retail 2020: retail will change more in the next 5 years than the last 50
TRANSCRIPT
Generous Brands Ser ious Bus iness of P lay Joy of Shopping GenZ Reta i l ’s New Rea l i ty Exper ience S ignatures Must Sees Quarter ly t rend reports Kantar Reta i l /PWC Reta i l 2020
Where we got our thinking:
This change is not just driven by economic, product or industry trends (a l though they remain an in f luence).
Retail today is “under-delivering against millenials’ expectations.”
Source: Accenture Millenial Outlook, 2013
FITCH describes GenZ as “shopping in a constant state of partial attention”.
Source: FITCH Gen Z Future of Shopping Report, 2014
Both millenials and GenZ believe strongly in the importance of good citizenship. 78% would recommend a company seen as such 74% would be proud to be associated with it 71% say they would be loyal to such a business.
Source: MSL Future of Business Citizenship Report, 2014
On a Macro level this trend will influence the products and services retail brands choose to provide.
Example: CVS
On a Micro level stores won’t just be located in communities they will be woven into their fabric.
Example: CityTarget
”On average, CityTargets generate double the sales per square foot of larger Target stores.” Source: USA Today, 2015
This is indeed the new Seattle, the post-WaMu Seattle. Here, on Second and Union, you have the feeling that downtown is beginning to rise. The Seattle Stranger, August 2012
Example: CityTarget
“Our stores are integral parts of the neighborhoods we are joining”
N e i l B l umen t h a l , C o -‐ C h i e f E x e c u t i v e , Wa r b y Pa r ke r
IKEA
Hire local Incentivize employees to ride to work Employee housing Promise to improve the site they develop
Generous BrandsWearing your heart on your sleeve…In a world where consumers are becoming increasingly aware of
‘mean’ brands it was time to begin researching the concept of generosity.
Generous brands are those who show more of a heartbeat, take the first step and display a genuine understanding of their customer needs.
This is a long way from 2 for 1 deals and bonus points, but rather a tone of voice and general personality that encourages consumers to warm to their offer and become advocates.
By 2020…
We believe shoppers will absolutely want to know what retailers care about.
How will acting as a “generous brand” define the future for stores?
“Retailers will have to rethink their scalable ―one size fits all approach. Any retail strategy must include a plan to fit the ever-diverging needs of the US shopper.”
Source: Kantar Retail/PWC Retailing 2020 Report, 2014
Two trends:
Format Expression
Offer ing, footpr int , locat ion, operat ions
P lanned var iance across the estate
2008 Militant consistency Corporate driven messaging 1 look, 1 format Mass production of product and service.
2015 Exploring new formats Empowering their people Dialogue with their guests Passionate commitment to causes
Format Strategy: Lawsons Not driven by products, operations or location, but by people and niche needs.
By 2020…
We believe the concept of “engineered diversity” won’t just be the norm, it will be mandatory.
The only question will be: what formats, forms and expressions make the most sense?
Only 5% of consumers in the US & UK currently believe big businesses are being transparent enough.
Source: Cohn & Wolfe Oct, 2013
“By 2020, apps will proactively inform a shopper regarding specific issues with products or retailers upon entering brick-and-mortar stores or websites.
Managing and manipulating information (rumor control), will be more of an issue than ever as flash truth reports are distributed more frequently.
Brand management by 2020 will need to develop a host of new skills, tools, and communication modes, both nimble and innovative, than are typical today.”
Source: Kantar Retail/PWC Retailing 2020 Report, 2014
everything’s coming up
spring
$50 everydayliz claiborne handbag
february turquoise cuff bracelet
$225
$12 februarywomen’s gold toe sock 6-pack
$18-$20 everydaymisses’ bisou bisou swimwear
$13 everydayoutdoor pillow
$75 everydaymen’s nike shoes
$17 everydayjuniors’ arizona shirt
$20 everydaypillow pet
$12 februarymen’s st. john’s bay polo
$15 februarymisses’ made for life jacket
$30 februarytwin comforter set
$20 everydayjuniors’ olsenboye blouse
$130 everydayrachael ray 10-pc. cookware set
$14-$20 everydayfloppy hat or thong sandal
$14 everydaymixit bracelet
$20-$25 everydaymen’s j. ferrar shirt or tie
$4 everydayhome expressions bath towel
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everything’s coming up
spring
$50 everydayliz claiborne handbag
february turquoise cuff bracelet
$225
$12 februarywomen’s gold toe sock 6-pack
$18-$20 everydaymisses’ bisou bisou swimwear
$13 everydayoutdoor pillow
$75 everydaymen’s nike shoes
$17 everydayjuniors’ arizona shirt
$20 everydaypillow pet
$12 februarymen’s st. john’s bay polo
$15 februarymisses’ made for life jacket
$30 februarytwin comforter set
$20 everydayjuniors’ olsenboye blouse
$130 everydayrachael ray 10-pc. cookware set
$14-$20 everydayfloppy hat or thong sandal
$14 everydaymixit bracelet
$20-$25 everydaymen’s j. ferrar shirt or tie
$4 everydayhome expressions bath towel
| j
cp.c
om a
lway
s a
brig
ht id
ea
7
everything’s coming up
spring
$50 everydayliz claiborne handbag
february turquoise cuff bracelet
$225
$12 februarywomen’s gold toe sock 6-pack
$18-$20 everydaymisses’ bisou bisou swimwear
$13 everydayoutdoor pillow
$75 everydaymen’s nike shoes
$17 everydayjuniors’ arizona shirt
$20 everydaypillow pet
$12 februarymen’s st. john’s bay polo
$15 februarymisses’ made for life jacket
$30 februarytwin comforter set
$20 everydayjuniors’ olsenboye blouse
$130 everydayrachael ray 10-pc. cookware set
$14-$20 everydayfloppy hat or thong sandal
$14 everydaymixit bracelet
$20-$25 everydaymen’s j. ferrar shirt or tie
$4 everydayhome expressions bath towel
| j
cp.c
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The good news? Ours won’t be the loudest, or most important voice at all. .
