The Shopping Experience We May All Have by 2030

November 28, 2019 – Peter Diamandis is sharing his vision of how we will buy stuff in the future. Will it be visits to bricks-and-mortar stores, or be through an app on your smartphone, notepad, or other digital screens? In his latest look at the future, Diamandis notes that in the last year e-commerce continues to grow by more than 14% while surged +14%, while physical stores have seen sales decline in the same period by 3.5%. Malls across the United States and Canada are failing because online shopping is eating into the traditional retail experience in a big way. So what can save them? Diamandis believes there is a future in what he calls the experience economy driven by artificial intelligence (AI), augmented and virtual reality (AR/VR), and the Internet of Things (IoT), where sensor-laden smart physical shopping environments will alter consumer behaviour.

The Future Marketplace

It’s April 2026, a cold, rainy day in Chicago. You’re supposed to meet your mother for lunch, but forgot your coat. On the Uber autonomous ride downtown, a quick online search reveals a shop selling new eco-friendly vegan leather jackets you’ve heard so much about, a leather grown from stem cells, no cows harmed along the way.

You click the “interested” button on your smartphone. The store’s AI interfaces with your phone’s AI and redirects your driverless taxi. You arrive outside one of those throwback “craft retail” shops where they still employ actual humans. A woman named Sylvia meets you at the door, holding the vegan-leather coat you selected. The jacket fits perfectly which isn’t a surprise because a couple of months ago you used a modified Wii sensor on your phone to map your body precisely. The shoes you wear have weight sensors so if your waistline fluctuates, the mapping app automatically adjusts.

When you decide you want the coat there is no need to wait in line to pay. Cameras and sensors track both you and the jacket as you walk out the door deducting the price of your purchase from your smartphone bank app or cryptocurrency account. Plus, because the store’s AI knows this is your first trip to its premises it sends you a digital 25% off coupon for your next purchase. While the transaction is being completed the store’s smart racks let the retail AI know which leads to an immediate reorder from the manufacturer. And because you are the third person in the last two days to express interest in the product, the AI retail identifies a trend and orders a few more of the jackets in popular sizes while informing the marketing AI to spread the word.

This scenario by 2026 could very well become a reality as the ever-expanding impact of IoT technology becomes pervasive. In fact, according to research done by McKinsey, by 2025, IoT is projected to have a value impact on retail somewhere between $410 billion and $1.2 trillion USD.

Go, Go, Gone Are Cashiers

Automatic checkout, which frees customers from the drudgery of waiting to pay is already here. Amazon first introduced the concept in 2016 with its initial Go store in Seattle. To date, Go has 13 stores, 4 more on the way, and up to 3,000 potentially planned for construction by 2021. The New York Times recently described the Go shopping experience as a combination of “shoplifting” and going through a turnstyle to enter the subway.

How does it work? Visitors to a Go store scan a QR code using their smartphones. The AI does the rest with cameras tracking customer movement down the aisles, while weight sensors built into the shelves track movements of inventory. Just grab what you want, drop it into your backpack and head home. As you leave the Go store sensors aggregate the cost of your purchases and automatically charge them to your Amazon account.

This is frictionless shopping with no long lines, and no cashiers. Staff requirements are reduced with the only employees currently in these stores being an individual who checks IDs in the liquor section.

How much can retailers who adopt this technology save? McKinsey estimates automated checkout will reduce retailer overhead costs by $150 to $380 billion USD annually by 2025.

That’s why Amazon isn’t the only company looking at a cashierless future. San Francisco-based startup v7labs, for instance, is helping any retail store to make this transition. And Alibaba’s cashierless Hema stores have been testing the concept in China a full two years ahead of Amazon’s Seattle site. And two other startups, AiFi and Grabango, are developing autonomous systems for retailers to compete with Amazon.

Smart shelf technology already exists employing RFID (radio frequency identification) tags and weight sensors to detect an item’s removal. This innovation deters theft, automates restocking, and ensures inventory is maintained in the right spot. Intel’s version operating today uses a screen built into the shelf. Tomorrow, smart shelves will be AI-enhanced and capable of conversing with consumers and employees. Is the sweater you’re holding dry clean only? Just ask the shelf.

Perhaps the biggest improvement for retail will come in the area of efficiency, particularly supply chain management. Back in 2015, a Cisco study found that IoT solutions will have impact supply chain and logistics yielding $1.9 trillion USD in savings. The use of AI will provide data pattern detection at a sophisticated level that humans cannot equal. Every link in the supply chain, inventory levels, supplier quality, demand forecasting, production planning, transportation management, and more will be impacted.

How far away are we from this supply chain and logistics overhaul? Today, 70% of retail and manufacturing companies digitize every aspect of their logistics operations, and they are doing this even before robots arrive to further alter the retail experience.

Retail’s Last Hope: The Experience Economy

In an article appearing in the Harvard Business Review, entitled “Welcome to the Experience Economy,” author Joseph Pine describes 200 years of economic development using a curious metric, the birthday cake.

In the agrarian economy, mothers made birthday cakes from scratch, mixing the products produced by farms including flour, sugar, butter, and eggs. The cost of these commodities amounted to dimes. As the industrial economy advanced, mothers started paying a dollar or two to purchase Betty Crocker’s premixed ingredients. Later, as the service economy took hold, busy moms and dads ordered cakes from a local bakery or grocery store at a $10 to $15 cost, ten times as much as the packaged ingredients. By the 1990s, time-starved parents stopped making the birthday cake and even throwing the party, and instead outsourced the entire event, spending $100 or more at places like Chuck E. Cheese’s, the Discovery Zone, the Mining Company, or some other site that staged event for kids, often throwing in the birthday cake for free.

Welcome to the emerging experience economy. By replacing premade ingredients with premade experiences, the experience economy is a new kind of disruptive business model satisfying a new need. For most of history, we didn’t want pre-packaged experiences because life itself was the experience. Just staying safe, warm, and fed was adventure enough. Technology has changed that equation and retailers are capitalizing on this.

Today, for many of us experiences have become more valuable than possessions. Look at the Starbucks experience turning the drinking of coffee into a destination event. Outdoor retailer Cabela’s has turned its showrooms into faux outdoor adventures complete with waterfalls.

Consider the 10-year vision of the Westfield shopping center group in something they call “Destination 2028.“ Replete with hanging sensory gardens, smart changing rooms, and mindfulness workshops, Westfield proposes shopping centers that will be a “hyper-connected micro-city” with an incredible amount of personalization. Combining entertainment, wellness, learning, and personalized product-matching, Westfield aims to make you a better you, and the company is betting that this will be worth the inconvenience of having to leave home to shop.

This is a big bet. In the United States, there are more than 1,100 malls and 40,000 shopping centers. Minnesota’s Mall of America is a small town, spanning 5.6 million square feet and housing 500 stores. China’s largest mall covers over 7 million square feet, bigger than the Pentagon. Through an upgraded experience economy these malls may have a chance of surviving the bricks-and-mortar decline.

If Destination 2028 does the job, malls will be very different from what you see today and retail will become a convergent industry, where time spent in a mall pays multiple dividends. Shopping will become healthcare, will become entertainment, and will become education and so forth. If not then our malls will become distant memories as shopping becomes another task outsourced to AI.