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  • How will shopping evolve in the coming year?
    Mark Kidsley, Creative Commons (2014) ©
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2016 Expert Outlook on Shopping

Can a brick-and-mortar focus benefit retailers? How important is mobile commerce? Will people come to expect engaging shopping experiences? And which retailers should we be keeping an eye on? As part of our Expert Outlook 2016 series, we speak to three retail experts about the future of shopping.

Location Global

Scope
In the shopping chapter of our Expert Outlook 2016, Canvas8 speaks to James Dion, founder of retail consultancy Dionco Inc., Paul West, strategy director at design consultancy Dalziel & Pow, and retail consultant Graham Soult.

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James Dion is founder and president of Dionco Inc. A consultant, keynote speaker and author, he is one of North America's leading experts on consumer trends and retail technology.

Changes in shopping will be evolutionary as opposed to revolutionary. There has never really been a 'revolution' in retail as it is – it’s predicated upon the way the consumer behaves, and consumer behaviour is evolutionary. So if we look at something that’s as seminal today as mobile shopping, the reality is we are in its infancy.

All of these technologies are still worming their way into people's lives. Mobile has arguably wormed its way into consumers’ lives far more than any other technology in the history shopping, but having said that, we don’t know the kind of impact it is going to have.

We know that people are obsessed with their phones; 24% of Americans have admitted to making a purchase on the toilet and, it's frightening, but 2% have admitted to doing it at a funeral. Shopping used to be a separate event in our lives, but for most consumers it’s now been woven into the fabric of our lives. It can be done on the bus, on the subway, at a funeral – anywhere.

There has never really been a 'revolution' in retail as it is – it’s predicated upon the way the consumer behaves, and consumer behaviour is evolutionary

Humans who are literally addicted to their mobile devices are really fascinating for retailers, who are just beginning to recognise this and get to grips with things like 'how do I get into that customer's life and how can I do it without being disruptive?' If you irritate them, you can break that addiction.

What we're also seeing now – and we've known about it for years in retail – is the difference between wants and needs. In 2016, it’s a very fundamental difference in consumers’ lives, and e-commerce and in-store shopping is really starting to dichotomise those two experiences, with price dropping further down the list. The real needs – basics likes detergent or nappies, for example – are increasingly being moved off to robotic buying. People are going to let their favourite online retailer automatically replenish those goods, with price significant here.

Retailers will make the most of mobile commerce in 2016
Thomas Hawk, Creative Commons (2013) ©

On the want side, it’s almost nude running for retailers as consumers aren’t only focused on price anymore. They’re buying into more experiential components. They want to feel good in the store, they want to really be impressed with the website – it’s much more emotional. But it’s staggering how many retailers don’t think strategically. They are still very reactive and don't think to themselves ‘what are we doing?’, ‘who is our customer going to be tomorrow, next week, a year from now?’, ‘what is this whole mobile thing?’, and ‘how is it really impacting our customer?’ I don't think most retailers are asking those questions.

Pirch is an exciting brand. You book the sanctuary and you can go in stark naked and try 27 different showers, and they’re cooking something all the time in the store. As soon as you walk in, they’re asking if you want a latte, cappuccino or an espresso. They just want to relax you. I have never felt as good in a store as I do in a Pirch.

Uniqlo is also doing a phenomenal job. You initially think the world really doesn't need another a basic fashion retailer – another Gap – but the reality is Uniqlo isn’t that. It’s blending form and function. Every one of its products has a story, and it keeps improving them, telling you all about the changes. It’s really firing on all cylinders. I think that it is going to continue to be disruptive in the sense that it’ll continue to amaze consumers, capturing more and more of that market.

Consumers are buying into more experiential components. They want to feel good in the store, they want to really be impressed with the website – it’s much more emotional

Restoration Hardware is doing amazing things. Interestingly, it’s all but ignoring the web. It’s building gorgeous stores, and the best retail store in the world today, in my opinion, is the Restoration Hardware in Chicago. RH took a 120-year-old historic building and completely gutted it, creating the most gorgeous retail space. Every room you walk into you say ‘I want to own this room’. It’s just a stunning display of retail ability and temptation. It shows that for some categories, particularly those that RH carries – furniture and home accessories – customers want to touch, they want to feel, they want to see and to experience. The Chicago store has a celebrity chef cooking in a full restaurant with a separate wine bar. Like Pirch, it gets you in, gives you some refreshments – and I would argue that an inebriated customer spends far more money.

