Future of Retail: Technological Adaptations for Future Effectiveness - JB Hi-Fi Case Study

The retail industry in Australia is exposed to several challenges presently due to various changes in demographic factors like preferences of customers, expectations of more value and experiential elements during shopping. Other factors that are affecting retailing in Australia are rise of pressure from international retail chains and evolving shift to e-commerce retailers. In this report case of JB- Hi-Fi is illustrated to interpret the future changes where their in-stores layout and process both needs to be integrated with technological platforms such as Advanced analytics for better customer learning and certainty to predict trends to deliver needs.

Running head: FUTURE OF RETAIL
E-business
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Executive Summary
The retail industry in Australia is exposed to several challenges presently due to various changes
in demographic factors like preferences of customers, expectations of more value and
experiential elements during shopping. Other factors that are affecting retailing in Australia are
rise of pressure from international retail chains and evolving shift to e-commerce retailers.
Altogether these attributes have emerged the need for retail scenario in Australia to evolve to
adapt to new changes so as to survive in future. In this report case of JB- Hi-Fi is illustrated to
interpret the future changes where their in-stores layout and process both needs to be integrated
with technological platforms such as Advanced analytics for better customer learning and
certainty to predict trends to deliver needs. Also JB Hi-Fi needs to integrate with modern
technologies like IoT to deliver more user friendly services and value experiences in their stores
so as to attract the new age customers. In this report a detailed discussion is made to understand
destructive innovation in retail and some recommendations are given for better future
effectiveness of JB Hi-Fi.
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Contents
Executive Summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
Discussion....................................................................................................................................................4
Conclusion and Recommendation...............................................................................................................8
References.................................................................................................................................................10
Appendices................................................................................................................................................12
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Introduction
In this report the future of retail business is discussed specifically focusing on markets of
Australia by taking the case study of JB Hi-Fi which is one of the leading retailers in the region.
The report describes the present scenario and change in customer expectations and demographics
showcasing some technological adaptations that will improve future effectiveness of retail.
Finally some recommendations are provided for integration with internet technology that will
leverage benefits.
Discussion
Retailers who have come out successfully from the evolving hard blow waves that is impacting
retail industry in Australia have realised that to survive the tide they need to re-invent and re-
structure their physical outlets and supply chains networks to meet evolving needs of digital
savvy consumers. With more advances in future, competitive pressure from international
retailers and rapid growth of e-commerce, the future of physical retail stores is less clear as it is
evident that they would be dead if not prepared to adapt to changes. This is due to the fact that
digitalisation and technology advances that has mopped up from books, music and travel has
now taken a blow to equally stride a chill through all retail groups. As known around one third of
traditional retail stores have closed and Amazon has crossed over 50% mark of their share in e-
commerce markets (Research and markets 2012). Another reality is that for retail industry the
propensity of millennial and Gen Z has taken priority and both these demographic categories
have largely moved from experiencing products within in-stores to ordering at online stores.
According to Research and markets (2012) this is because of the fact that their behaviour has
changed due to smartphone and wearable devices which offer personalised assistance from
virtual agents and this has shown its impact even on retail as this high priority consumer group is
more technology and convenience inclined over being price sensitive. The millennial group in
particular is currently ruling retail industry and have overtaken baby boomers and their
population is expected to rise to 80 million by 2025 due to demographic change and increased
immigrations. The millennial initiated mass disruption in retail industry and this digital savvy
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group with high spending power are armed with huge information accumulated over various
online platforms and social networks.
As stated by Bailey (2016) the emerging group of millennial have characterised flair for
convenience as they expect easier and effortless retail shopping. They expect advanced
technology to be utilised from the time they initiate searching products, to purchase, shipping
and delivery. Hence in future convenience, distribution of experiences will be accelerated and
with rise of innovation payment gateways the power of technology will boost giving rise to
future facilities like mobile checkout, evolving fulfilment technology centres such as airborne
warehouses. Moreover the millennial customers prefer visual and experiential retail as they
expect not only captivating and connected shopping but also expect more fun, moment creating
experiences which should be supported through technologies like augmented reality (AR).
