Recently, my team and I invited 9 retail leaders of industry to Antwerp for a full day brainstorm about the Future of Retail. Here’s what they had to say:
The pressure on the retail industry is mounting. International giants like Amazon are swallowing up chunks of market by the tens of percentages, and the empty skeletons of closed commodity stores leave holes in shopping streets, like a kid’s grin devoid of its baby teeth.
Fortunately, like with baby teeth, something better will come in their place. It’s an evolution. In the retail industry, that means a complete reimagination of what a store is.
1. Pick a side: Convenience vs Experience
Brands will differentiate themselves by putting either convenience or experience first.
Amazon is an obvious convenience first brand. Their entire proposition is based on removing all friction for the customer, from discovery to delivery. Convenience first brands will focus on optimisation of targeting and profiling, automation throughout the value chain, reducing customer journey friction, and delivering “on demand” services.
Experience first brands, like Louis Vuitton, Burberry and, to a lesser extent, Nike, will differentiate through optimal brand experience. Their USPs will be cultural identification, retailtainment, non-retail offerings (like lounges and food or drinks) and multi-sensory environments.
Does this mean exclusively doing either will make your brand successful? The answer is no. To survive the retail revolution, you will have to do both — yet emphasise one. An experience-driven brand will still need convenience in terms of ordering and delivery. Convenience-driven brands will still need to invest in experience to inspire loyalty.
A retailtainment expert: In 2016, IKEA invited amateur chefs to cook at their DIY pop-up restaurant The Dining Club in London. Source photo: missouri-creative.com
2. The future is Phygital
Online and offline are terms of the past. The future will be defined by physicaland digital. You can’t treat online and offline as parallel distribution channels anymore. The magic happens in the interplay, the happy marriage between the physical and the digital.
Think of how facial pattern recognition might improve the in-store experience in real time. Mobile apps will act as digital companions, equipped with AR to guide customers through your showroom. And A.I. offerings will complement the tactile, human and atmospheric of the offline.
We have no way of knowing what the value of e.g. Blockchain might be –
all we know is that it has potential.
Or how about personal attention in digital channels. Human interaction and storytelling, even when you are miles apart, give the digital experience a more emotional touch.
The future of retail will belong to the brands that find the best way for digital and physical services to complement each other. Brands like Farfetch are already ahead of the curve when it comes to phygital retail.
3. Adopt fast. Adapt later
VR, Blockchain, A.I. – new tech is released faster than you can keep up with, let alone understand. These technologies are in their early infancy, and we’ve only just begun to scratch the surface of their potential. We have no way of knowing what the value of e.g. Blockchain might be – all we know is that it has potential.
Brands like Farfetch are already ahead of the curve when it comes to phygital retail. Souce photo: thedrum.com
That is why we say: adopt fast, adapt later. Start experimenting with new technologies now and incorporate them into your operations. Then, once there’s a better sense of the value they may bring, adapt accordingly. It helps you avoid playing catch-up with the competition.
4. Invent new Business Models
The way your customer relates to ownership is changing. The new luxury is not defined by accumulation and decoration, but by access and freedom. With new expectations come new products and services – but you can’t profit from them if they are monetised through archaic business models.
Netflix, Uber and Airbnb proved the market is open to new ways of monetisation. So experiment. Pilot new ways of making money and ask your customers for feedback. Create new streams of income for yourself and your company because you never know when your traditional business models may become obsolete.
5. Build a Community
I’m not sure why I’m still stressing this in 2018 . Involve your customer! The fact is that your 40 years of experience are exactly the reason why you’re out of touch with customer expectations. Your customer is 40 years younger than you and lives in a completely different universe. There is a place for intuition and gut feel in innovation, but when it comes to decision-making, leave it to the voice of the customer.
One of the best ways to keep your customers close is to build a strong community of co-creators, advocates and influencers. The customer of the future can fulfil crucial roles in design (crowdsourcing), marketing (influencer leveraging), sales (retail of things) and advocacy (word of mouth). Brand loyalty isn’t dead, but its drivers have shifted to cultural identity, location and social responsibility.
In-store retail is not a dead end far from it. Yet the value customers seek in physical stores is changing. People don’t need to leave the comfort of their home anymore to purchase anything. So, the question becomes: what do they leave their home for. The answer lies in creating unique experiences, entertainment and personal, human care and service.
One of the best ways to keep your customers close is to build a strong community of co-creators, advocates and influencers.
Change is scary. Not everybody is up for it. Many retailers will suffer huge market losses, or worse – disappear completely. But for every giant that topples, a multitude of innovative, young companies driven by the next generation of entrepreneurs will pop up.
The few legacy companies with the guts to innovate will leverage this opportunity to dramatically grow their turnover. By putting corporate capital behind the creation of startups, they will build a fleet of innovation speedboats, with the potential to become oil tankers of their own.
This is evolution. And I for one can’t wait to see what the future will have in store.