The Future Foundation has carried out an extensive forecasting exercise to explore the future of several commercial themes and sectors beyond 2020. In this report, we examine our predictions for the future of retail, identifying informed assumptions for the evolution of consumer trends, product and service innovations and the role that technological developments will play. We also provide invented images of retail concepts that might characterize the future marketplace as a result of the shifts we describe.
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Future of Retail #FutureOf
1. The Future of Retail
A presentation by Future Foundation
October 2013
#FutureOf
2. 2
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
3. 3
What sets us apart?
Over 100 established and emerging trends
200+ global clients from all sectors
Network of experts and 200 trendspotters
Proprietary consumer research
Trend trajectories help to forecast the size and evolution of opportunities
1000s of commercial examples of trends in action
4. 4
Contents
1 | Introduction
2 | A Changing Landscape
3 | The Constants
4 | The Versat-aisle Consumer
5 | Real Lives
6 | Retail Reloaded
7 | Concepts
5. 5
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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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
Source: nVision Research | Base: 1,000-5,000 online respondents per country aged 16-64 (Mexico 16-54, Indonesia 16-44), 2013
France
Netherlands
Italy
Poland
Ireland
Hungary
Spain
Czech Rep
Germany
2013
Australia
2012
Russia
Sweden
South Korea
Turkey
USA
Canada
Mexico
India
China
Indonesia
Brazil
2011
Denmark
80%
60%
40%
20%
0%
-20%
-40%
-60%
Argentina
% 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
8. 8
The global retail landscape is changing:
e-commerce is in the ascendancy
Trend in action
% having recently bought online
100%
2010
2011
2012
Global shoppers using shopping apps at
least once a month
2013
80%
2013
19%
60%
China
2011
17%
58%
2010
14%
40%
“When buying a product or service online,
which of the following platforms do you use
most frequently?” (GB)
20%
China
India
Turkey
Russia
Brazil
Indonesia
Mexico
Argentina
Ireland
Sweden
Germany
Poland
Czech Rep
Denmark
France
Netherlands
Spain
Italy
Hungary
Australia
South Korea
USA
Canada
0%
Desktop/laptop:
79%
Tablet:
14%
Mobile:
Source: nVision Research | Base: 1,000-5,000 online respondents per country aged 16-64 (Mexico 16-54, Indonesia 16-44), 2013
Source: nVision Research | Base: 1,171 online respondents who own a tablet and a smartphone and who shop online, aged 16+, GB, 2013
7%
9. 9
1 | The Constants
Trends to think about:
• Maximising
• Local Preference
• Complaints
• Self-Service
• Aspiration
10. 10
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
11. 11
Bargain hunters are everyone: the majority in most
markets shop around, with few differences across
age / demographics
2010
2012
Denmark
100%
Ireland
“I shop around extensively to get the best deals”
2013
80%
60%
40%
20%
Source: nVision Research | Base: 1,000-5,000 online respondents per country aged 16-64 (Mexico 16-54, Indonesia 16-44), 2013
China
Russia
India
Indonesia
Turkey
Mexico
Argentina
Brazil
Sweden
Czech Rep
Netherlands
Italy
Poland
Germany
Hungary
France
Spain
South Korea
Canada
USA
Australia
0%
12. 12
Local paradox
% who feel the need “to be involved in the life of the neighbourhood or community”
1986: 50%
1980: 45%
1999: 50%
2004: 48%
2007: 43%
2011: 45%
2011 online: 34%
2013 online: 38%
Source: nVision Research | Base: 1,000 (F2F)-5,000 (online) respondents aged 16+, GB, 2013
13. 13
Time is at a premium, bad service is unacceptable
“I am often under time
pressure in my everyday life”
2010:
2012:
41%
43%
2013:
46%
“I have taken my service to
another shop because of poor
customer service”
45%
Source: nVision Research | Base: 1000-5000 online respondents aged 16+, GB, 2013
Source: nVision Research | Base: 5,000 online respondents aged 16+, GB, 2012
14. 14
Self-service: a serious proposition
Vending in the early 10s: the future of 21st
century self-service?`
% in UK preferring to use self service to make a
purchase (rather than speak to someone)
(actual)
100%
(forecast)
80%
60%
40%
20%
2025
2023
2021
2019
2017
2015
2013
2011
2009
2007
2005
2003
2001
1999
1997
0%
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)
Source: nVision Research | Base: individuals 16+, GB
15. 15
2 | The Versat-aisle Consumer
Trends to think about:
• 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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Daily mobile internet usage: rapid acceleration
2013
34%
2020
69%
Source: nVision Research | Base: All individuals 16+, GB, May 2013 forecast
19. 19
The new era of click & expect
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”.
Interest in “a home delivery service which brings groceries to my
door at precisely the time I prefer”
100%
80%
60%
40%
20%
Source: nVision Research | Base: 1,000-5,000 online respondents per country aged 16-64 (Mexico 16-54), 2012
Russia
Mexico
Turkey
India
China
Brazil
Argentina
Hungary
Ireland
Italy
Sweden
Poland
Netherlands
Czech Rep
Germany
Denmark
Spain
France
GB
Canada
USA
Japan
Australia
South Korea
0%
20. 20
QR shopping: energising the grocery sector
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.
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The Versat-aisle Shopper | Trend Trajectory
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
High
Medium
Low
Now
3 years
5 years
10 years
Pace
Source: nVision | 2013
22. 22
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
23. 23
3 | Real Lives
Trends to think about:
• Collective Individualism
• Smart Boredom
• Mass Customisation
• The Power of Quiet
24. 24
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
25. 25
There’s an expert for that
“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
Source: nVision Research/Promofutures Consortium, Future Foundation | Base: 1,000 online respondents aged 16+, GB, Dec 2012
Source: nVision Research | Base: 2,000 online respondents aged 16+, GB, 2012
26. 26
Personalisation of Authority | Trend Trajectory
Intensity
Future direction references the importance attached to trusted sources of personal advice as well as its ability to influence and impact consumer behaviour
High
Medium
Low
Now
3 years
5 years
10 years
Pace
Source: nVision | 2013
27. 27
The need for escape: make creative use of downtime
Check work emails in bed
Never
Occasionally
Regularly
Every day
53%
63%
64%
64%
“Silence is definitely seen as hip
and trendy, but only because
busy people ‘need’ it.”
Female, 23
Source: nVision Research | Base: 5,000 online respondents aged 16+, GB, 2013
28. 28
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
29. 29
Implications for insight
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
Trends to think about:
• End of Adventure
• Concierge Living
• Big Data Shopping
• Magic Nostalgic
• Retail Reloaded
31. 31
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 passersby. 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.
32. 32
Concierge Services: a route to full price?
“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
nVision Research | Base: 2,000-5,000 online respondents aged 16+, 2011
33. 33
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
Source: nVision Research | Base: 1,000-5,000 online respondents per country aged 16-64 (Mexico 16-54, Indonesia 16-44), 2013
34. 34
Recommendations get personal
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
Source: DMA/Future Foundation/nVision Research | Base: 1,020 online respondents aged 18+, UK, 2012
35. 35
Retail Reloaded | Shape of Things to Come
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
High
Medium
Low
Now
3 years
5 years
10 years
Pace
Source: nVision | 2013
36. 36
Implications for insight
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
37
38. 38
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…
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39. 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: pippag@futurefoundation.net
T: +44 (0)20 3008 4889
Heather Corker, VP Consumer Trends, NA
E: heatherc@futurefoundation.net
T: 1-646-517-1142