Further they dislike conventional sales event and promotions. According to Market Research
Reports (2013) in future millennial who face time crisis will respond to time saving deals that
will impact majorly the sales promotions of retailers. As such retailers need to integrate with
technology and machine analytics to incorporate digital promotions that can be communicated 1-
to-1 in real time through mobile phones both in-store and online. As a result stores sales
promotions in future would become largely personal and instant like for instance as customers
enter a store, they would be receiving alerts for price breaks on products they purchase
frequently or browse online. In future retailers would be using in-store or offline avenues to
provide instant discounts on slow moving items. As stated by Baxendale, Macdonald and
Wilson,(2015) further in future the millennial will show greater enthusiasm for content and a
larger appealing content will be necessary for retailers to instantly catch attention of millennial as
the attention spans are collapsing a lot now. So in future retailers in order to remain successful
will have to focus on customised contents such as for instance retailers would need to collate
images, video and texts related to products or offers and then share them with shoppers who will
be followers on social media pages through Snapchat stories etc.
According to Ferraro, Danaher, Danaher and Sands (2017) the disruption fashioned by
Millennial is further elaborated through customers of Generation Z which refers to those who
were born after mid-90’s and are often said to be iGeneration. These set of consumers are largely
occupied with technology and are digital native. They too are overtaking retail priority after
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significant Millennial and Generation Z are imposing competitive landscape and reshaping retail
with omni channels. As most of the shoppers no longer have an emotional connect with retailers
now through in-person purchases so this behaviour is further going to be accelerated with Gen Z
in future. According to O'Cass and Carlson (2012) around 50% of these set of Gen z consumers
are reported to buy online at least once a month. And once this Gen Z will have their individual
spending power in future with larger access to funds then this figure of trend is expected to rise
significantly, far outpacing the online purchase activity of Millennial. Today most of the retail
consumers already exert a choice for convenience and exceptional personal value and these
trends will become even more pressing for Gen Z and this reality points out their expectations to
clearly demonstrate where the retail industry would move in future and what a true retail
experience needs to be. Hence to survive this transformation in retail they need to embrace
digital and conceive ways to serve and meet customer need so as to make the physical stores
livelier to deliver an immersive experience. The dependency on sensors to seize and evaluate
data in real time and borderline between online and offline shopping has already dimmed. So to
exploit more opportunities in future the retailers need to understand what the customer’s desire
and expect more clearly and with high level of certainty to remain effective. As opined by Colton
(2012) he physical and online stores in future would become phy-gital where there will be no
longer distinctiveness between physical and online stores and no longer in future customers
would debate about the benefits of one or another as both will merge and shared. Like for
instance the future retail stores will be those that would allow customers to be self and respect
their needs and demands to indulge more on snapping photos, taking videos and sharing their
experiences. So in future social media like Facebook, Instagram etc will be ingrained with buy
options as that will become largely lucrative and they will be extending to e-commerce
programs. More shoppable images on products and labels will be posted on Instagram,
Facebook etc thus sooner or later taking customers to a shop now option and next to the brand’s
webpage so as to finish the purchase transactions.
Operations of JB-HIFI
JB Hi-FI is among the biggest retail business operating in Australia and is one of the most
credible brands among customers. Their current business includes operating around 303 stores
under name JB Hi-Fi and JB Hi-Fi Home across territories of Australia and New Zealand. Within
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Australasia JB-HI-FI operates with six locations that include Melbourne, Sydney, Hobart,
Brisbane, Perth and Auckland. Further within Australia JB HI-FI inaugurated another 6 new
outlets and in New Zealand 1 new store was launched in year 2017 (JB hi fi ltd 2017). Moreover
after acquiring The Good Guys, JB Hi-Fi operated another 103 stores and post acquisition 1 new
The Good Guys outlet was opened. There are nearly 102 The Good Guys outlets operating since
2017. Their business does not operate directly out of the JB Hi-Fi stores and currently more
focus is leveraged on extending their store network to support delivery and pick up of goods
from any outlet across Australia.
