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Retail2020 onlinegoldrushreport

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  • 1. Retail 2020 Online Gold Rush 3 Retail 2020
  • 2. 02 • Jones Lang LaSalle Retail 2020 Online Gold Rush Online Gold Rush Who Stole My Lunch? Retail has long been the key touch point between goods manufacturers and end consumers. So it is no surprise that the sector has been vibrant and innovative, bringing such inventions to the market as: layaways; self service shopping; concept stores, in-store bakeries, factory outlet centres, loyalty cards; pop-up shops, airport retailing – even scuba diving in shopping centres. However, looking ahead, the Take the online pharmacy. Whilst regulations will save next generation of visible Regulations today are keeping independent pharmacies for a innovation will come mainly this movement at bay but with while longer, some independents from online retail initiatives escalating healthcare costs, will feel the cold winds of change – and many of these will few governments will stand in blowing very strongly over the be entirely new entrants to the way of ‘progress’ for too next three years. Legacy formats retail. In fact, over the next much longer. With an ageing like independent bookshops 5 years, existing retailers will population less able to collect and music stores cannot survive find themselves increasingly their prescriptions, with doctors in their current positioning. asking the question: who stole soon being able to issue repeat Instead, they will become cottage my lunch? And the answer will prescriptions electronically and businesses selling an attitude be a disparate group of digital with many consumers happy to and an approach to an afternoon. natives who see selling directly order vitamins and Viagra online, Bookshops were pleasant, to consumers as a get-rich- a tsunami will hit the independent dusty places before transactions quick gold mine. And these pharmacies by the end of the became all important, and they entrepreneurs will grow without decade to come. Today’s online will have to return to this pharmacies – for example, experiential focus. paying rent to anyone. Despite pharmacy2u.co.uk, infar.com their lack of retail experience, and medix24.com – are pioneers these new retail entrepreneurs but expect a rush of new entrants have youthful enthusiasm on to this profitable sector over the their side plus a revolutionary next few years. platform (i.e. the web) which has radically lowered entry barriers and increased consumer convenience. This online gold rush is, of course, in full swing today but we are just in the foothills of what will occur; the 2020 retail landscape will look very different from a consumer’s perspective.
  • 3. 03 • Jones Lang LaSalle Retail 2020 Online Gold Rush Best of Both Worlds Given the increasing number of online entrants, the last decade has seen owners and occupiers react in one of three ways to e-commerce and web-based marketing. 1. Perceive online as a potential competitor – but a small, containable one 2. See online as another channel, one to be integrated into a multi-channel trading strategy 3. Use the communication possibilities of the internet in an integrated multi-media strategy. In other words, online has been either ignored, or more recently, blended with existing operations to get ‘the best of both worlds’. However, possibly because of the legacy of bricks and mortar, few retailers have really positioned to launch The real retail innovation on the internet has come entire new businesses and business models from elsewhere. In fact, it can be argued that the on the internet. real innovation anywhere has come from online. Take e Bay (eBay.com) and their revolution in: a) auction selling b) accessing the second hand market c) taking retail global d) introducing safe payment systems. Fluctuating fortunes mean they have lost ground recently but fully intend to rebound through new initiatives such as their newly launched fashion micro site selling trendy new clothing at deep discounts using ‘flash’ sales techniques. eBay are also experimenting with an online outlet mall, have signed exclusive fashion deals with designers like Narciso Rodriguez and are improving the whole site experience. eBay sold $7.1 bn of clothing in 2009 and has access to 90 million active buyers and sellers.
