Swedish supermarket Coop Sweden has a retail grocery assistant on its websites. Cooper, as the assistant is called, can help you with dietary requirements, suggest recipes and provide nutritional information. The idea behind Cooper is to increase interaction with consumers while providing a seamless shopping experience.
As consumers move online, implementing the technologies of the fourth industrial revolution (4IR) is becoming more crucial. Cooper is an example of the 4IR in practice. These technologies are changing the way we work, commute, communicate and, as Cooper will tell you, even shop. The 4IR is based on high-level technology such as artificial intelligence, automation, biotechnology, nanotechnology and communication technologies that permeates society. It is a combination of various technologies that can communicate with humans and interact with other devices and programs.
The lockdown necessitated by the Covid-19 pandemic has been an important yardstick for understanding behavioural changes in consumers as online options become more commonplace. A recent Nielsen study found that 37% of South Africans say they are shopping more online in this period. As Gareth Paterson, a lead retail analyst at Nielsen South Africa, put it, “Amid the strange new world of Covid-19, online grocery shopping has been a lifeline for many South African consumers who have desperately sought out safe and secure shopping alternatives amidst the uncertainty of lockdown living. As a result, available online shopping platforms, especially for groceries, medicines, and other necessary items, have seen a surge in usage over the last few weeks as consumers prefer not to venture into stores and have increasingly opted for these reduced touchpoint alternatives.”
According to data from the survey, Nielsen is anticipating that options such as click and collect and online personal shopping will grow exponentially, resulting in prolonged behavioural changes. Retailers have been quick to cotton on to this shift and have responded in innovative and effective ways. For instance, Checkers has launched an app called Checkers Sixty60, which has groceries delivered to you in 60 minutes. There are 5 000 groceries to choose from and options to substitute products if your first choice is not available.
In various industries, the coronavirus has been an important lesson where we are well equipped to deal with the 4IR and where we still have gaps. This will undoubtedly signal a shift in consumer behaviour and many will not return to traditional brick-and-mortar retail. We will increasingly see more retailers adapt to this way of operating. In fact, a report by global management consultancy Accenture last year suggested that South African retailers would see a knock to a business if they did not embrace e-commerce. The emphasis on traditional stores, Accenture argues, means that many retailers are losing out on the potential profits that come with online offerings. Yet, interestingly enough, the current pandemic may subvert this.
This is not to say that online shopping has not had somewhat of a watershed moment in recent years. Perhaps the best example that provides a holistic user experience is the Mr Price app. With it, you can shop online, find the stock in stores and even upload a picture of something you like for it to suggest similar items available on the app through the snap and shop feature. For instance, I could either take or upload a picture of a pair of brown formal shoes that I saw a colleague wear. The app will then pull any stock available at Mr Price that looks similar and provide a list of suggestions accompanied by pictures.
The starkest instance of the popularity of online retail is Black Friday, which has gained popularity in South Africa in the last few years. It is probably the biggest day of the year for retailers, particularly online retailers. In the week leading up to it, consumers receive hordes of massive Black Friday discounts. Some of them may have put together wish lists to check out at the stroke of midnight while others may have used their phones to search for discounts.
AI is tailoring the online experience and it is determining prices, inventory and making distribution far more efficient for your favourite retailers. Another example of this on Instagram is the move to online shopping with a new AR shopping feature that is being rolled out, which allows consumers to try on products digitally before buying them. For example, using your phone you could try on the latest shade of Mac lipstick to see how you would look. This followed a rollout of a checkout feature that allowed you to buy products directly on Instagram without ever leaving the app.
The try-on feature is limited to certain brands and is still in a trial phase, but it is as easy to use as the filters when you create a story that could give you dog ears and a tongue or freckles and blue eyes. The long-term vision is to roll this out with all retail, so, for example, you could see what a couch looks like in your living room. This is not the only technology Instagram has adopted. AI influencers have been introduced, which have been surprisingly popular.
According to consumer insight website LendEDU, three years ago 52.9% of millennials said Instagram has the most influence on them when making shopping decisions. For instance, many followers use the website LIKEtoKNOW.it, which sends a direct link to a product after a shopper “likes” a post. Creating completely digital influencers is a whole new avenue. Miquela is an AI influencer with 2.4-million followers. Just like any other influencer, her posts are perfectly planned, she has a themed feed, has sponsored content and gives her followers useful advice and brand recommendations. But she does not actually exist — she is run with AI technology. This has not stopped her career from taking off.
Last year, she collaborated with Prada for Milan Fashion Week by posting 3D-generated gifs of herself at the Milan show venue wearing the spring/summer 2018 collection. On Prada’s Instagram account, she gave their followers a mini-tour of the space, just like any influencer would for a brand. She is not an outlier — there are many more like her. Balmain recently announced a Balmain Army made up entirely of computer-generated imagery (CGI) models. There is also a dedicated modelling agency for digital models called The Digital.
Amazon, the largest online retailer by revenue, has 45 000 robots at its warehouses to fulfil orders and a fleet of airborne drones into service for fast deliveries. It is not just online that retail is transforming with the 4IR. There is room to implement this kind of technology at brick-and-mortar level. The introduction of robotics has streamlined checkout processes, for instance. In the United Kingdom, you can self-checkout at grocery stores that weigh your goods to prevent theft. Similarly, there are robots akin to sales assistants in stores in the United States — they can help you find an item either verbally or through the touch screen. Some robots can perform real-time inventory tracking.
Best Buy, the US-based electronics store, has an automated system much like the claw machine at the arcade that can retrieve products from shelves. There is scope to streamline and automate processes that will prove to be cost-effective for retailers in the long run. “Accelerated adoption of technology will be a key strategic move that could lift retailers’ margins significantly. Retailers can introduce digital technologies and automation into their operations to reduce costs and enhance the customer experience. They can turn e-commerce from a threat to a growth opportunity,” a McKinsey and Company report on the future of work in South Africa reads.
One of the grim realities of this era we are moving into is that there will be knock-on employment, particularly of low-skill workers. The caveat is that there will be demand for graduates and employees with higher skills levels, and we need to meet the demand for graduates not to fall into an even deeper unemployment crisis.
From a retail perspective, there is so much to be done that can augment consumers’ experiences. As industries vie to be a step ahead in the ever-changing context, consumers and business owners have to be open to these experiences and shifts. As physicist William Pollard once said: “Without change there is no innovation, creativity, or incentive for improvement. Those who initiate change will have a better opportunity to manage the change that is inevitable.”
Professor Tshilidzi Marwala is the vice-chancellor and principal of the University of Johannesburg and deputy chair of the Presidential Commission on the Fourth Industrial Revolution