Future of Retail #FutureOf

The Future of Retail A presentation by Future Foundation

October 2013 #FutureOf

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Future Foundation specialises in generating actionable

insights about the future

Our mission is to provide

clarity to our clients, reduce

their risk and inspire creativity

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What sets us apart?

Over 100 established and emerging trends

Proprietary consumer research

Network of experts and 200 trendspotters

Trend trajectories help to forecast the size and evolution of opportunities

1000s of commercial examples of trends in action

200+ global clients from all sectors

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Contents

1 | Introduction

2 | A Changing Landscape

3 | The Constants

4 | The Versat-aisle Consumer

5 | Real Lives

6 | Retail Reloaded

7 | Concepts

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1 | Introduction

This report explores some of the key

trends driving the future of retail

across the world.

Using Future Foundation data, we

explore the retail landscape over the

coming decade, and identify the

evolution of consumer trends,

product/service innovations

Each section includes a summary of

the key trends we believe will play a

major role in the path to the future

with examples/ data for some, as well

as implications for brands.

We also provide invented images of

retail concepts that might characterise

the future marketplace as a result of

the shifts we describe.

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2 | A Changing Landscape

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Source: nVision Research | Base: 1,000-5,000 online respondents per country aged 16-64 (Mexico 16-54, Indonesia 16-44), 2013

% who think the state of their own personal finances “will improve” over the next 12 months

minus those who think they “will worsen” | May 2013

Financial optimism is highest in emerging markets.

However, we anticipate no serious weakening in the

price sensitivity of the average and even the

wealthier shopper

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Source: nVision Research | Base: 1,171 online respondents who own a tablet and a smartphone and who shop online, aged 16+, GB, 2013

The global retail landscape is changing: e-commerce is in the ascendancy

Trend in action Global shoppers using shopping apps at

least once a month

2011

17% 2010

14%

2013

19%

“When buying a product or service online,

which of the following platforms do you use

most frequently?” (GB)

Desktop/laptop: 79%

Tablet: 14%

Mobile: 7%

% having recently bought online

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1 | The Constants

Trends to think about:

• Maximising

• Local Preference

• Complaints

• Self-Service

• Aspiration

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Some things never change

There are a number of trends we believe won’t dramatically change in the

medium-term and which will continue to inform and shape the retail landscape

Some brands, especially those offering low-value FMCGs, will continue to derive

marketplace advantage by operating on a no-thrills, maximum-value proposition

A distinct tribe of consumers will eschew technological advances and revel in the

more traditional high street encounter (browsing unassisted, using shopping lists,

paying in person). This is particularly relevant when it comes to complaints –

even the most tech-savvy will demand some level of the human touch

Convenience will remain king - cornershops etc will remain go-to locations for

consumers in need of quick retail fixes or emergency top-ups. Self-service will

evolve to become an intelligent solution, and employees freed from the POS will

act as customer service specialists

While local remains important, its appeal should not be overstated – while

consumers state they want to be involved in their local community, real levels of

engagement are low and this often doesn’t translate into sales

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Bargain hunters are everyone: the majority in most

markets shop around, with few differences across

age / demographics “I shop around extensively to get the best deals”


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% who feel the need “to be involved in the life of the neighbourhood or community”

Source: nVision Research | Base: 1,000 (F2F)-5,000 (online) respondents aged 16+, GB, 2013

1980: 45%

1986: 50% 1999: 50%

2004: 48%

2007: 43%

2011: 45%

2011 online: 34%

2013 online: 38%

Local paradox

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Time is at a premium, bad service is unacceptable

“I have taken my service to

another shop because of poor

customer service”

45%

“I am often under time

pressure in my everyday life”

2010: 41%

2012: 43%

2013: 46%

Source: nVision Research | Base: 1000-5000 online respondents aged 16+, GB, 2013

Source: nVision Research | Base: 5,000 online respondents aged 16+, GB, 2012

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Self-service: a serious proposition

Facial recognition machines (USA)

Pay for items with a Tweet (Ireland)

WiFi-dispensing machines (Japan)

Interactive (Singapore)

Baguette vending machine (France)

24-hour cupcake ATM (USA)

Vending in the early 10s: the future of 21st

century self-service?`

Source: nVision Research | Base: individuals 16+, GB

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1999

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2013

2015

2017

2019

2021

2023

2025

(actual) (forecast)

% in UK preferring to use self service to make a

purchase (rather than speak to someone)

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2 | The Versat-aisle Consumer


• Click & Collect

• Showrooming

• End of Inefficiency

• Computers Learn Human

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The Versat-aisle Consumer

The lines between bricks-and-mortar and online retailing are blurring as

consumers adopt shopping approaches which combine elements of both.