  • 4. 04 • Jones Lang LaSalle Retail 2020 Online Gold Rush Private sales models are also booming. Gilt’s (gilt.com) model requires personal sign up and gives access to “luxury brands, hand-selected styles and members -only prices”. The offer changes frequently, each sale lasting 36 hours and can be 70% off retail prices. They have already launched an app for the new iPad to “significantly transform e-commerce at Gilt by injecting a sense of entertainment and Polyvore have 1.5 million registered users and competition into the online shopping experience”. 200,000 ‘creators’. Again, Polyvore is the initiative Gilt grew sixfold in 2009 and is on track for $500 of non-retailers being started by a bunch of million in 2010. The company launched in 2008. ex-Yahoo employees in 2007. Polyvore (polyvore.com) is part social network, And so it goes on. Once again, the point being part designer club. It aggregates clothing and that the real innovation in retail is happening accessories from many different brands online: now, it’s happening online and it’s being led by a sort of online transactional department store. ‘non-retailers’. iTunes (apple.com) is dominant in The twist is that customers compose their own music sales and Amazon (amazon.com) conquers looks and styles dragging and dropping together all before it in book sales. ‘Old economy’ retailers merchandise they prefer. Others are then like Virgin Megastore and Waterstones were late encouraged to vote on their favourite looks to launch online and, although not solely because – and indeed buy into the look they prefer. of this, have essentially underperformed. This site creates a community feel, an interactive shopping setting and a good way to pick up on hot trends and ideas. Consumers are invited to be creative and have fun. Suddenly, fashion is becoming democratised – and moving away from the autocratic cat-walks. The real innovation in retail is happening now, it’s happening online and it’s being led by ‘non-retailers’
  • 5. 05 • Jones Lang LaSalle Retail 2020 Online Gold Rush Here today, bigger tomorrow So what of the next ten years? We will see more of the same; the barriers for entry in the retailing industry have never been lower. In the future, we will see more of: - private selling (e.g. ruelala.com) - peer-to-peer selling (e.g.leboncoin.fr) - flash sales (e.g. nakedwines.com) - auctions (e.g. swoopo.co.uk) and blind auctions (e.g. auctionsforacause.com) We will witness raging innovation in retail – a real gold rush where entrepreneurs go - mutual sites (e.g. thewinesociety.com) from zeros to heroes in a matter of months. - augmented reality retail sites (e.g. zugara.com) In the online world, 6 months is a really long time - rental sites (e.g. bagborroworsteal.com) – and time enough to make a fortune. We will see - luxury sites (e.g. netaporter.com) innovation in format, in channel, in delivery, in social retail, in retail-as-game, in sales techniques, - trading sites – where consumers buy wholesale and in payment systems, in returns policies. sell on retail (e.g. doba.com) - swapping sites (e.g. whatsmineisyours.com) - grouped buying (e.g. groupon.com) - free sites (e.g. limewire.com) - virtual stores (e.g. polyvore.com) In the online world, 6 months is a really long time – and time enough to make a fortune
  • 6. 06 • Jones Lang LaSalle Retail 2020 Online Gold Rush And we will see more and more co-production, Will any old-World players match the business flair involving consumers in the whole process, of these upstarts? Looking ahead, anything is from design, through selection to selling and possible, but it will require true iconoclasm at the beyond. For example, made.com showcases very top of a retail enterprise and a new generation furniture designs and holds public votes. Only the of employees. For a start, retailers should be most popular designs go into production and voters recruiting as many smart ‘digital native’ Gen Yers receive discounts for helping select. In true win-win as they can lay their hands on and putting them in style, consumers are involved and get products pivotal positions (hint: not in the warehouse). they want; new designers get showcased; the manufacturer has no unsold inventory, retailers sell exactly to order. And once again, the specialists in this supply-chain revolution come from online. In the future, creativity will continue to come from start-ups not incumbents. Perhaps this is the way it always happens. Future electrical cars are as or more likely to come from battery makers as automotive companies. Alternative energy companies like Vestas Wind Systems and RePower are more likely to dominate renewable energy, than Shell or BP. When the platform changes, leadership changes. Insiders become outsiders and new opportunities abound. If you have any questions about this report, please contact us at: Paul Guest, Head of EMEA Research +44 (0)20 3147 1925 retail2020@eu.jll.com www.retail2020.com

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