How the Fourth Industrial Revolution Shapes the Retail Industry

It seems to almost happen overnight, the Fourth Industrial Revolution. “Something’s coming. It’s picking up speed and will overtake most of us in the coming years. Industries will be disrupted, lifestyles will be altered, economics will be shattered as this revolution takes hold”, according to a press release by the Digital Journal.

The revolution started almost unnoticed, very quiet and extremely swiftly. It’s also clean, unlike the first industrial revolution that was noisy, dirty and very slowly – just imagine the coal gobbling steam engines, 3 centuries ago…

Don’t make any mistake. The 4th Industrial Revolution wouldn’t have happened without the 1st (coal); the 2nd (oil and electricity) and the 3rd (internet technology and clean energy) Industrial Revolutions.

However, the Fourth Industrial Revolution is busy happening right now and it’s having a profound effect on our businesses and our lives. Indeed, the Fourth Industrial Revolution and the future of core technology trend are expected to result in an all-new era of automated industries 1.

Also, the retail industry and its customers are already part and parcel of this revolution.

So what is the Fourth Industrial Revolution?

The internet and Information Communication Technology (ICT) have facilitated the advent of cyber-physical Internet-based systems.  These systems offer innovative capacities that can benefit industry and other economic sectors. This phenomenon is happening now and is known as the 4th Industrial Revolution.

The Fourth Industrial Revolution is a fusion of all current technologies to create a cyber-physical system 1.

Floridi 3 (2014) explains the 4th Industrial Revolution as a space where smart and autonomous agents no longer need to be human.  Therefore, a society that’s fully dependent on third-order technologies and thus are human-independent. Here, learned machines that communicate with each other, are taking over the thinking and doing of humans…

Or, as Oosthuizen 2 (2016) recently described it: “Consider the possibilities of mobile devices connecting billions of people driving unparalleled processing power, storage capabilities and access to knowledge. In addition, the overwhelming convergence of emergent technology such as, among others, artificial intelligence (AI), robotics, the internet of things (IoT), autonomous vehicles, 3D printing, nanotechnology, biotechnology, materials science, energy storage and quantum computing.”

The retail industry is one of the spaces in business that the 4th Industrial Revolution is seen working and it is experienced by many.

How the Fourth Industrial Revolution shapes the retail industry

The World Economic Forum 4 (2015) identified six software and services mega-trends which are shaping society:

People and the internet

How people connect with others, information and the world around them is being transformed through a combination of technologies. Wearable and implantable technologies will enhance people’s “digital presence”, allowing them to interact with objects and one another in new ways.

Bricks2Clicks recently discussed how the multi-purposed smartphones of customers that are AI empowered can help them to connect, communicate, recognize and experience the digital world of the 4th Industrial revolution.

Computing, communications and storage everywhere

The continued rapid decline in the size and cost of computing and connectivity technologies is driving an exponential growth in the potential to access and leverage the internet. This will lead to ubiquitous computing power being available, where everyone has access to a supercomputer in their pocket, with nearly unlimited storage capacity.

The use of the mobile smartphone has grown exponentially since its introduction a decade ago. In fact, just over 36 percent of the world’s population is projected to use a smartphone by 2018, up from about 10 percent in 2011, according to Statista. For retailers the growth in use of smartphones by their customers may result in opportunities and threats. Read more: Bricks and Mortar Retailers Need To Be Smart With Smartphone Customers.

The Internet of Things (IOT)

Smaller, cheaper and smarter sensors are being introduced – in homes, clothes and accessories, cities, transport and energy networks, as well as manufacturing processes.

“Connected devices and products provide retailers with the opportunity to help optimize operations in the face of a more complex supply chain. That’s  increasingly important for digital channels, and a more demanding customers.  By utilizing the IOT, managers can track inventory more easily, and adjusting pricing in real time using smart tags”, says Douw G Steyn (Bricks2Clicks).

Artificial intelligence (AI) and big data

Exponential digitization creates exponentially more data – about everything and everyone. In parallel, the sophistication of the problems software can address, and the ability for software to learn and evolve itself, is advancing rapidly. This is built on the rise of big data for decision-making, and the influence that AI and robotics are starting to have on decision-making and jobs.

Retailers will have to decide where and when Artificial Intelligence has the potential to replace human intelligence. Cost and scale will drive these decisions. Future decisions about AI by retailers will probably be about the ethics of using the technology and the effect it may have on society. Further reading: Artificial Intelligence – Digital Outcomes or Digital Disruptions for Retailers?

The sharing economy and distributed trust

The internet is driving a shift towards networks and platform-based social and economic models. As a result, assets can be shared, creating not just new efficiencies but also whole new business models and opportunities for social self-organization. The Blockchain, an emerging technology, replaces the need for third-party institutions to provide trust for financial, contract and voting activities.

Here we are talking about crypto-currencies such as Bitcoin. “There is the potential for a lot of demand for crypto-currencies from a consumer perspective. But right now it’s a pretty complex process to set up a digital wallet, gain access to a crypto-currency exchange, and start buying up coins”, according to Nikki Baird (Forbes).

The digitization of matter

Physical objects are “printed” from raw materials via additive, or 3D, printing, a process that transforms industrial manufacturing. Consequently it allows for printing products at home and creates a whole set of human health opportunities.

3D printing technology for retailers is now emerging as an outcome for small localized retailers that are facing closure. However, as it is with most disruptive technologies, the advantages that 3D printing offer for retailers should be weighed against its potential pitfalls. Read more: 3D Printing Technology for Retailers – An Opportunity or a Waste of Money?

Conclusion

The 4th Industrial Revolution is not only about digital technology and gadgets, but also about us. How should we prepare ourselves and our children to survive and prosper in this digital, robotic and information rich space? And what about retail? Not only need the structure, operations and organisational cultures change at retailers, but retailers also need extraordinary leaders (Read: Success in the Digital Age Requires Extraordinary Retail Leaders).

The last words are from Albert Einstein: “The distinction between the past, present and future is only a stubbornly persistent illusion.”

Notes

1 Chung, M. and Kim, J. 2016. The Internet Information and Technology Research Directions based on the Fourth Industrial Revolution, KSII Transactions on Internet & Information Systems, 10(3):1311-1320.

2 Oosthuizen, J.H. 2016. Entrepreneurial intelligence: expanding Schwab’s four-type intelligence proposition to meaningfully address the challenges of the fourth industrial revolution. In proceedings of 28th Annual Conference of the Southern African Institute of Management Scientists, University of Pretoria, South Africa.

3 Luciano Floridi 2014. The Fourth Revolution, How the Infosphere is Reshaping Human Reality, Oxford University Press, USA.

4 World Economic Forum 2015. Deep Shift: Technology Tipping Points and Societal Impact, Global Agenda Council on the Future of Software & Society, Survey Report, World Economic Forum, Geneva, Switzerland.

Images

c1.staticflickr.com and pixabay.com

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