In some ways, it feels like the future is now upon us: After years of hype that didn’t quite materialize, AI has arrived with a bang, and it’s already benefiting almost every sector of both B2B and B2C business operations—and yes, you can say it’s living up to the hype. But for the revolutionary new tech and its potential, particularly generative AI, things are just getting started. And with that future-is-now mindset, new research from payments and shopping service Klarna takes a look at what we can reasonably expect the retail landscape to look like in less than 20 years, when Gen Z hits its 40s and, along with Millennials, dominates retail spending power.
The firm’s new Future of Retail report—with input from retail expert Kate Hardcastle, MBE, aka the Customer Whisperer, and future-gazing predictions from some of the world’s leading retailers, along with ChatGPT, OpenAI’s trailblazing GAI chatbot that is ushering business and retail into a new era—reveals how retailers will need to adapt their offering to win shoppers in the future, when AI, AR and robots are likely to dominate both the in-store and online landscape and integrating AI personalization into their products.
“Retail and shopping trends have evolved significantly over the last decade and it’s clear there are more changes to come,” said Hardcastle, in a news release. “Technologies like augmented reality have the potential to transform rundown physical shops and revamp the in-store experience for shoppers. Klarna’s latest research shows that consumers want greater convenience and a more personalized shopping experience—and seamless technology must be at the heart of this.”
The firm also surveyed more than 5,000 consumers across 5 countries, examining shopping habits 18 years from now, when Gen Zers will turn 40. Results revealed their predictions on how emerging technologies will influence future shopping experiences.
The study’s predictions include:
More personalization is top of the wishlist
About two-thirds (65 percent) of those surveyed want the shopping experience to become more personalized in the future, and 36 percent are sure it will be, both in-store and online.
“In the western world, approximately 80 percent of all online purchases are made through search, while the remaining 20 percent are based on personalized recommendations. In contrast, in China, 80 percent of online purchases are driven by personalized recommendations,” said David Sandström, chief marketing officer at Klarna, in the release. “This study confirms that shoppers in the western world desire a comparable shopping experience. The next generation of consumers will expect a highly personalized shopping experience where products find them instead of the other way around.”
Most fashion shoppers won’t try clothes on physically
Only half believe they will try clothes in the same way as today (53 percent). Instead, 48 percent want to use virtual dressing rooms, 28 percent AR, and 23 percent will rely on AI to advise which clothes best fit their body and fashion style.
Well-mannered robot fashion advisors and virtual personal shopping assistants are in high demand
More than half (59 percent) are open to the idea of a robot approaching them in-store to take their measurements and recommend styles, with an additional 18 percent considering it depending on how the robot looks and behaves. In addition, 34 percent want access to virtual ‘personal shoppers’ which can provide recommendations based on their fashion style and taste when they shop online
Augmented reality will elevate the future in-store shopping experience
The vast majority (81 percent) expect AR to enhance their in-store shopping experience and one-third (37 percent) think that this technology will eventually become standard across retail stores.
Virtual reality won’t replace the real-life shopping experience
Less than half of Gen Z’ers (43 percent) believe that shopping in VR will come to surpass the real-life shopping experience within the next two decades.
The future is cashless
Gen Z’ers and Millennials (64 percent) agree with the prediction that the majority of physical stores will be completely cash-free in 18 years time, and 31 percent of them believe that shift will take place already in 5 years time.
In addition to technological advancements, the future of the planet and the growth in the circular economy are also at the forefront of consumers’ minds. The younger generations also agree that the circular economy should take a larger share of the total shopping industry and that fashion needs to become more sustainability oriented in the future:
- 52 percent want more sustainable fashion in the future.
- 57 percent want the circular economy to take a larger share of the total shopping industry, and 1 in 3 believe they will sell (26 percent) and buy (37 percent) pre-owned items more often.
ChatGPT commented: “The biggest change for consumers when they shop in 2041 will likely be the widespread use of augmented reality (AR) and virtual reality (VR) technologies, allowing them to virtually try on products and experience them before making a purchase. Additionally, personalized recommendations based on their past behavior and preferences will become even more accurate and prevalent, making shopping experiences more efficient and tailored to individual needs.”
Klarna conducted an online survey in cooperation with research agency Dynata across 5 countries (the US, UK, Germany, France and Sweden) in April 2023, including a minimum of 1,000 respondents in each country. The sample sizes are nationally representative, naturally including both Klarna users and non-Klarna users, and have been selected by Dynata. In total, 5,055 consumers participated in the study, out of which 1,108 were from the US.