How retail changes when algorithms curate everything we buy
The first stage of the digital-shopping revolution saved consumers time and money by letting them buy things they already wanted without having to go to a traditional retail store. A major part of the second stage will likely be a dramatic refinement of technologies that tailor recommendations and then scour the internet for the best deal.
We expect that retail curators will become an industry on their own, changing the structure of the retail sector and capturing a significant share of retail sales. Below, we explore three types of digital curating engines that are emerging.
MARKET MAPPERS We expect agnostic curating engines that will consider not just products’ price but delivery and other potential costs to suggest the best deals. Once that happens, market mappers will be able to find the best combination of items for a full online shopping trip, where the customer pays the shopping service for a variety of goods in one go. DIGITAL PERSONAL SHOPPERS
A step beyond market mapping is to tailor offers to individual shoppers.
The key technology is learning algorithms. Pioneered by Netflix, among others, these types of algorithms get better at their predictions as the customer approves or ignores successive offers. Ultimately, digital human-machine services could end up playing a key role that department stores currently do, curating a vast range of clothing or other consumer goods to make it easier for customers to find just what they want.
REVIEW AGGREGATORS As consumers buy more types of products online, the importance of fair reviews across platforms will increase. We expect this will lead to the rise of review aggregators across platforms in a broadening range of retail segments.
CURATING RETAIL Retailers are already beginning to pioneer shopping models that show these types of curating engines are attractive to shoppers. And when retail curators gain momentum, the model could scale well globally, particularly in segments where products tend to have the same specifications in all markets, such as technology and some kinds of apparel.
Once that happens, retailers, just like travel agents before them, risk becoming back-end utilities serving new intermediaries. The best way for retailers to protect themselves: Give customers good reasons to keep coming to them directly. (Bobbygibbsisapr incipalinoliverwyman’sretailandconsumergoods practice.nickharrisonis apartnerandco-leadof Oliverwyman’sretailand consumergoodspr actice globally.)