An outline of eight technologies that are expected to disrupt the retail and consumer packaged goods in the near future.


In the days leading up to the World Economic Forum (WEF) Annual Meeting, which began in Davos, Switzerland, yesterday, 17 January 2017, the WEF published a report, Shaping the Future of Retail for Consumer Industries.  The report seeks to highlight key forces that will shape the retail and consumer packaged goods into the future, specifically over the next 10 years.

For those who are not familiar with the term, consumer packaged goods (CPG) are consumable products, such as food and beverages, footwear and apparel, tobacco, and cleaning products (Source: TechTarget). Hence, matters related to the supply chain for those goods is also expected to be change significantly in the next few years.

In addition to a more empowered consumer  and the implementation of transformative business models, the WEF identified disruptive technologies as factors that are going to change the retail and CPG industries. Below, we highlight those eight technologies, and verbatim from the WEF, some of the ways they will alter retail and CPG.

1. Internet of Things

The Internet of things (IoT), which speaks to the interconnection of devices via the Internet, is not yet at a stage where it is expected to truly have the impact envisaged. However, in the next two to five  years below are a few of the ways IoT is expected to transform the retail and CPG industries:

  • Enhanced customer experience via personalized service offerings that adapt to individual needs
  • Device data can provide a 360-degree view of the customer
  • Enabling new purchasing channels by automating product purchase via subscription refill and//or providing new channels to discover, research and purchase products directly.

2. Autonomous vehicles (AV)/ drones

Drones, also known as unmanned aerial vehicles, have become quite popular, both among individuals and businesses, and is being used in limited circumstances by select retailers. Autonomous vehicles, also know as self-driving cars, are currently being piloted in a few cities in some developed countries; but it is still years away from mainstream acceptance. However, in the next six to 10 years, the WEF predicts that autonomous vehicles and drones will be used to:

  • Reduced operating costs in transporting people and goods
  • Enhanced productivity from continuous operations
  • Increased fuel efficiency and use of alternative energy sources, specifically for autonomous vehicles

3. Artificial intelligence (AI)/ machine learning

Although we have been hearing about artificial intelligence and machine learning for decades, according to the WEF, it will still be another two to five  years before the technology is at full readiness. However, below are some of the ways artificial intelligence and machine learning are expected to transform retail and CPG:

  • Foundational technology for disruptive trends (e.g. autonomous vehicles)
  • Removes need for human involvement in routine and predictability tasks
  • Greater precision, accuracy and speed when conducting tasks.

4. Robotics

Similar to artificial intelligences, the existence of robots has been part of our psyche for decades. Although robots are being used extensively in manufacturing, they are expected to have an impact in the retail and CPG industries in the following ways:

  • Reduced operating costs through the automation and optimisation of commoditised tasks
  • Increased utilisation by operating up to 24/7
  • Enhanced customer service experience by allowing store staff to focus on customers
  • Speed in performing simple and structure repetitive tasks at faster rates via software bots.

5. Digital traceability

Typically, digital traceability refers to the creation of a common digital language for supply chain traceability (Source:  Global Food Safety Resource). Although traceability is frequently mention with respect to food, for example farm-to-table, and fair trade produce, it also important in the production and supply of other products, especially in relation to quality control. At this point, the state of digital traceability is still two to five years away from being ready for the retail and CPG industries, at which point it is expected to have the following impact:

  • Increased accountability on supplier quality, as all product elements are traced back to suppliers
  • Quicker responses to food safety situations, drastically reducing the risk of consumer backlash
  • Real-time analytics enables timed offers and circumstantial pricing, which can lead to revenue uplift.

6. 3D printing

Over the past two years, 3D printing has been discussed extensively in the media. Currently, 3D printing machines are available, but not yet priced within the reach of the typical home or office. Accordingly it is expected to be another six to 10 year before 3D printing is used extensively in retail and CPG, and having the following impact:

  • Moves production closer to the end consumer, minimising movement of commonly available raw materials and increasing product customisation
  • Reduces response time to shifting consumer preferences by enabling on-demand production
  • Creates new retail and at-home models based on capability to manufacture flexibility at a small scale
  • Enables product customisation, from appearance and packaging, to flavour and nutritional content.

7. Augmented reality/virtual reality

Augmented reality (AR) and virtual reality (VR) was all the rage in 2016, with a few simple mass consumer devices being released, and more yet to come. However, within the next two to five years, AR and VR are expected to play an important role in retail and CPG in the following ways:

  • Alternative purchase channels provide a new way for customers to discover and evaluate products
  • Ease of access for customer via on-demand shopping, helping tham avoid physical-store trips
  • Limitless access for experiencing products through ‘endless aisles’.

8. Blockchain

Blockchain might be new to most, but according to Don & Alex Tapscott, authors Blockchain Revolution (2016), “the blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value” (Source: BlockGeeks). As one of the newer technologies, it is still between six and 10 years from being fully developed, at which time it is expected to be used in retail and CPG in the following ways:

  • Secure decentralised digitalisation of assets and transactions
  • Complete audit trail for purchased products and/or materials
  • Process digitalisation/automation, e.g. instantaneous settlement
  • Risk mitigation in settlements, counterparties, operations and points of failure

In summary, and according to the WEF, the above technologies are not only expected to disrupt the retail and CPG industries, but open up a broad range of opportunities. However, ultimately, they will “fundamentally change some aspect of the end-to-end value chain and redefine the core operations of the retail and CPG industries” (Source:  WEF).

 

Image credit:  Mr. Muggles (flickr)

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