Using technology to enhance the shopping experience like never before could present each of the UK’s 10 largest retailers with additional sales of £235m by 2014, eBay today reveals.1 That’s a potential direct boost of £2.4bn for the retail industry as a whole in two years. The technologies will also indirectly influence £9.1bn in retail sales in the same period.
New research by retail experts Conlumino, commissioned by eBay, reveals that the retail industry is on the cusp of a third wave of technological revolution. After online and mobile, a new wave of shopping technologies will again present opportunities and challenges for the industry.
Interactive TV will have the most influence, as by the end of 2014 one in four (25%) people will regularly use interactive television to shop. By bringing together television and the internet, it will generate nearly £750m worth of direct sales by the end of 2014.
The other technologies that will come to the fore over the next two years in order of influence are:
- Augmented Reality – enables consumers to bring the real and virtual worlds together by overlaying digital information onto real products, spaces and places. This will range from allowing shoppers to view 3D projections of products that aren’t physically present or allowing them to virtually try on clothes.
- In-store technologies – this cluster of technologies will enrich the consumer experience and improve store efficiency. Innovations such as iPads replacing tills and electronic shelf labelling will boost productivity.
- Image recognition – allows devices to identify consumers or objects based on their attributes. Consumers could perform visual searches for products they point their devices at, and more significantly micro QR codes could replace barcodes and help retailers bridge the gap between tracking on and offline behaviour.
- Smart devices – everyday appliances become intelligent and empowered, for example a fridge making recommendations on what food to order. Retailers could develop greater personalisation and gather deeper insight into their customers.
By investing in these technologies retailers could see sales growth of up to 4% by 2014, compared to flat or minimal growth for those that don’t invest.
Angus McCarey, UK Retail Director for eBay commented: “We are entering a period of transformation in the retail sector. Consumers are driving this as they demand more choice, more interactivity, specialist knowledge and price transparency.”
“’Third wave technologies are about meeting those demands and presenting information back to consumers in ways that haven’t been possible before: using virtual reality to try clothes on, or watching your favourite show on TV and buying the box set at the same time.
“The opportunity for the retail industry over the next two years lies in identifying which technologies will yield the most return on investment. But it’s tough because it means thinking differently about what is driving sales – individual technologies or even individual stores may not yield significant direct sales, but their value may lie in customer engagement and brand loyalty.”
Retail analyst Neil Saunders, of Conlumino warned that retailers need to meet consumer demand to create growth. He commented: “Retail is changing as the focus shifts from the channel to the consumer. Brands need to move their thinking from channels, loosely comprising of stores, online and mobile, which will become less relevant as new technologies continue to blur the lines.
“Channel convergence was born out of the rise of mobile a couple of years ago and is set to accelerate at an unprecedented rate. Just as major players adopted mobile, they must invest in these new technologies now if they are not to limit growth in the coming years.
“The investment required is modest whilst creating genuine growth for retailers. Beyond direct sales introducing these new technologies could influence sales worth £9.1bn by the end of 2014, compared to the £0.3bn we calculate they contributed to the sector last year.”
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To compile this research Conlumino used a variety of sources:
- A dedicated consumer research programme undertaken in April 2012 designed to understand existing use of technology, potential future use, interest levels in new technologies and general shopping habits. This was carried out among a UK nationally representative sample of 2,774 consumers and included open as well as closed questions.
- All market forecasts and numbers in are drawn from Conlumino’s retail market data model which assesses retail’s position in the broader UK economy and the relative performance of individual channels, including online, mobile and new technologies.
- Desk research was carried to explore new technologies, their impact and application. This included case study research into how retailers, and others, are currently using technologies. Trade publications, retailer corporate reports, social media and news media were all utilised as part of the research process.
- Price auditing across stores and online was used to assess price differentials between online and offline products.
- An internal forum of analysts was used to debate and assess implications, strategies and impacts of new technologies, social media and other factors. The outcome of these discussions is included within the findings of this report.
Conlumino is a retail research agency and consulting firm founded by leading retail analysts Neil Saunders, Matt Piner and Simon Chinn. Our research focuses on all aspects of retailing and consumer behaviour, which we deliver through bespoke reports, projects and presentations. We work with many of the world’s leading retailers, property firms and those in the financial sector to help them maximise success through developing a thorough understanding of the sector and its likely future performance.
- Founded in 1999, eBay.co.uk is the UK’s largest online shopping destination, providing a platform for over 17m unique visitors per month to buy and sell new, unique and used items in a fun and easy way.
- eBay has around 40 million live listings on the UK site, with fixed price goods accounting for the majority (61%) of items sold globally.
- Sellers of all sizes, including 180,000 registered businesses and over 100 well-known brands and retailers use eBay.co.uk to reach the UK’s largest online shopping audience.
- eBay.co.uk is owned by eBay Inc, which has expanded to include a range of brands that help consumers find and purchase the goods they want including eBay, PayPal, Shopping.com, RedLaser, Milo and others.