Future Retail: Growth through consumer-centric innovation
May 2, 2016
From Amazon Dash to Aussie Farmers, … through branded boutiques and online marketplaces, digital walls and mobile marketing, big data and personalised promotions … what is the future of retailing, in general, and for your business in Portugal?
Walking around the Burberry flagship store on London’s Regent Street, with its beautifully arranged clothes, it magic mirrors that superimpose your image in the clothes of your fantasy, and place of your choice, and the VVIP room on the top floor, it is a world of imagination, where emotions not rational desire prevails. It is the work of designer Christopher Bailey who has overseen the rejuvenation of the brand from its “chav” ubiquity to its super premium status. The $100,000 limited edition, white alligator skin jacket, not to everyones taste, perhaps demonstrates this stretch. It is a brand that is truly global, more Asian than European if measured by its custom, and more digital then physical, based on the focus of its innovations. Burberry shocases the future of retail – as a niche focused, premium branded, hybrid experience.
Fast and Easy: Amazon is rethinking every aspect of retail, from Alexa to Go, OneClick and Prime, private labels and physical stores.
Smart shoppers, smart stores
Online retail has grown rapidly over the last decade, from a marginal bolt-on, to major revenue stream in a multi-channel model. In the US, it has grown by around 18% per year, and now accounts for 8% of all sales. But digital is more that this, it is not just another way, but a fundamental capability that can enhance every channel. Search on your phone, buy online, pick up in store. Go to store, use your phone to buy, delivered to your home. Retail innovation is about hybrids, combing physical and digital activities and options in a more experiential and valuable way.
Rapha Cycle Club: More than a store for premium cycle gear, this is a community where people meet, drink coffee, share their passion, watch Le Tour, go for a ride, its their spiritual home.
Retail purpose, formats and incentives all change – whilst loyalty cards originally drove behaviour through points, people soon became wise that the rewards were trivial compared to special offers in store. Whilst stores have enhanced their shopper experiences, markets have fragmented with more space for discounters. In Turkey for example, BIM has taken around 40% of the food market with low price, small outlets across cities. At the same time, online players have morphed into credible alternatives, where Amazon sells wines and eBay replaces physical outlet stores. More emotionally, technologies such as Synqera from Russia can “mind-read” a shoppers emotions, judging how to best engage them as they shop, and how to make them smile.
Aisle One from Aussie Farmers Direct: making fresh food delivered from farm to your doorstep. Not only fast and easy, but human and authentic too.
Digital hybrids, data and mobile
Mobile is already a huge factor: at upmarket fashion retailer Gilt, 50% of shoppers, and 30% of sales is by mobile. It is the glue that brings together online and offline, creating more personal experiences, from individual promotion geo-targeted, for in-store research and navigation, price checks and comparisons, as well as fast and safe payment. As newspapers are replaced by digital news, TV is on demand, and online retailers never close their doors, the ways retailers engage and serve consumers changes. We expect 24 hour access, we don’t tolerate stock outs, compare prices instantly, shop beyond our borders, and demand delivery in 24 hours.
Fishpeople: Scrumptious and sustainable fish, using big data and internet of things to track provenance and authenticity in fresh food.
Big data, the huge quantitites of transacational data, mashed with other sources of personal and behavioural data through complex algorithms, means that marketing is highly personalised. Around 35% of all Amazon purchases and 75% of Netflix movie choices are based on recommendations. Of course these suggestions compete with the much more trusted recommmendations of friends and peers on social media, often valued around 10 times more highly than anything from a brand. A brand therefore needs to think laterally, about how to influence communities, and give them the abilities and incentives to influence each other. Consumers also become much less tolerant of failures, unavailable products or poor service, they expect free and easy returns, and they immediately tweet their feelings, particularly the negative ones, to thousands of people like them.
Together, our gamechangers show how the variety of innovations build a future vision of retail. The demand side is led by the engaging, personal experiences – driven by the passion of Zappos, collaboration of Threadless, affinities of Greenbox or latest desires of Zao Zao. On the supply side, this is about the efficiency and speed of Amazon, the reach and richness of Aramex or Etsy, and the transparency of Positive Luxury. In between is the ability to match niche segments with lifestyle store experiences, and whilst the Aberchrombie brand portfolio is not without challenges, it knows how to connect.
The future of retail
“FutureStore” is part of the Gamechangers project, exploring the future of retail, the fast-changing needs of consumers and the best new ideas from retailers across the world. You can explore FutureStore online with in-depth case studies, downloadable tools and videos, but also through keynotes, workshops and practical fast consulting support for your business. To think of new possibilities. To learn from the best ideas around the world, and even from other sectors. And by applying new approaches from design thinking to gamechanger strategies, new business models to lean innovation, consider how you can innovate and grow.
Here is a summary of Peter’s most keynote at Congresso APED in Lisbon
More about Gamechangers
More about FutureStore