Ikea is looking at both artificial intelligence and digital realities as big opportunities for its future.
CEO Jesper Brodin, said a “major shift” in technology over recent years has prompted the retailer to start looking at both for how they can impact business. During the World Economic Forum in Davos, he told CNBC: “(What) we haven’t been able to do before is to find easier ways to connect with people so digital opens up massive opportunities for us.”
Last month, the retailer tested virtual reality in its Dallas, Texas, store. Shoppers were given access to a fully immersive experience that allowed to them play a pillow toss game with a coffee table or hang out with a panda inside a bamboo lamp.
Its also been playing with augmented reality. Using Apple’s ARkit, its new Ikea Place app now allows consumers to virtually try out what furniture looks like in their homes before buying.
Artificial intelligence, meanwhile, is an area many retailers are turning to in a bid to stay ahead of competition from mega players like Amazon. Ikea previously announced research into the idea of its own AI virtual assistant, for instance, that would be able to help customers with “smart furniture”.
AI was also a big focus in Davos at large with Google’s chief executive Sundar Pichai, referring to it as more important than fire or electricity.
“Like most retailers, we don’t know exactly where we will land at the end of it, but our curiosity and willingness to create will be a guide for us,” Brodin added.
Underpinning the fashion and luxury industries right now is both a tough retail environment and a landscape of intensifying competition – from Amazon to the bevy of new direct to consumer players. While sales are steadily on the rise, with The McKinsey Global Fashion Index projecting global industry growth from 3.5 to 4.5% in 2018, there are still big challenges ahead.
As we’ve seen time and again, survival is no longer a guarantee merely based on heritage; innovation in an age of rapidly evolving consumer expectations is what will drive staying power.
However, while that word – “innovation” – means newness in a literal sense, when it comes to looking at trends for the year ahead, we are very much talking about evolution not revolution in terms of what matters for retail and fashion brands.
For 2018, then, the big areas of focus will continue to be around augmented reality, artificial intelligence, the voice interface, blockchain, the circular economy, new materials, customisation and fulfillment.
Those tech terms tie into some big overarching trends shaping the future of the industry too; namely the sense of an increasingly frictionless shopping experience, more personalised and relevant consumer interactions and the drive of a serious sustainable agenda.
Here are the things you need to be thinking about…
In 2017 we saw the launch of Apple’s ARkit and Google’s ARcore, making augmented reality development on the devices we all use everyday incredibly simple. This push into the mainstream has led to a forecast of 900 million AR-enabled smartphones by the end of 2018, according to consulting firm Digi-Capital. With that of course comes increased consumer expectation – research from Digital Bridge shows that 69% of shoppers now want retailers to launch AR apps within the next six months.
We’ve already seen the likes of Ikea, Anthropologie and Burberry doing so to both facilitate shopping and make for some fun experiential use cases. As Apple CEO Tim Cook told Vogue: “Over time, I think [these features] will be as key as having a website.” 2018 then is your year to tool up. What is your AR strategy going to be?
Big data strategy is more of a reality for retailers and brands than ever thanks to the role of machine learning within artificial intelligence. Now, decisions can be made based on detailed and real-time consumer insights. The largest benefit for businesses at this point lies in providing greater relevancy or personalisation to the consumer – from tailored recommendations to highly individualised messaging.
There will be an estimated 1.8 billion users of voice assistants – like Amazon’s Alexa and Apple’s Siri – by 2021, according to Tractia. That kind of progress is already well underway, hot on the heels of simple facts like Amazon’s Echo devices being the biggest sellers on its website this holiday season. Last year we saw retailers starting to figure out where their place was in this landscape – Walmart teamed up with Google Home; others like Perry Ellis launched a fun personal styling app through Alexa.
Based on the simple mantra of needing to be where your consumers are, it’s time for the rest of the industry to start exploring how they too can use voice. At some point we’re going to see such technology assistants as the gatekeepers to shoppers, turning traditionally targeting and messaging on its head.
Blockchain is another tech word that’s been bandied about nonstop of late, but the chips are starting to fall as to what this can really mean for the industry. While cryptocurrencies are having a real do or die moment, the more relevant applications of blockchain for fashion brands lie in authenticity and transparency. Authenticity is about anticounterfeiting above all else, while transparency sits alongside sustainability. Both are about validating supply chain data, with blockchain by its immutable nature supporting that very fact.
