Sentient spaces are shaping the future of retail

  • Business Model Shifts

Business Designer, Chelsea Phillips shares how sentient spaces are set to change the retail landscape forever and what this means for businesses.

If you cast your eyes back 50 years, the retail industry is barely recognisable. 

We’ve seen the transition from shopping at your local street shop, to browsing through a plethora of products presented in large scale utopian shopping malls. From buying in-person to buying online. And in turn, customers are increasingly expecting their in-store experiences to be frictionless and convenient. To reflect these evolving consumer preferences, in recent years business models have needed to change – just take the rise of the subscription model. However, and perhaps most importantly, the incorporation of big data analytics to support and fuel strategic decisions signals a new chapter for retail. 

Over the past year I’ve worked in Business Models Inc.’s Brisbane office while simultaneously completing a research thesis exploring consumer behaviour within integrated technologies through the Queensland University of Technology. What I’ve found in the process, is that we’re on the verge of a potentially sector-changing business model shift. One where – through technology – even more emphasis is placed on seamless, tailored consumer interactions.

 

An evolving retail landscape

As described by Business Models Inc.’s research partner Trendwatching.com, with the collision of massive troves of customer data, the maturation of AI and smart physical objects, the widespread use of facial recognition and sensors, and the ever growing demand for relevance and personalisation has emerged the concept of the sentient space for the retail industry. We can now expect physical stores to recognise the customer and adapt to provide in-person experiences.

The way we shop will be uniquely tailored to our needs.

The Digital Shift is already underway. As explored in one of our recent blog posts looking at fashion retailer Gucci. Since 2015, Gucci has shifted their business model. By refocusing on online presence, digital networks and utilising artificial intelligence algorithms, they have been able to redesign the fashion house’s legacy and build tailored narratives for new customer segments. By understanding the minutiae of customer behaviours through digital technology, Gucci is now able to predict what the future of fashion will look like. However, the retail use of sentient spaces is taking this successful business model shift one step further. 

Image from “The business model of Gucci”, a case study forming part of the research for our upcoming book Business Model Shift. 

 

Facilitated by multiple devices embedded within a set physical environment, this new technology enables the experience economy to be propelled forward into the technological context by anticipating customer needs, perhaps even sometimes before the customer realises their needs themself.

 

The future is here

While seemingly futuristic, sentient spaces are already here. To be frank, you’ve most likely already been exposed to such an environment. The incorporation of Amazon’s Alexa or the Google Home device in a smart home context is one example. Here the device is able to respond to action based on your needs in an interactive manner through voice recognition technology. You need to know the weather? Your voice assistant can tell you it’s 25 degrees. You need to order AA batteries?  Your voice assistant can order it for next day delivery.

However, in 2018 Amazon introduced a landmark milestone that signalled the integration of the sentient space to the retail industry – the Amazon Go store. Here Amazon facilitated a just-walk-out experience, eliminating the check-out altogether. Initial reactions were mixed, triggering customers at a value-based level as the adoption of such technology ultimately meant humans were removed from the designed experience.

 

Amazon go Brookfield

Amazon Go store, from Business Insider

 

While a seemingly simple scenario, and not that anticipatory in nature, information systems and computer science fields anticipate these technologically enabled environments to change the way we interact with brands in-store across multiple sectors within the retail industry, presenting the opportunity to create significant competitive advantage between firms. By employing future visioning scenarios, human creativity is really the limit as to what is possible when redesigning the in-store customer experience.

 

The evolving role of the human

So what? What does this new physical retail environment mean? Well, I have found, among other things, that sentient spaces truly challenge the role of humans in the retail environment and experience. With no one at the checkout to perform mundane functions, do we really need humans after all? What function do humans truly provide that cannot be automated? Humans are innately designed for human connection, so is that needed in physical retail environments?

 

The digital and platform shift

The uptake in employing sentient spaces in the retail industry reflects an anticipatory digital and platform shift to the industry, perhaps more so than ever before. Shifts that we’ll be exploring further in our upcoming book, Business Model Shifts.

 

We’re in exciting times. As digital technologies are set to repurpose the in-store experience, it’s up to us to question, challenge and create the path forward. To create new business models for the businesses of the future. That’s why we’re currently building a Retail Futures Lab – to answer exactly these questions and opportunities. If you’re interested in creating change with us, feel free to email me or Michael Eales, the Partner of the Aus-NZ offices.

 

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