The Future of E-commerce: The Road to 2026 Contents Executive summary ........ 3 Introduction ..... 3 Welcome to the consumer of the future . 3 Instant gratification will mean more than a quick fix3 The desire for shopping experiences will intensify .. 4 The pretzel-shaped shopping journey ......... 4 The sharing economy is here to stay but with a mixed impact on retail ...... 4 Pure play and physical retail: blurring boundaries .......... 5 Online moves into the real world ..... 5 Physical retail still exists but not as we know it ....... 6 An increasingly fragmented physical footprint ......... 7 Goodbye to silos ..... 7 Fulfillment is a major battleground, ushering in new models .......... 8 The race to find new delivery systems ........ 9 Toward a mobile-centric retail experience .......... 9 Contextual location becomes a building block for retail .... 11 Prepare for a mobile payments boom, driven by m-commerce .... 12 Mobile loyalty in the ascendant ..... 13 Moving toward mobile-first advertising ...... 13 Context is king .. 15 Moving from a 2-D to 3-D customer perspective ... 15 The rise of predictive models and curated shopping ......... 16 Consumers take more control of personal data trade-off terms .... 17 Key technologies that will shape retail . 17 Hyperconnectivity will create new dynamics in retail ........ 17 Wearables will become a platform for m-commerce, albeit with limitations .......... 18 Augmented reality (AR) will be a strong driver for online and physical retail ........ 20 Forget the hype – 3-D printing will have a limited impact in the retail space ........ 20 Preparing for the road to 2026 . 21 Recommendations: actions to help retailers stay ahead of the game .. 21 Executive summary Introduction The world of retail is undergoing an unprecedented wave of innovation. Technology, of course, plays a major role, but it is not the only force at work. New business models are appearing that will have a profound influence across the e-commerce and wider retail value chain. At the same time, consumer behaviors and expectations are evolving. In this report, we identify and examine those trends that will shape the retail landscape over the next five to 10 years. For example, what technologies will have a transformative influence, and what technologies are just hype How will the e-commerce value chain evolve, and what impact will this have on online and physical retail To provide answers to these questions and build a vision of the future, we interviewed thought leaders across the e-commerce ecosystems, including leading retail brands from a spread of market sectors. Welcome to the consumer of the future “The word is convenience – the word is anywhere, anytime, however the consumer wants it.” Colgate-Palmolive Instant gratification will mean more than a quick fix Consumer e-commerce today is largely driven by price and convenience: a good deal on products that are delivered quickly. A smaller but growing number of consumers are starting to want more from e-commerce, for example, wanting the ability to discover unique goods they will not find in big-box retail chains. By 2026, these fundamental desires will still exist, but consumer expectations of the e- commerce experience will have changed drastically, along with the shopping experience. The desire for instant access and fast turnaround, 24/7, will be the norm by 2026, driven in particular by millennials (born approximately 1980–95) and also by Generation Z consumers (born approximately 1996–2010). Generation Z are digital natives to the power of 10, with technology use their second nature. These generations are constantly connected and inhabit an online environment where events happen in real time without them having to wait, and where social media enables them to dictate terms. Key takeaways However, by 2026, instant gratification will have come to mean something more sophisticated than a quick fix. It will have evolved into expectations of a seamless shopping experience across an increasing range of connected devices, in which immediacy and convenience are paramount. Instant access and fast turnaround will still be a key part of the equation, but other expectations will have come to the fore: proactive customer service and support, and free or very low-cost delivery anytime, anywhere. Consumers will expect goods advertised online to live up to the promise in every way – with no disconnect between the “fit and feel” of what they see and what they get. This places great pressure on retailers, and those that fail to meet expectations will fall by the wayside. The desire for shopping experiences will intensify By 2026, many consumers will want retailers to provide an environment where shopping is an event experience in its own right. This will translate into interactive, highly engaging online and real-world retail environments where augmented reality (AR) plays a key role. The provision of distinct and tangible shopping experiences, online and real-world, will become a key means to enhance and differentiate a brand’s value proposition. There are a number of factors driving this trend. Many consumers today already treat shopping as a leisure activity in its own right. Consumers are also increasingly drawn to a new generation of lifestyle brands. Alongside this is the appetite for life-enhancing experiences in addition to material things, evidenced by the strong growth in “adventure” holidays and “experience” days. Another driver is the seemingly insatiable need for people to showcase their participation in activities and experiences on social media. Retailers will increasingly align not only their brands but also the shopping experience itself to this consumer desire for encounters worth sharing. This can already be seen with the emerging trend for integrating social media with in-store retail, with the aim of creating socially driven shopping experiences. In 2015, Victoria’s Secret encouraged shoppers to take selfies in front of displays and show them to sales assistants in return for a free gift – and hopefully share their selfies/experiences with friends. Key takeaways The provision of distinct and tangible shopping experiences, online and real-world, will become a key means to enhance and differentiate a brand’s value proposition. But retail brands must ensure that the experience in question provides genuine delight and value; otherwise, there is a danger consumers could view it as a stunt or gimmick. The pretzel-shaped shopping journey The traditional notion of a universal, linear shopping journey that all consumers dutifully follow is already disintegrating, and by 2026, the concept will be completely outdated. Due to the proliferation of wearable devices and technology, smart TVs, connected cars and household appliances, beacons, and other technologies, the consumer journey in 2026 will increasingly look like a pretzel that twists, turns and loops back on itself. Consumers can start and end their shopping experiences on a mobile platform, in store or online. It is a fluid movement that by 2026 will be even harder for retailers to keep up with or predict because it will include a growing number of devices and touchpoints. Key takeaways One of the key conditions for success for retailers in 2026 will be their ability not only to keep track of users across a growing number of devices and touchpoints, but also to figure out how to effectively measure which of those are most effective at driving sales. This will imply a growing level of sophistication in how sales are attributed to the different marketing touchpoints. The sharing economy is here to stay bu