KEY TAKEAWAYS FROM - Deborah Weinswig...faster, at 27%. These numbers suggest that, to boost retail spending, retailers need to make shopping more of an experience for the consumer

1 DEBORAHWEINSWIG,MANAGINGDIRECTOR,FUNGGLOBALRETAIL&[email protected]:917.655.6790HK:852.6119.1779CN:86.186.1420.3016Copyright©2016TheFungGroup.Allrightsreserved.

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KEY TAKEAWAYS FROM On Friday, September 23,we attended the design:retail Forum in Brooklyn,NewYork.Theforumisthe“longest-runningeventofitskindintheindustry”andcovers“themostpressingissuesamongthoughtleadersintheretaildesigncommunity.”

1) Presentersattheforumnotedthatretailersarestillfocusedonexperience,butarestrugglingwithexactlyhowtoincorporateinnovativeexperiencesintotheirretailspaces.

2) Onespeakernotedthatserendipitybringssmilestoshopping.Retailerscantapintoconsumers’emotionstoenhanceormanipulatetheretailexperience.Asthebrick-and-mortar shopping experience shifts, it should be more aboutserendipity—allowing shoppers to stumble upon something delightfullyunexpected.

3) In-store technology can act as retailtainment, according toDeborahWeinswig,

ManagingDirectorofFungGlobalRetail&Technology,inherpresentationon12in-store technology trends. She noted that, to increase store traffic and boostspending, retailers need tomake shoppingmore experiential. Experiences areespeciallyimportanttotoday’sconsumerbecausethatiswhatmanypeopleusetodefinethemselvesacrosssocialmedia.

4) Authenticity and transparency are demanded by consumers with new, fluid

identities, presenters said. Authenticity is attractive to consumers, who areincreasingly seeking out and embracing new identities, rejecting the binary,restrictive codes of the past in favor of more fluid identities. Retailers areworkingtoprovideconsumerswithtransparency,servingasabrand-authenticitycheckpoint.

5) Finally,wetouredIndustryCity,“aninnovationecosystemthatservestobenefit

itstenantsandthewidercommunity” locatedintheSunsetParkneighborhoodofBrooklyn.Thecomplex featuresauniquecombinationofmanufacturingandretail space, allowing Industry City to foster innovation in various consumergoodsareasincludingfood,apparelandfurniture.


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OnFriday, September23,2016,weattended thedesign:retail Forum inBrooklyn,NewYork.The forum is the“longest-runningeventof itskind in the industry”covering“themostpressingissuesamongthoughtleadersintheretaildesigncommunity.”Thethree-dayevent,beginningThursday,September22andrunningthroughSaturday,September24broughttogetherstoredesign,architectureandvisualmerchandisingretailexecutivesand design and architecture principals. DeborahWeinswig,Managing Director of FungGlobal Retail & Technology, gave a presentation titled “In-Store Technology asRetailtainment: Bright Shiny Object or the New Normal?” on the second day of theforum.

RETAILERSFOCUSEDONEXPERIENCE

Retailers are still focused on experiential retail, and many creative tactics have beendeveloped to enhance the customer’s in-store experience. However, retailers arestrugglingtoincorporatetheseintotheirspaces.Theyhavefoundgreatwaystoengagethe customer in flagship stores, but have not been able to effectively apply thesetechniquesand innovationsatall their locations.PresenterTomSavigar,Chief StrategyOfficer of The Future Laboratory, used a quote from William Gibson to sum up thisphenomenon:“Thefutureisalreadyhere—it’sjustnotveryevenlydistributed.”

Source:FungGlobalRetail&Technology

SERENDIPITYBRINGSSMILESTOSHOPPING

In his presentation on how retailers can tap into consumers’ emotions to enhance ormanipulate the retail experience, Savigar posed the question, “What’s the point ofrunning stores?” Thepoint, heargued,was “smilesperhour.”As thebrick-and-mortarshoppingexperienceisshifting,Savigarsays itshouldbemoreaboutserendipity,aboutthecustomerstumblinguponsomethingdelightfullyunexpected.Hereferredtothisas“the deep end of retail,” contrasting it with the clearly marked “MEN’S” and “KIDS”sections often seen in stores today.We should be “using real estate in an interestingway,”hesaid.

