Retail Futures 2018: Trend Summary

features
category - ai
type - trends
Trends
category - digital
sector - retail

‘The current retail environment is like a dead sea, killing off existing life but providing a new eco-system in which different organisms can thrive.’

Greg Satell, author, Mapping Innovation: A Playbook for Navigating a Disruptive Age

In 2018, retailers are finally realising that e-commerce is not the enemy of bricks-and-mortar retail. The panic is dying down.

But it is important to acknowledge that the whole sector is undergoing a massive paradigm shift in which traditional principles of evolution apply: adapt or die. Brands and retailers will need to embrace seamless technology and reconsider the definition of a retail experience whatever the channel if they want to survive and thrive in this new landscape.

At our Retail Futures Forum 2018 we examined eight key macrotrends, including Digital Fit, Grocery AI-sles and Anti-showrooming, alongside our in-depth macrotrend Store-front Salvation. You can read a summary of the trends and insights below.

But if you want to survive the retail apocalypse, download our latest report, in which we provide the solutions that retailers need to implement if they want to survive and thrive in the future.

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Published by:

4 May 2018

Author: The Future Laboratory

Image: Storefront Salvation visuals by Max Guther for The Future Laboratory

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Retail Trends Rising

MTO Exotic capsules by Bonsoir Paris for Dior

From democratising ingredients and packaging to finding novel solutions and showrooming, these are the eight trends that retailers must prepare for in 2019.

Accessible Premium

From taking the idea of the dollar store online to the rejection of big brands, retailers are exploring how they can democratise quality and bring premium products to the mass market.

One strategy is to use a direct-to-consumer model to make it more affordable to access items that were traditionally higher priced, such as organic food or products that are free from parabens.

‘[There is] a movement of real people who want to be treated fairly no matter what their economic status. It’s a movement of people who reject labels, legacy institutions and old ways of doing things.’
Tina Sharkey, co-founder, Brandless

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Digital Store Fronts

Brands are increasingly creating experiential bricks-and-mortar offerings, but these creative, highly immersive environments have yet to be successfully replicated online.

E-commerce websites still tend to focus on features such as checkout and shopping basket functionality. But new design-centric retail platforms are emerging that enable a kind of digital escapism and increase page dwell time and the likelihood of a purchase.

In a US survey, 66% of 13–17-year-olds said they view brands that experiment with new ways to sell or deliver as innovative.
Source: Ypulse

Micro Retail

With convenience a key priority for consumers, brands are exploring the potential of dynamic selling spaces in non-traditional locations. Start-up Cargo, for instance, is turning taxis into moving retail spaces, enabling Uber drivers to sell snacks, phone chargers and beauty products to passengers.

75% of British adults say that corner shops’ opening hours make it easier to fit shopping into their daily schedule.
Source: Mintel

[There is] a movement of real people who want to be treated fairly no matter what their economic status. It’s a movement of people who reject labels, legacy institutions and old ways of doing things.
Tina Sharkey, co-founder, Brandless
Bodega by Paul McDonald and Ashwath Rajan, US

Digital Fit

New digital tools are helping to refine sizing options for shoppers buying fashion online. Solutions are varied, with Israeli start-up MySize showing how an iPhone’s accelerometer could be one way to capture accurate body measurements. Japanese fashion brand Start Today offers its customers a sensor-laden smart suit that captures 15,000 body measurements. This allows itse-commerce customers to determine their exact size before buying pieces online.

£251bn ($351bn, €288bn) The amount US retailers lose in sales each year due to product returns.
Source: National Retail Federation

Grocery AI-sles

Grocery brands are increasingly considering the potential of robots to optimise their services. Automation is taking over menial tasks such as checking inventory and stock while in-store. For Walmart, handing over repeatable, predictable and manual tasks is seen as a way to free up human time. Similarly, Ocado’s warehouses have turned into automated centres that are completely run by AI and algorithms.