Walgreens is also devoting a lot of money to mobile. It’s beginning to understand that it has this whole consumer base of Boomers out there who are taking a lot more medical drugs. This generation are also using smartphones today because they have to talk to their children and grandchildren, and so its building into its apps some pretty useful stuff like scanning existing prescriptions, or finding a prescription based on your history. It can also tell you if one is impacting the other one, and it has some great promotional stuff on its mobile site. Walgreens is powering ahead and devoting significant capital into technology, which a lot of retailers aren’t.

In some categories, customers want to see and experience before buying
VISIT FLORIDA Editor, Creative Commons (2013) ©

Paul West is strategy director at Dalziel & Pow, a brand and retail design consultancy.

Retail is being shaped by customers more than ever before, so customer participation with brands is extremely important. A few brands are doing some interesting things and Muji is one, with its Idea Park, a forum for customers to give feedback and suggestions. Meanwhile, Sony’s First Flight– a platform for people to review, refine, give feedback and suggest new products and services – is also interesting. Power is being handed back to the customer because of the advantages engagement brings.

People are paying for things and are being rewarded in novel ways. I think this is going to shape shopping next year, particularly with the introduction of new payment technologies. One example was the Marc Jacobs tweet shop, where people paid with tweets.

Brands will also fit into people’s lives in new ways next year, as opposed to having the generic flagship store and local stores. It can be anything from a traditional storefront to billboard space, through to a whole family of retail and leisure spaces. Brands are developing them to build advocacy and make friends with customers, using retail space as a new kind of media model – a traffic-driving opportunity. Retail brands are also becoming content brands to attract customers; Mr. Porter, for instance, is a very strong content brand, drawing people in with articles like how to look after your jeans or how to dress for a special occasion.

It’s not just about price sensitivity, or speed, or convenience. It’s about increased engagement and better experiences – having more memorable experiences than just pure possessions

‘Edutainment’ is also an interesting aspect. Customers are treating specialist retail as a form of entertainment in their own lives. There will be fewer transactions going on in stores – and it’s been happening for a while – but the brand space can potentially be a lot more commercially viable and relevant to people as opposed to just a brand showcase or an exhibition. So that kind of entertainment is interesting, and is true for all types of retail – men’s fashion, to beauty, to technology and sports.

In terms of people’s behaviour, consumers will have different expectations of retailers. It’s particularly true for younger generations, who are using retail differently. Retail takes a different role in their lives, becoming cultural hubs to maximise engagement. It’s more about building relationships and driving traffic back to online, or creating better awareness of campaigns, or getting customers to create media – sharing their store experience online to their peers. So that role of retailers as cultural hubs – offering things to do, not just things to buy – will be quite interesting.

Nike’s 45 Grand gym, for example, is great at building customer advocacy. Though it’s a retail space primarily, it’s also used for entertainment and leisure, bringing audiences together and promoting products by getting people to take part.

Brands like Nike are building customer advocacy by getting people to participate
Sosasha (2015) ©

People’s expectation of being able to share is seeing brands take on-board the sharing economy. Jaguar Land Rover, for instance, has an extremely high conversion rate once people get behind the wheel. So it’s more about getting people behind the wheel. Audi is now creating a sharing platform to literally get bums on seats, allowing people to experience the vehicle in new ways without overtly pushing a purchase.

Primark is exciting right now. It’s selling very good value clothes at super low price points. In Madrid, it created this multi-story digital installation in a store atrium. It’s a series of transparent meshes applied to this beautiful, ornate atrium, and all the projections are linked, with 25 minutes of continuous digital content running through these transparent screens. It’s monumental in its scale and it’s so striking, and when you can experience that while buying a £2 t-shirt, it's quite remarkable. The commitment to the level of experience that customers can have is amazing.