Smartphones and easy access to the mobile internet are playing a central role.

The rise of intelligent algorithms which can make informed, optimised choices

are making it ever easier to discover instantly the best moment to purchase a

deal, the most competitive or value-laden brand/offer, the perfect evening meal

out... Automation will continue to be a crucial element of consumer control.

Every surface and every space has the potential to become interactive - the

ability to deliver experiences as much as display objects for purchase will help

counteract the effects of remorseless competition. In an age when one can buy

anything from pretty well any location, it will become increasingly important to

give consumers a reason to physically engage.

The Click & Collect proposition is spreading rapidly, with retailers finding ever

more instant, interactive and convenient ways to deliver goods to on-the-go and

time-pressured consumers.

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34% 69%

Daily mobile internet usage: rapid acceleration

2013 2020

Source: nVision Research | Base: All individuals 16+, GB, May 2013 forecast

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Future interfaces will talk to customers

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Russia

The new era of click & expect

Source: nVision Research | Base: 1,000-5,000 online respondents per country aged 16-64 (Mexico 16-54), 2012

Interest in “a home delivery service which brings groceries to my

door at precisely the time I prefer”

In September 2013, eBay and Argos announced a partnership that allows

sellers to offer the option of in-store collection for any of their goods. According to

the press release : “At least 50 eBay merchants will participate in this trial,

enabling a wide range of merchandise to be readily available for collection by

customers from around 150 Argos stores in primary locations nationally”.

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In the early 10s, several

supermarkets have

attempted to capture the

interest (and custom) of

commuters through QR

code grocery walls -

including Sorli Discau in

Barcelona, Tesco at

Gatwick Airport, Cencosud

in Santiago and Peapod’s

100 virtual grocery stores at

commuter rail stations in

Boston, Connecticut, New

York, New Jersey,

Philadelphia, Washington

D.C. and Chicago.

As such mechanics become

more sophisticated, will it

encourage more people to

choose their day-to-day

purchases while on the go?

We expect so.

QR shopping: energising the grocery sector

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The Versat-aisle Shopper | Trend Trajectory

Source: nVision | 2013

Low

Medium

High

Now 3 years 10 years 5 years

Intensity

Future direction references the ubiquity of multi-channel retail interactions and the blurring

of the lines between traditional bricks-and-mortar and e-commerce forms of retail

Pace

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Implications for insight

Technology must be the enabler, delivering a supportive yet invisible

service experience

Recognition software must curate added benefits; it cannot be seen

simply as a way for retailers to sell more

Scale efficiencies in using personnel to best effect, applying the human

touch where needed

Use space gained through logistics to deliver enhanced customer

experience

Next generation Click + Collect services will see retailers and retail

spaces partnering in new and innovative ways

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3 | Real Lives


• Collective Individualism

• Smart Boredom

• Mass Customisation

• The Power of Quiet

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Real Lives

Deference towards traditional sources of authority is being re-defined. Growing

numbers of consumers now look towards friends, relatives and colleagues for

advice and (re)views. This is ushering in a culture of social shopping: our

friends and family have become online sales assistants; our social networks

virtual marketplaces where products are evaluated and opinions formed.

The rise of Big Data provides new opportunities for brands to tailor products and

services to the exact preferences/ needs/ previous behaviours of consumers

Consumers want to stand out from the crowd – but they want to fit in at the same

time. We call this desire not to be too different ‘unique belonging’ – and it plays

an important role in brand/ consumer relationships. Expert advice and

recommendation still reign, even in a context of growing consumer control

(Future Foundation’s book The Big Lie explores consumer duplexity in more

detail – for more info/ a sample chapter, visit www.thebigliebook.net)

Mobile technology and internet uptake are facilitating a move towards creative,

constructive use of downtime, a time to add value to our lives in some way

and take control

http://www.thebigliebook.net/

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There’s an expert for that

Source: nVision Research/Promofutures Consortium, Future Foundation | Base: 1,000 online respondents aged 16+, GB, Dec 2012


“Thinking about each of the following, would you say you

are more or less influenced by them now compared to in

the past?”

1 in 5 are seeking expert

advice for their

shopping more

than 2-3 years

ago

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Personalisation of Authority | Trend Trajectory



Low

Medium

High

Intensity

Future direction references the importance attached to trusted sources of personal advice -

as well as its ability to influence and impact consumer behaviour

Pace

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The need for escape: make creative use of downtime


Check work emails in bed

53% 63% 64% 64%

Never Occasionally Regularly Every day

“Silence is definitely seen as hip and trendy, but only because busy people ‘need’ it.”

