Consumers can look forward to a future increasingly defined by a global voice, and dominated by robots, the Internet of Things (IoT), and virtual and augmented reality (the last of which has become considerably more plausible since the release of Pokemon Go), according to a new trends report by Toronto-based non-profit innovation hub MaRS.
Arguably more fascinating than the report’s conclusion, however, is its methods: To determine the trends that will define tech’s future, authors Farah Momen and Sue McGill calculated the startups that were receiving the most funding, then divided them into sectors.
“By analyzing the capital raised over the past year, we can understand: a) which consumer and commerce verticals are seeing the most activity here in Canada (such as wearables and foodtech); and b) which specific, innovative consumer and enterprise business-to-business companies are gaining traction in the market,” Momen and McGill wrote in a July 7 press release announcing the report.
While ecommerce might be delivering a wider variety of products to consumers than ever before, the final purchase decision is still frequently influenced by their shopping experience, Momen and McGill write – and advancements in VR and AR have created new opportunities for companies to provide an immersive, unforgettable experience, with manufacturers such as Lexus and Volvo implementing virtual test-driving simulations, and Ikea adding an AR feature to its mobile app that lets viewers virtually place and view nearly 300 of the Swedish furniture giant’s products in their homes.
Artificial intelligence and robotics
Sure, we all know about Alexa and Cortana, but more interesting to Momen and McGill is the role that digital shopping assistants could play in retail’s future, with companies like Stitch Fix already delivering monthly boxes of curated items chosen by a combination of machine and human stylists.
The Internet of Things
In an era where even water bottles and deodorant can be connected to the Internet, and with the number of connected devices expected to reach 75.4 billion by 2025, retailers now have the opportunity to collect more big data then ever before and use it to connect with consumers, both inside and outside their stores, Momen and McGill write.
For example, luxury fashion retailer Hugo Boss uses heat sensors to track customers, then places its premium products in high-traffic areas. Zara uses radio frequency identification technology (RFID) tags to keep track of its inventory, while the Amazon Dash can be used to automatically restock crucial items.
The transportation industry
While investments in flying cars, hyperloops, electric vehicles, and driverless cars eat up press, ride sharing services led by Uber are having an unprecedented impact on the transportation industry as well, Momen and McGill write: Volkswagen, for example, has invested $300 million USD in global ride-hailing provider Gett, while Toyota is collaborating with Uber on an auto-leasing program. Apple, meanwhile, has a $1-billion USD stake in Didi Chuxing, Uber’s main competitor in China.
With “emerging markets” – that is, countries outside of North America, Australia, and Europe which house some 80 per cent of the global population, half of whom are under 25 – expected to experience rapid commercial growth, the next frontier for both exported technology solutions and new innovations is undoubtedly overseas, Momen and McGill write. Retail sales in Asia alone are expected to exceed $10 trillion by 2018 (double the projections for North America), while in Brazil, B2C ecommerce sales are expected to reach $40.8 billion in 2019.
Even Africa is a promising frontier for commercial innovation, the authors write, with the continent’s urban economies growing and mobile technology spreading. By 2025, they write, approximately 200 million Africans will have discretionary income and more than half of these income earners will be between 16 and 34 years old.
Fluid demographic segments
Rather than dividing their target audience by age, today’s advertisers are better off appealing to emotions, and the technology that exists to gauge consumer reaction is only likely to improve, Momen and McGill write. For example, Honda and Procter & Gamble already use Emotient’s technology to measure emotions as testers try out products, while Coca-Cola and Unilever rely on Affectiva to gauge consumer reaction to advertising campaigns.
The rising power of “Generation Z”
The members of “Generation Z” – which Momen and McGill define as those born between 1995 and today – represent the world’s youngest cohort composed of digital natives, and will soon dominate what the authors call the “economy of persuasion.”
“Emerging research is finding that Generation Z is uniquely self-reliant, productive and goal oriented as a result of turbulent and financially unstable economic times in the early 2000s,” they write. “In the retail space, it will be challenging for marketers to reach and develop a sense of brand loyalty with this group, which has grown up massively connected (five screens minimum), money conscious and label agnostic.”
Gen Z expects authenticity from brands, the authors write – that is, they want companies to be consistent in their actions, open about their business practices, and easily reachable on social media. Companies that cater to these expectations, such as Starbucks, are likely to come out ahead.