Technological adaptation for future effectiveness
According to Rao and De' (2015) as digitalisation has already rephrased the rules of competitive
landscape for retail function so adaptation with more advances in technology is likely to maintain
future effectiveness. Also integration and collaboration is the new disposition of current retailing
changes where even supply chain operations of JB Hi-Fi need to be effectively integrated with
technology so as to remain connected with automated elements such as inventory, logistics and
fleet management systems. Already airborne fulfilment centres and drone delivery have sealed
the gap of new retail definition. Hence in future there are likely more expectations and JB Hi-Fi
stores have to re-imagine themselves with technology to respond to customers. According to
Häikiö and Koivumäki (2016) by year 2025 physical outlets will need a strong reason to exist as
digital interactions will replace many conventional interchanges and by 2020 customers will
begin managing 85% of their relationship with retail or other business without interacting with
human. Moreover the demand for larger physical store spaces will drop down as improvement in
logistics for online deliver and click and collect archetype will minimise the requirement to keep
entire inventories in stock at all stores. Also as real estate prices currently make no economic
sensitivity and leases reach to end dates so more of JB Hi-Fi physical outlets in future would be
transformed into retail fulfilment points or used for other functions. And embracing the store-to-
warehouse tendency will add leverage to supply chain and capacitate delivery time, but stores
lower space requirements will overcome the pressure to become more effective and proficient.
According to Bhakoo, Singh and Chia (2015) in future the JB Hi-Fi retail stores will be more
focused on data and analytics that are available till now for e-commerce platforms and will use
these information’s for store decisions. Example, Internet of Things (IoT) will be new
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technology platform for stores with wider usage across store aisles and operations. Equipped
with mechanism like sensors, RFID tags the physical stores will become more effective and
prepared to embrace changes with help of IoT advancements by capturing and evaluating data in
real time. As stated by Pinto, Claudio Dell’Era, Verganti and Bellini (2017) by reckoning the in-
store information to data lakes, JB Hi-Fi in future will be capable to accurately forecast and
foretell customer patterns and demands with more conviction. Each thing from holographic
mirrors to electronic shelf will be adapted and provided IP address as sensors will have large
impact on JB Hi-Fi restructure of outlet designs which will speed their process, enhance
performance and build capabilities. Moreover smart sensors and mirror technology will enhance
sales with use of IoT for innovation. Further JB Hi-Fi can carry sensor technology to next level
with staff free brick and mortar storefronts where stores can be ensemble with sensors that can
recognise pre-registered customers and items they choose and then automatically can initiate
payments. In future stores of JB Hi-Fi can be made advanced with internet and digital integration
that will enable associate free, checkout archetype along with image recognition with high
resolution cameras and machine learning to accurately recognise and deliver items to pre-
registered customers.
Conclusion and Recommendation
Hence it can be concluded that potential for growth and profits in face of retail change is
awaiting for retailers who would focus on onmi channel or unified commerce. Customers who
agilely switch across multi-channels offer more lifetime value over those who engage with only
one. So retail store formats that coincide all elements of physical retail with digital service and e-
commerce platforms will evidently lead the change by satisfactorily delivering a fully integrated
shopping experience with all channels sharing common marketing, merchandising, supply chain
approaches and even data formats. Some recommendations for future effectiveness with focus on
technology for JB Hi-Fi is it can show agility in embracing augmented reality AR for making
their stores more experiential and interactive with in-store smartphone apps that can layer to-do
lists over store map and would enable shoppers click on product reviews and book their orders
for purchase. Further hyper personalised real time promotions particularly enabled with sensor
technology, electronic beacons and AR solutions can be useful for JB Hi-Fi such as Apps can be
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used that can allow stores to connect with shoppers with mobile devices so as to aid them locate
their items and even virtually find expert assistance. These possibilities in future if implemented
by JB Hi-Fi will improve customer experiences by giving them autonomy, sense of controlled
personalised experiences thereby appealing future customers who have huge expectations.