London designer Martine Jarlgaard recently led the charge in terms of transparency, turning to storytelling to showcase each step of her supply chain through blockchain company Provenance. Expect 2018 to see more of these types of initiatives on a marketing level, as well as a broader movement to start thinking from the ground up in terms of integrating such technology into the foundations of the organisation.
The circular economy
On the subject of sustainability, the drive for less waste, and the move towards a true circular economy is also gaining headway. In 2017 we saw H&M announce its goal to be fully circular by 2030 and to only use recycled or other sustainably sourced materials. No small task, but a bold statement highlighting the work that’s got to go in between now and then.
The key, according to Nielsen, is that 72% of millennials and 73% of Generation Z say they would pay more for brands with sustainable offerings, meaning doing good is also key to strong business today. It’s not possible to be in this industry without thinking about this side of things in some way or another as a result, making this year a critical time for all involved. Strategy around the three R’s: reduce, reuse and recycle, will be a big focus for 2018, from new innovations shaping the possibilities around recycling techniques themselves, to a continued focus on areas like the sharing economy and resale sites.
Other names like VitroLabs are also worth keeping an eye on, as well as those experimenting with different fibres produced from the byproduct of harvests including pineapples, mushrooms, oranges and grapes. If last year was about experimentation, 2018 gives us the opportunity to move towards application and real commercial viability.
If you pull together some of the above trends – personalisaton and sustainability fundamentally – there’s little escape from the idea of customisation as a penultimate thought for 2018. If you can make something tailored to the individual, waste is lower, usage lasts longer, conversions are higher… the list goes on.
This is not new – we’ve been monogramming for decades – but the continued roll out of flexible manufacturing options from start-ups like Unmade, or with Shima Seiki printers as the likes of Ministry of Supply have used, as well as large scale automated systems like the Speedfactory from Adidas, are making this both quicker and more possible at scale. If that wasn’t enough, beware the A word once more: Amazon recently won a patent for an on-demand manufacturing system for apparel. That could be a game changer.
In case Amazon hasn’t yet been mentioned enough above, one final point to note continues around just how to make your time from order to delivery faster than ever. With the e-commerce juggernaut setting the precedent amid a consumer landscape of instant gratification in the on-demand economy world, it’s become somewhat of a race to the bottom for fulfillment.
The fact is, if we’re offered 30-minute drone delivery down the line, or even more realistically the 90-minute arrivals of our Gucci wares from Farfetch, as we saw launch in 2017, we’re more than likely going to take it. The question of need no longer comes into it. This space is ripe with start-ups offering all manner of assistance – from types of delivery options to opportunities for simplified returns. So what are you doing to pick up the pace? Time is quite literally of the essence.
“At some point, we’re going to look back and think, how did we not have a digital layer on the physical world,” Greg Jones, director of VR and AR at Google, said at Shoptalk Europe earlier this month.
The role of augmented reality (AR) is set to be transformative, he argued, and that’s particularly the case when it’s applied to retail.
Those words were echoed in an interview with Apple CEO, Tim Cook, published by Vogue magazine around the same time, in which he said he believes AR will impact everything from runway shows to shopping. “Over time, I think [these features] will be as key as having a website,” he commented.
The fact is both Apple and Google are facilitating this happening. While AR has been around for many years, 2017 will be marked as the beginning of mass consumer uptake, thanks to the smartphone integration we’re starting to see.
The introduction of Apple’s ARkit, a developer platform for augmented reality, and the subsequent launch of iOS 11, which hosts it, has paved the way on iPhones and iPads. Google’s ARcore meanwhile, brings the same to Android.
Consumer adoption follows the fact users have long been playing in this space – they know what AR is by the filters they put on their faces on Snapchat, or the characters they’ve chased around the streets using Pokémon Go.
The difference now, is having this utility integrated in a multitude of other apps on their phones; making it a second nature experience to add that digital layer to everything they are doing. Head over to Forbes to read the full story, including the fashion and retail brands already jumping on board.