It’s also something that Rockar – a new platform for automotives that’s collaborated with Hyundai – is doing. It’s been a huge success, committing to engagement, convenience and speed at the same time. Rockar lets people buy cars very differently than traditional dealerships, focusing on where the people are with informative and supportive staff. It also provides an ongoing relationship where customers can bring the car back and so on. It doesn’t employ car salespeople – quite a few people who work there don’t even drive – so it’s facilitating the process of buying the right car rather than trying to sell you any car.

All in all, there will be a greater commitment to engaging experiences. It’s a more competitive marketplace; there’s been a flattening of the landscape across the world, with people expecting more. And it’s not just about price sensitivity, or speed, or convenience. It’s about increased engagement and better experiences – having more memorable experiences than just pure possessions.

Rockar provides a more engaging way to buy a motor than traditional dealerships
Rockar (2014) ©

Graham Soult is a retail consultant and owner of CannyInsights.com.

Primark is doing a great deal on the UK high street to invest in stores. Take Newcastle or Edinburgh – Primark is one of the most handsome stores on those main streets. It has done a really good job of turning what used to be a kind of cheap brand image into one that every major town now wants to have. The stores in Boston and Madrid are thrilling, historic buildings that have been transformed into Primark stores. It’s really targeting the high street and not trading online, which, on the face of it, goes against the grain.

A new retailer called PEP&CO is also exciting. It’s got a really strong team behind it, and has managed to open 50 stores in about two months. So there’s been a really rapid roll out of this new value fashion concept. I admire its boldness in doing that, and in spotting a gap in the market. It’s tried to target smaller towns – secondary high streets – that most of us do our daily shopping in. It’s also offering something a bit more compact than something like Primark, aware that people might not be keen to push a buggy around a big store. It’s a convenient concept based around fashion that ordinary people can use every day.

In terms of online, there are a number of niche retailers who are selling via Etsy, giving makers an outlet. And for bigger retailers, click and collect is exciting, making it easy to get the stuff that you order either through a locker or through having a high street presence.

The high street now looks healthier than it did a few years ago. I look at vacancies – who’s moving in and out – and this year, I think we’ve seen far fewer retail collapses and some quite exciting retailers opening up stores (like PEP&CO). But independent stores are also coming through, who are really savvy with their marketing and are able to look at how retail is changing.

Primark is showing that engagement can happen at accessible price points too
Dee McIntosh (2012) ©

There’ll be a move away from wanting to buy everything from big name stores. That’s partly why you have this anti-Tesco backlash; people don’t seem to like it if a retailer gets too big, too dominant. There will be a real demand for products that have a story to tell – those that show you’re helping a real person when you buy it. That’s an important trend, and it’s feeding into the growth of independents.

Equally, the online shopping trend shows that the retailers who thrive here will be ones that manage to offer a really good experience. Even now you get people who complain about delivery; it’s not very clear when it will arrive, or if it arrives in a poor condition. Those stores with simple websites, that make it easier to buy, can have a simple communication throughout the process, with an item arriving in one piece. The retailers who get those things right are the ones who will be tapping into what shoppers really want.

Next is one retailer doing this well so far. There’s no doubt that it sells more online by virtue of it being so easy to conduct returns. If you can return something to store then that’s an important benefit, too. Other than Next, John Lewis is succeeding with its online ordering. Things like being able to order from JohnLewis.com but collecting from your local Waitrose can be really convenient for people.

There will be a real demand for products that have a story to tell – those that show you’re helping a real person when you buy it

Ikea is also exciting. Big box stores are having to adapt the way they do things, partly in response to how people are shopping, but also because of available space. Ikea has struggled to find big enough locations in the places it wants them, so it’s now thinking about possibly taking over part of the current BHS base in Oxford Street in London – a small Ikea, focusing on click and collect, right in the heart of Britain’s biggest retail thoroughfare. Having these kinds of retailers, who traditionally haven't been part of town centre retail, or high street retail, will be interesting.

Amazon is one brand that’s always leading the way in terms of online shopping experiences. It’s now opened its first physical store in the US – a book shop in Seattle. It’s exciting because, although it might just be an experiment, it’s a challenge for high street stores from the same sectors. eBay has also experimented with physical pop-ups and so has Etsy. If you are a business that sells so many different things, it’s more about exposing your brand in new places and creating new opportunities to engage with your customers.

Related behaviours
Experience Hunters: When people have enough stuff, they seek experiences.

Author
Adam Steel