Bricks and Clicks: Next Generation of Retailing


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Impact of connectivity and convergence on the retail sector. Global online retail sales to reach $4.3 trillion by 2025 accounting for 19% of total retail.

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Bricks and Clicks: Next Generation of Retailing

  1. 1. Bricks and Clicks: Next Generation of RetailingImpact of Connectivity and Convergence on the Retail Sector
  2. 2. Today’s Presenters Archana Amarnath Program Manager Visionary Innovation Research Frost & Sullivan Archana Vidyasekar Senior Research Analyst Visionary Innovation Research Frost & Sullivan 2
  3. 3. AgendaIntroduction and Definition of Retail IndustryPresentation of Top Mega Trends of the FutureInfluencing Retail IndustryBricks and Clicks: New Trends and Business ModelsMore About Visionary Innovation Group 3
  4. 4. Objectives of the Briefing• Defining the concept of bricks and clicks and understanding the consequent dynamics within the industry• Understand the impact of Mega Trends in driving new business models , innovative technological applications in retail• Gain insight into the impact of connectivity and convergence on new e- retailing strategies and future shopping experiences• Looking at the Store of the Future integrated with scanners, kiosks and interactive virtual stores• Trace the Future of Online Retailing with new Retail Formats, Store Layouts and impact of Social Media 4
  5. 5. What is Bricks and Clicks? The Retail Model Will Evolve From a Single/Multiple Channel Model to an Integrated Hybrid Cross Channel Model Bricks (pre-2000) +Advent of Clicks (post-2000Department Supermarkets Hypermarkets Online Mobile Payments Mobile Apps Stores The Future - Bricks and Clicks (2015 and Virtual Stores Beyond) Interactive Hyper Online Stores Markets 5
  6. 6. Global OnlineRetail Market 6
  7. 7. Future of Clicks in Retail Industry Global Online Retail Sales To Reach $4.3 Trillion By 2025 Accounting for 19% of Total Retail $23 Trillion China United States $1.30 $0.21 Trillion Trillion 18% 25% $11.8 Trillion $18.7 81% Trillion 15% 24% 10% Germany $11.25 $0.09 Japan95% Trillion Trillion $0.17 Trillion United States $1.32 Trillion $4.3 19% Trillion $0.555% Trillion 2011 Online Sales Non-Online Sales 2025 7
  8. 8. Media and Entertainment Products to Experience the Highest Online Sales Penetration at 82% by 2025Top Product Categories 2011 2025 OnlineNon-Online OnlineNon-Online Media and Entertainment 1 54% 46% 82% 18% Electronics sales 24% 76% 60% 40% Apparels & Accessories sales 15% 85% 38% 62% Food & Beverages sales 5% 95% 25% 75% Health/Wellness/Beauty sales 4% 96% 22% 78% Home & Garden sales 7% 93% 15% 85% Total retail 5% 95% 19% 81% Books, Music and Videos Total Retail Sales $11.8 Trillion $23 Trillion 1 Total Online Retail Sales $0.55 Trillion $4.3 Trillion Source: Frost & Sullivan Analysis
  9. 9. Global MegaTrends and Retail 9
  10. 10. Mega Trends Driving Retail Industry Connectivity1 Urbanisation 2 and 3 Social Trends ConvergenceBy 2025, there will be By 2025, 80 billion devices By 2025, the world willover 50 cities globally, will connect the world with have around 2.4 billion Gen 35 of which will be each person carrying 5 Y individuals with more Mega Cities connected devices digital shopping habits What does this mean for Retail? Smaller Stores; Self-service Retailing Collaborative ‘Stores-within- with more digital Consumption, Stores’, and checkpoints , Virtual Hyper NicheOptimised Supply Stores, and Marketing, Online Chain Interactive Stores Hypermarkets 10
  11. 11. Urbanization Will Compel Retailers to Shrink Store Sizes Retailer Store Size to be 15-20% Less than the Current Average Store Size by 2020 Big-Box Small-Box 15%-20% smaller Examples of Small Format Stores Best-Buy Mobile Wal-Mart Express City Target Tesco Fresh ‘n’ Easy 11
  12. 12. Connectivity Will Make the Shopping Experience of the Future More Digital and InteractiveFull-Service Retailing Assorted-Services RetailingSelf-service Retailing Retailer handles all Chain stores allows With Augmented aspects of the buying customers to browse Reality, LBS, and Mobile process from picking aisles and do their own Payments, complete the product for the shopping with minimal self-service retailing is consumer to billing. assistance becoming a reality 19 th Century 20 th Century 21 st Century 12
  13. 13. Connectivity in Retail: Emerging TechnologiesTechnology Converting Buyers into Multi-Channel Shoppers Location-based services Augmented Reality Foursquare Wal-Mart Holography Body Scanners Diesel Selfridges QR Coding Home Depot Motion Sensing Tesco Store Trek 13
  14. 14. Social Trends: The Next Generation ShopperCollaborative Consumption and Targeted Marketing will Become More Common Niche Marketing 2.4 Billion Gen Y Population Every 1 of 3 Women –focused Retailing workers will be a woman. Silver Retailing Every 1 of 10 will be an elder above 65 1.5 Million middle class consumers Shoestring Luxury from India and China 14
  15. 15. Future of SocialMedia in Retail -Social Commerce 15
  16. 16. Social commerce is the use of social media platforms toengage with the customer with user-generated content to market and sell the product.Social Merchandising Subscription CommerceCollaborative Consumption E.g. Pinterest E.g. Birch-Box E.g. Rent the Runway Group Buying Social Shops E.g. Groupon E.g. Facebook 16
  17. 17. Social Commerce Success Stories From FMCG To Credit Card Companies Leverage Social Media Pampers sold American 1,000 diapers Express Luredon Facebook in Consumers to just 1 hour of Spend $12.8 launching its Million Facebook Through Store Twitter Campaign Levi’s saw 40 times increase in referral traffic from Facebook 17
