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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 …

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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  • 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. Insert Image or coloured box here Adjust rounded corners so that this box is no longer visible.
  • 6. 6 2 | A Changing Landscape
  • 7. 7 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
  • 16. 16 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.
  • 17. 17 Daily mobile internet usage: rapid acceleration 2013 34% 2020 69% Source: nVision Research | Base: All individuals 16+, GB, May 2013 forecast
  • 18. 18 Future interfaces will talk to customers
  • 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.
  • 21. 21 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.
  • 30. 30 [Example text box to copy and resize] 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… Insert Image or coloured box here Adjust rounded corners so that this box is no longer visible.
  • 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