C1 Technological Change
Technological factors are the availability and development of equipment that a business and its stakeholders have access to.
Automation and robotics
Communications infrastructure
Technological life cycle (innovation - obsolescence)
Access to and quality of the internet
CAD/CAM
AI
Security
Technology Change in Retail
The History of Online Shopping
Online shopping is the purchase of goods or services directly from a seller over the internet. The origins of online shopping are largely down to three key inventions;
In 1979, Michael Aldrich invented the earliest form of e-commerce allowing transactions between businesses and customers.
In 1990, the first ever web browser, the world wide web, was invented allowing millions of people access to the internet.
In 1994, SSL was invented. This prevented the interception of data transferred over the internet.
It is thought that the first online sale was a Sting CD in 1994 by Dan Kohn to his friend. The first major online market places began to emerge in 1995. In 1998, PayPal launched an online payment system which made it easier to trade over the internet. Online shopping accounted for 19% of global retail sales in 2021 and is expected to rise to 25% by 2026 (Coppola).
Mobile Commerce (M-Commerce)
M-commerce refers to any commercial transaction made using a wireless handheld device such as a smartphone or tablet. In October 2002, it was estimated that 83.32% of people globally own a smartphone and by 2025, 72% of all internet users will solely connect using their smartphone (BankMyCell).
Mobile apps for shopping include extensive product ranges with intuitive search functions, personalised recommendations, augmented reality features, in-store functions and chatbots.
Evolution of Contactless Payments
Chip and PIN transactions are processes where the customer inserts their card into a payment device and authorizes the payment with a pin number. This was an evolution from early credit card payments where the Retail staff swiped the customer's card and the customer signed the receipt which had to be verified by the staff member checking the signature against the one on the back of the card. It is now common for people to pay by tapping their card, phone or smartwatch onto a payment reader.
The future of contactless payments includes biometric scanning and ‘just walk out’ technology where bills are sent to a shopper’s phone via an app.
1950 - Charge cards were launched by the Diners club. Members could charge meals to their card and would be sent a monthly bill.
1958 - American Express launched a charge card that could be used in certain stores. The stores would pay a fee to American Express.
The 1960s - A magnetic strip with data was ironed to the back of the card. This was swiped at a point of sale terminal to read data about the customer who signed a slip to authorise payment.
1984 - Microprocessor chips were embedded in cards. The card was inserted into a point-of-sale device and authorised with a pin number.
2004 - Contactless cards begin to be used in the US. The customer tapped the card on a point-of-sale device without needing to enter a pin number.
2008 - VISA, Mastercard and AMEX all begin to offer contactless cards.
2011 - Contactless payments on smartphones were launched.
2015 - wearable devices such as watches start offering contactless
Self-Service Checkouts
Self-service checkouts are stations where customers scan their own items, are presented with a request for payment and then pay directly into the checkout without any interaction from store staff. In the UK, self-service checkouts were first introduced by Tesco in 2003 and many stores have been moving towards offering self-service as the majority option for payment. In 2015, McDonalds introduced self-service kiosks. The benefits to the retailer are reduced staffing costs and the ability to offer more checkouts should increase the speed of payment for the customer. However, many customers have reported finding the process irritating and slower than manned checkouts.
Developments in self-service checkouts include the use of AI to detect the items in a customer basket without them having to scan items individually. Convenience store Circle K are moving towards a fully autonomous checkout system whereby ceiling cameras and AI attribute items taken from shelves to each customer. They will then be charged for their items via a smartphone app, removing any need for them to queue up to pay. Customers will be able to walk straight out of the store.
Augmented Reality (AR)
Augmented Reality (AR) uses software to combine the real world with computer-generated content. For example, a smartphone can be used to capture the street, the store, the home or any environment a user is standing in. AR can overlay the location with elements such as videos, images or sounds.
In retail, AR can be used to provide people with more information about products, be guided around stores, enter competitions, play games and virtually try on clothes. Customers at home can use AR to walk around stores, test products and see how items would look when placed in their homes. AR can lead to greater customer satisfaction by providing better engagement with products before purchase leading to a higher likelihood that customers will make purchases that better suit their needs.
Autonomous Delivery
More than half of British consumers have reported same-day delivery options as being important when shopping online and 62% now expect next-day delivery to be an option (Retail Market). It is estimated that over 75% of shipping costs are due to labour (Global Data Retail). To meet the rising demand for online orders and pressure to reduce costs, developments have been made in using robots for autonomous delivery. Examples include the Amazon Scout, Alibaba’s Xiaomanlv and Walmart’s DroneUp.
Social Commerce
Social commerce is the use of social media platforms to reach customers and make sales. It is estimated that 57% (4.59 billion people) use social media (Stanley). Global social commerce sales are expected to double between 2020 and 2023 to $1.6 trillion (McLachlan and Gurr).
Experiential Retailing
Experiential retailing is a marketing strategy where retailers use their physical spaces to offer experiences that go beyond browsing for and purchasing products. The popularity and convenience of online shopping means that there is less need for customers to visit stores to make their purchases. Physical store space is increasingly being used to create memorable experiences for consumers to engage with brands. Examples include fashion shows, music concerts and areas to 'hang out'.
Technology plays an important role in the evolution of Experiential retail. Screens and lighting can be used to create an atmosphere.AR, VR and XR can be used to create fun games and activities for customers to engage with the brand. Lighting and Augmented Reality can be used to guide customers around the store. More recent developments include using holograms to guide people and make recommendations.