Female, 23

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Downtime, everything’s waiting for you

Ocado’s virtual shop in Birmingham

Tesco’s virtual airport store

Shop the Look during Taxi Rides in NYC

from Glamour and L’Oreal

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We all have access to the same stuff; it’s how we use it that counts.

Leverage customer and expert networks, expertise that can only be

delivered in person.

Consider Community Conversations trend – platforms that unite people

around common interests but with scope for individual expression.

Escape is key. Take advantage of the consumer desire to enrich spare

moments with useful activity and banish moments of tedium – creative

shopping options, inspirational retail spaces.

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4 | Retail Reloaded


• End of Adventure

• Concierge Living

• Big Data Shopping

• Magic Nostalgic

• Retail Reloaded

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Retail Reloaded

Despite the rise of progressively better e-commerce options, majorities of

consumers regularly go shopping for pleasure. We anticipate a degree of

polarisation, with low-interest products purchased online and much higher-value

ones sought in-store.

To win advantage within competitive marketplaces, a growing number of retailers

are concentrating on providing premium customer service - with VIP-style

perks (typically available at no or little extra cost) trading on the concepts of

exclusivity and personalisation.

In the era of ubiquitous consumer review, “shopping blind” is at odds with

consumers’ intensifying focus on maximised decision-making. Do we face a

future in which discovery is managed?

Pop-up is increasingly developing a distinctly digital feel, with e-commerce

brands utilising flash sales to generate buzz and brands across a range of

sectors deploying temporary “shopping walls” to capture the attention of passers-

by. Pace of innovation will be relentless as the decade unfolds.

Brands which succeed in recalling the warmth of the past while looking firmly

towards the future will enjoy a strong positioning.

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Concierge Services: a route to full price?

nVision Research | Base: 2,000-5,000 online respondents aged 16+, 2011

“I would be willing to pay full price for

good customer service”

44%

Bloomingdales

brings in 3D

body scanning

service to help

consumers to

find the perfect

fit jeans

Bonobos’

NYC stores

offer in-store

stylists to allow

customers to

find the perfect

fit clothes from

this online

retailer

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Big Data raising the bar on retail options


1 in 2 global social networkers “like”

or “follow” brands

1 in 2 global consumers would

consider giving companies

access to information about

past purchases in exchange

for discounts

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Recommendations get personal

Source: DMA/Future Foundation/nVision Research | Base: 1,020 online respondents aged 18+, UK, 2012

51% in the UK like it when

websites make recommendations

based on previous purchases

they’ve made

Pickie curates product and gift

recommendations based on an individual’s

social network activity - the aim being to

provide personalised product catalogues for

the user to browse. Individuals provide Pickie

with basic information about themselves and

then link their account to their profiles on

Facebook, Twitter, Pinterest or other social

networks of their choice. The site collates

data and filters the information into a personal

shopping guide - with the results based on

recommendations made by contacts as well

as those products which are being discussed

within the user’s networks.

35% see their personal

information as “an asset that I can

use to negotiate better prices/

offers with companies”

90% would like more control

over the personal

information they share with

companies

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Retail Reloaded | Shape of Things to Come


Low

Medium

High


Intensity Future direction references appetite for fun / interactive / engaging in-store experiences -

as well as the level of branded energy directed towards revitalising bricks-and-mortar

locations via retail-tainment initiatives

Pace

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The only way to compete with online is to think unusual, unexpected and

exposure to experience e.g instore theatrification, concept stores,

interactivity

Dramatically transform mundane product/ low engagement shopping

experience into high energy, anticipated, loyal association – retail is fun

Service matters more than ever. Consumers expect a degree of

personalised service as a standard part of the retail experience

The power of data must support ‘unique belonging’ => interactive

experience that each can customise

Consumers are looking to retailers for curated discovery and new

adventures

37 Beyond 2020 : The Future of Retail

Concept | The Experience Bazaar

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The Experience Bazaar

Experience-heavy, value-added

offers designed to transform

shopping into a leisure pastime

High street visits will be reserved

mainly for a) choosing high-interest

items or b) gaining new knowledge,

ideas and experiences - with retailers

playing on the stimulation of all the

senses in order to attract, immerse

and entertain.

As well as colour, scent, sound, taste

and touch stimuli being carefully

interwoven into the environment,

there will be ample opportunities for

the human element to be provided

through the presence of experts,

demonstrators, teachers,

advisors…

For a downloadable version of this report and more

information on the Future Foundation, please visit:

www.futurefoundation.net

Contact:

Pippa Goodman, Commercial Director

E: [email protected]

T: +44 (0)20 3008 4889

Heather Corker, VP Consumer Trends, NA

E: [email protected]

T: 1-646-517-1142

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