The ideaof serendipity isnot limited to thephysical,however.Savigar suggestedusing“moodographics” rather than the standard demographics or the increasingly popularpsychographics that many retailers rely on. Artificial intelligence (AI) is increasinglyplayingabiggerrolehere,hesaid.AEI,oraffectiveemotionalintelligence,nowmakesup60%oftheAIindustry,accordingtoSavigar.


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IN-STORETECHNOLOGYACTSASRETAILTAINMENT

Consumers are spending more on services and experiences and less on goods. In herpresentation,Weinswig stated that food and accommodationsmake up 6.58%of totalpersonal consumption expenditure and that recreation servicesmakeup3.86%—whileclothing and footwear represent only 3.07%. In addition, store traffic is continuing todecrease,Weinswignoted,withmallsseeinganaverage9%year-over-yeardropintrafficsinceJanuary2015.

Meanwhile, consumer spending is actually increasing. Market research firm Mintelforecasts that US consumer spending will grow by 22% over the next five years, withspending on nonessential categories such as vacations and dining out growing evenfaster, at 27%. Thesenumbers suggest that, to boost retail spending, retailers need tomake shopping more of an experience for the consumer. Experiences are highlyimportant to today’s consumer because they are what many people use to definethemselvesacrosssocialmedia,saidWeinswig.


Weinswig suggested that in-store technology can serve as the key ingredient, creatingretailtainment to draw in shoppers and engage with them in-store. She went on toidentify12key in-store technology trends,which includeaugmented realityandvirtualreality,interactivedisplays,robotics,andgamification.

AUTHENTICITYANDTRANSPARENCYDEMANDEDBYNEW,FLUIDIDENTITIES

We attended a panel on retail in Brooklyn with Adam Carmichael, Director of StoreDesign, Saks Fifth Avenue; Ryan St. Mary, Director of Stores, GANT; Clarence Nathan,Owner,PremiumGoods;andChristopherJ.DeCrosta,arealestateexecutivewithCrownRetail Services. All Brooklyn residents, these retail experts discussed what makesBrooklyn so influential in retail. The consensus among the panelistswas that Brooklynbreedsanauthenticity that isattractivetoconsumers. It isagreatplacetoexperimentwith one’s brand before bringing it to the mass market because it is such a diversecommunity.

Nathan identified an important balance between small, mom-and-pop retailers andbigger companies that makes Brooklyn’s retail environment unique. St. Mary agreed,saying, “It’s important for us tomake surewe are contributing to it authentically andfittingintotheneighborhood.”Brooklynitselfhasbecomeabrand,saidthepanelists.“Alot of it is hype driven,” said Nathan of retailers rushing to open stores in Brooklyn’strendiestneighborhoods.“Butonceyou’rehere,youcanseethateverythingishere.”


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Theideaofauthenticityisnotlimitedtotheretailer.Consumersareincreasinglyseekingoutandembracingauthenticidentities,rejectingthebinary,restrictivecodesofthepastinfavorofmorefluididentities,accordingtoSavigar.Hestatedthatonly30%ofGenZersbelievethatgendermattersasmuchaspastgenerationsdid,andonly45%ofthembuyclothing exclusivelymade for their gender. Racial identity is also in flux; there are 120millionmulticulturalpeopleintheUS,andthatnumberisgrowingby2.3millionpeopleeveryyear.So,multiculturalism isbecomingamore flexibleconcept,andanestimated30%ofthepopulationchangesthedefinitionoftheirracialidentityintheirlifetime,saidSavigar.

In response to these changes, retailers are working to provide consumers withtransparency, serving as a brand-authenticity checkpoint. Brands’ transparency can berelated to how retailers use customer data or how they are making and selling theirproduct.SavigarcitedPatagoniaasanexample.Theoutdoorclothingbrandwillactuallydiscourageshoppersfrombuyingafleecetheydonotneed,notingthattheirapparel ismeant to last for up to four years, Savigar said. Patagonia is thinking long term, aboutbuildinga50-yearrelationshipwithitscustomersratherthanjustaseasonalone.