From our perspective, [this] improves your service to your customers and is trying to make things simpler and easier for your associates at the same time.’
John Crecelius, vice-president of central operations, Walmart

Anti-showrooming

With consumers becoming used to showrooming – viewing an item in a store and then buying it online – physical retailers are having to reconsider how they can encourage in-store shopping. One strategy is to stop showrooming altogether. Following its purchase of Whole Foods Market, Amazon was granted a patent that would help the brand to stop shoppers using their phones to compare prices in stores.

In a recent study, 75% of shoppers said they prefer to shop in-store, if an item is available both online and in a nearby store.
Source: TimeTrade

£251bn ($351bn, €288bn) The amount US retailers lose in sales each year due to product returns.
Source: National Retail Federation
Storefront Salvation visuals by Max Guther for The Future Laboratory

Discount on Demand

Instead of being forced into a cycle of sales, some brands are adopting a more reactive approach to discounts.

Whisky Foundation, for instance, recently launched a new e-commerce retail concept in which it changes its pricing based on consumer demand. It puts bottles on sale for an extremely low price, and the price fluctuates depending on the demand.

In a US survey, 67% of consumers said they have made a purchase they weren’t originally planning to make solely based on finding a coupon or discount.
Source: RetailMeNot

QR Code Renaissance

Once considered obsolete, QR codes are making a comeback. The technology, which was created to instantly connect a mobile device to more information, never progressed beyond being a gimmick after it was launched in the 2000s. But recent applications by brands such as Amazon and Snapchat have shown the potential for QR code commerce. Amazon’s SmileCodes, for instance, allows mobile users to access exclusive offers.

‘For a solution almost considered obsolete, QR codes are getting a second life as a cost-effective and powerful link in our increasingly personalised world.’
Julie Vargas, director of digital solutions, Avery Dennison

DOWNLOAD THE RETAIL REPORT

If you’re a LS:N Global member, you can download the retail report for free. If you’re not, and you’d like to discover the benefits of joining, get in touch and discover our trend package options

 

‘For a solution almost considered obsolete, QR codes are getting a second life as a cost-effective and powerful link in our increasingly personalised world.’
Julie Vargas, director of digital solutions, Avery Dennison

Macrotrend: Store-front Salvation

Transitions III by Baars & Bloemhoff, Dutch Design Week 2017

Fuelled by an understanding that saving the store relies on a combination of physical touchpoints and digital technology, retailers are reconsidering the purpose of bricks-and-mortar shops.

Hindsight

Lack of purpose and a fear of new technologies are leading to an unprecedented number of store closures. Too many retailers chose to take a scattergun approach to opening stores, with the aim of reaching far and wide rather than being more considered. But as more digital-only brands open bricks-and-mortar locations, it is clear there is still hope for physical retail.

In a US survey, 56% of shoppers said they visit stores, at least occasionally, to see, touch and feel a product before buying it online.
Source: Retail Dive

Insight

In order to adapt their physical offering, retailers will have to combine the best technologies from e-commerce with the tactile, present quality of in-store browsing. They will need to invest in Software Support, create Click and Connect services and rethink their store layout to fit the many moods of shoppers who sway from desiring convenience to hyper-personalisation on any given day.

‘The notion that physical retail is dead is just silly – the combination of digital and physical is most often what customers want and what yields the best financial results.’
Steven Dennis, president, SageBerry Consulting

Foresight

As retailers embrace future stores that are not weighed down by technology, but supported by it, new spaces will adapt to better meet customer needs. A critical issue in the future of the store will be data and privacy. Just as it is a current battleground online, offline retailers will have to consider how to balance sophisticated customer-tracking techniques with transparency about how shoppers are targeted.

41% of consumers are happy for a retailer to monitor their shopping patterns.
Source: PwC 

DOWNLOAD THE RETAIL REPORT

Help prepare your business for the changes ahead by downloading the Retail Futures 2018: Storefront Salvation Report now. 

‘The Chinese market will adopt facial recognition methods… because it’s a trade-off they are willing to participate in. How can we, as an industry, bring our customers up to that same level of trust?'
Michael Olaye, chief technology officer, Inside Ideas Group

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