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Brick-And-Mortar’s Next Big Challenge

Could VR-armed digital assistants make showrooms obsolete?

They say whatever doesn’t kill you makes you stronger, and that’s certainly true for brick-and-mortar tech dealers.

Those still standing after the decade’s retail consolidations learned to compensate for compressed TV margins, and mounted their own counterattacks against e-commerce competition.

But according to a new report by Swedish telecommunications giant Ericsson, merchants now face a fresh challenge that once again calls the future of storefront retail into question.

This time, the antagonists take the form of digital assistants, virtual and augmented reality, and ever more powerful smartphones — soon to be upgraded to 5G — which together could present a compelling alternative to strip-mall visits.

Ericsson based its report on a recent survey of 5,048 early adopters in 10 cities around the globe. Of those, 43 percent already make weekly purchases on their mobile phones, supporting the company’s hunch that smartphone shopping will hit a global peak within the next few years.

 At the same time, mobile shoppers will increasingly rely on personal digital assistants to help with aspirational shopping, Ericsson predicts, while routine household goods will be purchased through smart speakers at home.  

To that end, consumers will have a choice of shopping assistants, based on the task at hand. For example, for the 63 percent of smartphone shoppers who want help with price comparisons on everyday goods, a “home restocking assistant” may be the ticket, while the 48 percent who want help making shopping decisions could opt for a “personal shopping advisor.”

And the era of virtual sales associates isn’t far off: 45 percent of those polled already use digital voice assistants on a weekly basis, and the majority of mobile shoppers believe most consumers will have a personal shopping advisor within the next three years.

See: Consumers Embracing Shop-By-Voice

At the same time, respondents expect AR/VR technology to imbue smartphones with all the benefits of physical stores without the disadvantages of crowds, parking, drive time and fuel costs. And like the advent of virtual shopping assistants, 69 percent of current AR/VR users — who already use AR or VR at least once a week — believe the requisite technologies will be upon us within three years.

Moreover, 64 percent of AR/VR users believe almost all shopping will be conducted by smartphone by 2021, and that physical stores will ultimately fade away.

While Ericsson considers that outcome unlikely, both the size and location of brick-and-mortar showrooms will need to change to draw new interest from shoppers, while a concomitant increase in home deliveries suggests the need for automated fulfillment, furthering its forecast for a connectivity-driven future for retail.

“Fast-changing consumer shopping behaviors are important to understand for anyone involved in 5G, smart homes, consumer IoT and artificial intelligence,” observed Michael Björn, head of research at Ericsson Consumer & IndustryLab. “When consumers start employing AI to automate everyday purchasing, this will create demand for IoT-enabled sensors as well as a need for people to connect appliances in their homes.”

See: Transforming The Retail Experience

But the dawn of AI-driven shopping assistants could also have a dark side, apart from the impact on brick-and-mortar. Respondents voiced concerns over whether these virtual associates can be trusted to put the consumer’s interests ahead of its programmers, and whether its purchase decisions and recommendations will benefit the household or the platform’s sponsors.

On a metaphysical level, Ericsson believes the overarching challenge for the retail industry is that the real customer will become an AI rather than a human, forcing a revaluation of everything from advertising and services to after-sales support, and the role of the consumer in transactions.

The complimentary report, “Beyond Smartphone Shopping — The Rise Of Smart Assistants,” is available online.