INDUSTRYCITYBRINGSINDUSTRYBACKTOBROOKLYN

After the day’s presentations, we toured Industry City, “an innovation ecosystem thatserves to benefit its tenants and the wider community” located in the Sunset Parkneighborhood of Brooklyn. The complex provides a unique experiential retailenvironmentbycombiningmanufacturing,workspaceandretailspace.

Shoppers canwander through shops—peering throughwindows to see the productionprocess in the next room—and grab a bite to eat in the complex’s 40,000 square-footfoodhall.Beyonditstypicalbusinesshours,IndustryCityalsooftenhostsevents,offering



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a community experience that brings neighbors together in an engaging environmentwhere they can explore new brands, ideas and networks. Called “the SoHo of SunsetPark”byTheNewYorkTimes,IndustryCitycouldbethefirststepincreatinganewmajorretaildistrict,transformingahistoricallyindustrialareaintoadestinationforconsumers.

Developed by Jamestown—the developer behind the trendy ChelseaMarket—IndustryCityismadeupof6millionsquarefeetofspacein16buildingson35acres.Lastyear,theownersrevealedtheir12-year,$1billionplantocreate themodernmanufacturingandtechnology hub. The complex features tenants such as TheGap, BaubleBar,West Elm,Rag&Bone,DesignWithinReachandMakerBot,aswellasstartupsandlocalbusinessessuchasBlueMarbleIceCream,Li-LacChocolates,BrooklynBrineandMerlette.

“This is the first time the private sector has tried this,” said Adam Kimball, CEO ofIndustryCity,whoalsoledthetransformationoftheabandonedBrooklynNavyYardintothemodernindustrialparkitistoday.AccordingtoKimball,therewere125,000industrialjobsinBrooklyninthe1950s,butthatnumberhadshrunkto5,000bythe1990s.Today,Industry City has helped raise the number of jobs to 4,500, up from 1,900 when theprojectstartedfouryearsago.IndustryCityhasauniqueopportunitytoreviveindustryin Brooklyn and foster innovation in various consumer goods areas, including food,apparelandfurniture.Currently,IndustryCity’sdevelopersaretacklingtheproject’snextphase: a 125,000 square-foot retail hub called “InnovationAlley.” The $8million retailinvestment will run 1,200 feet long, spanning 33rd to 37th streets along Brooklyn’swaterfront.

BelowaresomepicturesfromourIndustryCitytour.

ViewsfromIndustryCity’scourtyards.Eachoneisdesignedbyadifferentlandscapearchitecttocreateaunique,neighborhood-likefeel.ThespaceontherightisdesignedtoresembletheHighLine,whichrunsbyChelseaMarket.Source:FungGlobalRetail&Technology


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BlueMarbleIceCreamproductionatIndustryCitySource:FungGlobalRetail&Technology

IndustryCity’sInnovationAlleyconnectsthecomplex’swaterfrontbuildings.Source:FungGlobalRetail&Technology

Li-LacChocolatesinproductionatIndustryCitySource:FungGlobalRetail&Technology


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OpenbusinessspaceatIndustryCitySource:FungGlobalRetail&Technology

Brooklyn Brine’s shop entrance, production space and soon-to-open restaurant at Industry CitySource:FungGlobalRetail&Technology


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DeborahWeinswig,CPAManagingDirectorFungGlobalRetail&TechnologyNewYork:917.655.6790HongKong:852.6119.1779China:86.186.1420.3016deborahweinswig@fung1937.comAmandaByrneMarketingAssociateHONGKONG:8thFloor,LiFungTower888CheungShaWanRoad,KowloonHongKongTel:85223004406LONDON:242–246MaryleboneRoadLondon,NW16JQUnitedKingdomTel:44(0)2076168988NEWYORK:1359Broadway,9thFloorNewYork,NY10018Tel:6468397017FungGlobalRetailTech.com

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KEY TAKEAWAYS FROM - Deborah Weinswig...faster, at 27%. These numbers suggest that, to boost retail spending, retailers need to make shopping more of an experience for the consumer