Shopping in The Matrix: The new technology shaping the future of retail

@IE University

Technological innovation such as VR and sensory marketing are impacting our decisions on what to buy, presenting both opportunities and challenges for the future of retail.

The huge amount of information available to us online in the form of product descriptions and expert and peer reviews means many people – and especially younger generations – like to research major purchases on the internet before splurging.

A survey conducted last year by marketing firm PowerReviews suggests that 94% of US Centennials or Generation Z – those born after the mid-1990s – do their researching and browsing for products online, while a recent global report by IBM and the US National Retail Federation found that 46% of this new generation say a friend’s recommendation or opinion matters when choosing a brand.

Having been raised during the economic crisis of the last decade, young people are careful about how they part with their cash. Smart retailers should make sure their websites provide plenty of useful product information, reviews and attractive photos. IE University’s Bachelor in Psychology gives students a powerful toolbox with which to observe human behavior and conduct research that could give marketing organizations a vital boost.

“We remember 5% of what we see, 15% of what we taste and 35% of what we smell” – Steve Hughes, managing director of Mood Media

Need for speed

The internet has also made the need for speed more important than ever. Digital natives accustomed to everything being available on demand – from books and movies to food and even dates – expect immediate gratification. The IBM and US National Retail Federation survey found that 62% of 13 to 21-year-olds say they would not use a site that was hard to navigate. Tellingly, 58% of under-20s say they would pay more than $5 for one-hour delivery, according to an Accenture report.

Young people’s familiarity with online shopping means they also expect a wide range of goods and a personalized, interactive shopping experience. Recommendations of the kind given on Amazon are one example, but solutions are growing ever more sophisticated. For instance, online florist 1-800-Flowers.com’s Gwyn (Gifts When You Need) program uses the cognitive technology of IBM’s artificial intelligence platform Watson to guide buyers through an interactive shopping experience that helps them purchase the ideal gift. Watson learns their preferences as it goes.

Shopping-in-the-Matrix-VR-glasses

With VR technology, shopping online can really compete with the real thing.

In Australia, eBay teamed up with the Myer department store chain to introduce a VR shopping experience through “shoptical” goggles into which a mobile phone is inserted so that an app can take you into a three-dimensional store experience. It’s like how shopping would be in the film Matrix.

But despite all the new technology, the majority of those born after 1995 – 67% – still shop in physical stores most of the time, the IBM survey found. They appreciate the advantages of being able to feel fabrics, try on shoes, smell fresh coffee and joke with staff, even if they also continue to research products and offers on their cellphones while in-store. They expect a seamless transition between the online and offline shopping experience, a demand that retailers ignore at their peril.

Perhaps it’s no surprise then that, as Dr Ellen Newman, associate professor of psychology at IE University, points out, sensory marketing has become such a massive industry. The technique seeks to use smells, sounds, textures and other sensory experiences to trigger favorable responses in customers’ subconscious minds – the place where research says up to 95% of our consumer decisions are made. But these strategies don’t translate well to the digital environment, Newman notes.

Shopping-in-the-future

Technology is revolutionizing the way we research our consumer decisions.

“What are the ways that, for example, a fashion retailer can transmit a sense of the feel of the clothing virtually?”  – Dr Ellen Newman, IE University

They’re coming. While innovative tactics such as engaging product descriptions, sensuous photography and packaging help online retailers bridge the gap, emerging technologies may soon narrow it even further. Enhanced mobile ads, digital aroma devices, virtual reality, augmented reality and the latest haptic technology all provide more immersive experiences that could one day enable us to feel, smell, see, hear and handle products almost as we would in a bricks-and-mortar store.

A recent report by Mood Media, a marketing agency specializing in sensory branding, found that most people still shop most of the time on the high street because they want to feel the product first. What few of us probably fail to realize is the importance of scent for an experience to make a deep impact. “We remember 1% of what we touch, 2% of what we hear, 5% of what we see and 15% of what we taste,” said Steve Hughes, managing director of Mood Media. “But 35% of what we smell stays with us.”

Written by The Report Company – for IE University