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References
Bailey, M. (2016). Marketing to the big middle: Establishing Australian discount department
stores. Journal of Historical Research in Marketing, [Online] 8(3), 416-433. Available:
https://search.proquest.com/docview/1827620670?accountid=30552 [Accessed on 24 Sep. 2018]
Baxendale, S., Macdonald, E. K. and Wilson, H. N. (2015). The impact of different touchpoints
on brand consideration. Journal of Retailing, [Online] 91(2), 235-253. Available: doi:
http://dx.doi.org/10.1016/j.jretai.2014.12.008 [Accessed on 24 Sep. 2018]
Bhakoo, V., Singh, P. J. and Chia, A. (2015). Supply chain structures shaping portfolio of
technologies. International Journal of Physical Distribution & Logistics Management,[Online]
45(4), 376-399. Available: https://search.proquest.com/docview/1679372847?accountid=30552
[Accessed on 24 Sep. 2018]
Colton, D. A. (2012). The role of retailer mindset and promotional resources in strengthening
online brands. Journal of Brand Management,[Online] 20(1), 28-40. Available:
doi:http://dx.doi.org/10.1057/bm.2012.29 [Accessed on 24 Sep. 2018]
Ferraro, C. R., Danaher, T. S., Danaher, P. J. and Sands, S. J. (2017). The magnitude of change
effect in store remodeling. Journal of Retailing,[Online] 93(4), 440-457. Available:
doi:http://dx.doi.org/10.1016/j.jretai.2017.08.003 [Accessed on 24 Sep. 2018]
Häikiö, J. and Koivumäki, T. (2016). Exploring digital service innovation process through value
creation. Journal of Innovation Management,[Online] 4(2), 96-124. Available:
https://search.proquest.com/docview/1957794904?accountid=30552 [Accessed on 24 Sep. 2018]
JB hi fi ltd (2017). Annual report, 2017. Acquisdata Pty Ltd, Kuching Business Premium
Collection [Online] Available: https://search.proquest.com/docview/1951210775?
accountid=30552 [Accessed on 24 Sep. 2018]
Market Research Reports (2013). The future of retailing in Australia to 2017, new report
launched. M2 Presswire [Online] Available: https://search.proquest.com/docview/1426548308?
accountid=30552 [Accessed on 24 Sep. 2018]
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O'Cass, A. and Carlson, J. (2012). An e-retailing assessment of perceived website-service
innovativeness: Implications for website quality evaluations, trust, loyalty and word of mouth.
Australasian Marketing Journal,[Online] 20(1), 28-36. Available:
https://search.proquest.com/docview/934888033?accountid=30552 [Accessed on 24 Sep. 2018]
Pinto, G. L., Claudio Dell’Era, Verganti, R. and Bellini, E. (2017). Innovation strategies in retail
services: Solutions, experiences and meanings. European Journal of Innovation Management,
[Online] 20(2), 190-209. Available: doi: http://dx.doi.org/10.1108/EJIM-06-2015-0049
[Accessed on 24 Sep. 2018]
Rao, R. A. and De', R. (2015). Technology assimilation through conjunctures - a look at IS use in
retail. Information Systems Frontiers,[Online] 17(1), 31-50. Available: doi:
http://dx.doi.org/10.1007/s10796-014-9510-9 [Accessed on 24 Sep. 2018]
Research and markets (2012). The future of retailing in Australia to 2016 - Australia is one of the
fastest growing countries for online retail. Business Wire [Online] Available:
https://search.proquest.com/docview/1002680461?accountid=30552 [Accessed on 24 Sep. 2018]
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Appendices
Fig 1: Was to attract customers with Beacon technology
Source: Shopify (2018)
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Fig 2: Technology that will impact retail
Source: Tune (2018)
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