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The New Retail-Tech Landscape

What can we learn about the future of retail from the tech landscape in Israel?

New consumer behaviours and new technologies have caused the entire market to shift. With the rapid acceleration of digital adoption over the past twelve months, consumer preferences for personalisation, convenience, and service have grown - with the demand for channels such as e-commerce, mobile shopping, streaming content and social media addressing new consumer needs.

In tandem, fluctuation in demand and disruption of manufacturing and shipping capabilities have caused instability in supply chains. In some cases, these recent changes have accelerated trends that we have been tracking for years. In other cases, long-term trends have been halted or reversed.

While the business environment rapidly changes, retailers must leverage different assets to maintain and increase competitive relevancy. Many of the successful players are using technology as a key lever, now more than ever.

Global inspiration: Israel as a hub for new technologies

Israel (a.k.a. The Startup Nation) is an entrepreneurial powerhouse and a home for pioneering technologies, profitable business opportunities and high investment returns.

The Israeli start-up ecosystem consists of a vibrant and diverse pool of retail-tech companies. The 460 retail tech start-ups in Israel have collectively raised more than $1.5B in equity investment and a large pool of active Venture Capital firms, Labs, Accelerators & Hubs nurture, support and invest in these companies.

So what can retailers learn from one of the hottest innovation and technology hubs in the world?

This report covers seven trends shaping the future of retail and explores how technologies in Israel are being used to address global retail trends.

Key Trends

  1. Commoditisation and Premiumisation
    As a brand facing commoditisation, you can no longer rely solely on brand value or product qualities. Focus on connecting with consumers. Get to know their product, channel, and service preferences and deliver experience to support your products.
  2. Digital Success Grows Elusive and Ad Spending Rises
    Getting online is necessary for growth but can erode margins, increased spending digital advertising contributes to this. To become more profitable, retailers and brands should focus on increasing conversions on digital assets, reducing costs when fulfilling online orders, and making digital ad spending more efficient.
  3. Bricks & Mortar Become Smaller and Closer
    The physical store can still add value. However, the store will need to play different roles. It can function partially as a fulfillment center, or part of an omni-channel shopping journey by showrooming products. New experiential activities can increase shopper engagement and connection to the brand.
  4. New Models Growing Impact
    The binary choice between traditional e-commerce and brick and mortal retail does not meet many consumers’ needs. Alternative shopping, purchase, and fulfillment models should be explored, such as social shopping, buy online pick-up-in store, delivery lockers, subscription models, rentals, and easy returns.
  5. Convenience as the New Battleground
    Retailers can win by providing consumer's access to what they want, when they want it, quickly and conveniently. In physical points of sale, this can mean reconfiguring the store and keeping shelves stocked for speedier shopping and check-out. For digital channels, this can mean better search and filtering tools and more flexible delivery options.
  6. Health & Sustainability
    Beyond simply producing healthier products, brands can address consumer demands for health and sustainability by finding solutions to make manufacturing and the value chain more sustainable, and then share this information with their customers.
  7. Volatile Supply Chain
    Demand planning and supply chain decisions can no longer be based on historical data, but rather must be identified in real-time as the market shifts. Manufacturing and supply chain processes must be flexible enough to respond to unpredicted changes quickly.


The New Retail Tech Landscape Map

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