Prediction

Shopping has always followed a fascinating path. From street peddlers to mega malls, pop-ups, and eCommerce, it continues to diverge and evolve in unexpected and often delightful ways.

Despite predictions that brick-and-mortar stores would disappear by the 2020s, they're alive and well in 2040. Technologies have undoubtedly changed physical retail spaces and consumer behavior in significant ways. Yet certain aspects, like the desire for a local touch, endure. And while for decades, buying power was considered the key to driving change, the 20s and 30s saw an increase in consumer demand for sustainably-produced local goods.

Some experts point to the post-pandemic growth in the 2020s of SMEs as a major reason the retail sector remains strong. Another significant drive has been the increase in conscious consumerism, with consumers in the 2040s more aware than ever of what they're buying. Shoppers are no longer driven solely by where and how a product is made. Instead, from production to shopping cart, the full supply chain is considered essential to delivering exceptional customer experiences.

Why did this happen?

Those who study the retail industry say the rise of transparency and locality have driven retail growth over the past two decades. Ease of delivery and a lower environmental footprint have also been critical factors.

Most significantly, SMEs' increased access to innovative technologies has opened consumers to an unlimited number of choices. AI has simplified back-office operations, while blockchain has increased the transparency of a product's source. Drones deliver items to customers quickly, their affordability enabling smaller local businesses to compete with bigger players effectively.

How did the industry reach this point? It began with the COVID-19 lockdowns that severely impacted offline service industries, including food services, entertainment, healthcare, and non-food retail. Consumers had no choice but to become more self-sufficient, which led to a rise in technologies such as blockchain, AI, and distributed power systems that dramatically changed how people received and tracked their goods and services.

In 2040, these technologies have become mainstream. Online healthcare, food and medicine-delivering robots, and blockchain-based monitoring solutions are all part of a digital ecosystem that lets SMEs expand into emerging markets and reach customers more cost-effectively.

Impact

Today, digital connectivity and skills, both disruptive technologies in their own right, have become critical in the adoption of even broader revolutionary technologies. They're behind ever-greater transformations in employment and are helping to make it easier for governments and private investors to support local ventures. This represents a huge shift from the 2020 landscape when a handful of mega-corporations dominated and controlled the global economy.

Greater regulation has over the years reigned in corporate power, fostering frameworks that advance economic equality and liberty for all. Regional SMEs now enjoy increased political clout, with domestic companies focused on serving their local markets to become more prosperous and generate taxes for their domestic governments. In the retail sector specifically, eCommerce platforms now exclusively serve customers directly and have broadened their product lines to essential goods and services in the food, well-being, and entertainment sectors. AR apps are replicating the physical world online, and a more secure eCommerce experience has made everyday transactions in banking, investment, and more possible.

Lastly, local SaaS businesses, including cloud, accounting, and human resource providers, are making their databases and services available to governments for everything from information dissemination to disaster recovery. Often referred to as impact-as-a-service, companies now use technology to help solve local issues like poverty, hunger, education, and economic growth.

SMEs traditionally thrive in environments that focus on local communities, people, and sustainability. Lower barriers to entry allow small-scale retailers and manufacturers in local communities, neighborhoods, and villages to easily take advantage of digital marketplaces and platforms to reach both regional and global markets for their products and services. And as they continue to embrace transparency, businesses of all sizes are discovering how it helps build customer trust and loyalty, ultimately leading to a more robust bottom line.

  

Authors

Stefanie Lentfert

Stefanie Lentfert

KPMG in Netherlands

Arathi Suresh

Arathi Suresh

University of Leeds

    

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