  18. 18. Future of Brick and Mortar 18
  19. 19. Future of Bricks: Smaller Interactive StoresSensors, Digital kiosks, And Intelligent Marketing Will Shape Stores and Supermarkets of Tomorrow In-store Social Digital Personal Smaller Stores Digital Staff Commerce Shoppers Interactive Store In-store In-Store Design Urban (Concept Stores) Marketing Digital Kiosk Convenience 19
  20. 20. Apple Stores: Store or Brand?Apple stores reconceptualised ‘showrooming’ by creating an innovative brand experience through their stores Innovative Aspects of the Apple ‘Concept’ Store Theatre Studio Genius Bar Easy Pay System Highest sales per sqft in the US. Highest sales per sqft in the US. Stores sales have multiplied 100 Stores sales have multiplied 100 Twice the sales per square foot Twice the sales per square foot times since it first made its entry times since it first made its entry than any other US Retailer. than any other US Retailer. in 2001 with aasmall store. in 2001 with small store. 20
  21. 21. Integration ofBricks and Clicks 21
  22. 22. Examples Bricks and Clicks Models Amalgamating the Bricks and Clicks ExperienceTesco Subway Virtual Stores Coles Click and Collect Amazon Online Hypermarket Diesel Magic Mirrors Ebay Digital Pop-Up Stores
  23. 23. Virtual Stores: Tesco Subway Store The Next Generation Grocery Retail Store Smartphone App The product lands in Registers Product of customer’s “virtual 2 Choice 3 cart” The product isChoose delivered togrocery the customeritem from at a time and“virtual date of hisshelves” choice 1 4 Number 1 shopping App in Korea, with over 900,000 downloads Online sales increased by 130% since launch in 2011 23
  24. 24. Bricks and Clicks Impact on Key Industries 24
  25. 25. Top Industries Influenced by Bricks and Clicks Automotive, Logistics and Financial Services will find the Best Opportunities in Retail’s Transition to Bricks and Clicks Automotive Financial Servicesrom Dealership to Flagship Stores From Plastic Currency to Virtual Curren Logistics From Distribution Centres to Distribution Points 25
  26. 26. So what will the Future of Retail look like in 20251. Nearly 20% of retail will happen online and in some countries such as United States and United Kingdom, online retail will account for a quarter of total retail sales by 20252. Everything from the product to the in-store experience can be customised and personalised by the shopper as retailers increasingly offer real-time customisation tools to their customers3. Multi-line retailers will reduce their store sizes by 15-20% and revamp their large stores to become interactive4. Manufacturer retailers will open more connected flagship stores that are designed and created around the product’s philosophy and theme. They will aim to make their stores a destination rather than a retailing zone5. There will be lesser gestation gap between ordering a product and delivery as new services such as Same-day shipping become more 26
  27. 27. Visionary Innovation ResearchTop Mega Trends That We 2012 TopicsTrack Bricks and Clicks: Macro to Future Micro Implications of • Urbanizati on – City Bricks Infrastructu Connectivity and Convergence In as a and Clicks re Retail Industry Customer Developmen Global Mega Trends and its t Implications to Urban Logistics • Innovatin Health, to 2020 Smart is g to Zero Wellness Urbanisation and Mega Cities the New Green and Well and Impact on Industries and • Being Business New Business Models of the New Upcoming Topics - 2013 Future • Social Future of Trends Business Mobility Models: Macro to Micro Implications of Value for Convergence on Industries, • Many Products and Technologies 3D printing and its Macro to Connectivit Beyond Micro Impact on Manufacturing • y and BRIC: The and Supply Chain Management Convergen Next Macro to Micro Implications of Game ce Changers Robotics and Artificial • Intelligence on Industries 27
  28. 28. Frost & Sullivan’s Visionary Innovation SubscriptionProvides Global Mega Trends Analysis, Regional Implications and a Deep Dive into Specific Topics by Industry Verticals A B C Global Mega Trends Regional Mega Trends Focus on Specific Mega Analysis and Implications Trends and Their Impact by Industry • Featuring global study updates • Analysis of global Mega Trends in annually and analysis of key key geographies such as •Focus on specific Topics e.g. the topics like Urbanisation, Smart 1. Africa Impact of Connectivity and is the New Green, Health, 2. India Convergence on Healthcare Wellness and Well Being 3. China Devices, Urban Logistics . 4. Latin America • There will be over 30 such topics • Identification of specific regional completed in next 12 months trends (e.g., beneficiation in Africa) 360 Degree Perspective of Global Mega Trends and Analysis of their Impact on Industries 28
  29. 29. From Macro to Micro: Taking Mega Trends from Information to Strategy Implementation To Macro Micro Mega Trend Analysis of OpportunitiesSelected trends that impact your business and markets and Unmet Needs Sub Trend Impact on Future A sub-layer of trends that has a Product/ Technology wide ranging impact Impact to Your Industry Visualising the roadmap of these critical forces through scenario- building and macro economic forecasts 29
  30. 30. Learn More About “New Mega Trends” Published Book: New Mega Trends Implications for our Future Lives By Sarwant Singh Publisher: Palgrave Macmillan pid=577423 Join Our Mega Trend Group On Mega Trends: Strategic Planning and Innovation Based on Frost & Sullivan Research 30
  31. 31. Contact Information 31