And 2020 will be all about dialogue not broadcast
25%A d v e r t i s i n g
70%S t r a n g e r s w i t h p ro d u c t e x p e r i e n c e
90%
F r i e n d s w i t h p ro d u c t e x p e r i e n c e
Source: Edelman Trust Barometer, 2014
Stop worrying about controlling the message and embrace that it can be owned by others
Example: Selfridges #denimlovers
When you do speak in-store, keep it simple - Millenials already over-index on “tuning out noise”.
Example: Primark
Great visual is a draw for them because it signals inspiration. So let the product literally “sing”.
Example: H&M
And they are apathetic to marketing. Clutter is a turn-off for them. So keep it ordered.
Example: Uniqlo
“Leading retailers will be classified by those that are the best conversationalists, along with communicating a secure and self-confident image to their consumers.”
Source: Kantar Retail/PWC Retailing 2020 Report, 2014
By 2020… How will this manifest itself in store?
We see a co-authored narrative delivered with the impact of a tweet, the interest of a pin, and the emotional pull of a post.
OMNI-CHANNEL IN ACTION
Consumer Purchase
Multi-Channel Purchase Paths
But while omnichannel implies Seamless, the reality can be anything but.
Demands like:Internet of things 20-30 billion “always on” interconnected devices by 2020
Source: Garnett Research, 2014
Dominant platforms and conventions around retail out of store will have evolved and will be widely embraced and adopted.
Retail brands en-masse will be adept at managing and supporting these channels.
But one problem will still exist
And whether the store can not just create “continuity”, but truly pay off and enhance the OOS activity.
These concepts had the logistics, infrastructure and tools in place and the support of backers with deep pockets.
We believe they lacked continuity in their in store experience and that will need to be our biggest focus in the future.
By 2020…
What percentage of our in-store media will be dedicated to driving “continuity”?
How can we finally make the physical store enhance our OOS activities?
89% of millenials want personalization when they visit stores, but only 18% see it from retailers today.
Source: Vibes Marketing Personalization Report, 2013
OMNI-CHANNEL IN ACTION
The customer is free interact with the retailer on their own terms. Face to face
Direct/Email
Television
Online
MobileCall Centre
Loyalty
E-commerce
Review
Advice and Support
Search
Social
Bricks and Mortar
Consumer4
3 1
25
1 2
3
Shopper centric path to purchase. How they want to buy, not how we want to sell.
A shift from locating products to locating the best products for me.
Example: Forever21 -‐ ClosetSOS, 2014
And using technology to bring a relevant experience in-store.
Example: Klepierre -‐ Inspiration Corridor
In 2013, the overwhelming reason shoppers changed brands was poor customer service (66%). In almost every case (88%) the situation could have been saved, but wasn’t.
Source: Accenture Global Consumer Pulse Survey, Nov 2013
Part of personalization will be the ability to customize/tailor more and more products.
Example: Creyate
By 2020… Imagine a 150,000 square foot store that treats everyone in it as an individual.
What will it take to get us there?
Foot traffic is down.N o v / D e c F o o t Tr a f f i c40 Bil l ion Visits
30
20
102010 2011 2012 2013
1 7 . 6 B i l l i o n
Source: The Wall Street Journal, 2014
The sky is fricking falling.N o v / D e c F o o t Tr a f f i c40 Bil l ion Visits
30
20
102010 2011 2012 2013
1 7 . 6 B i l l i o n
Source: The Wall Street Journal, 2015
2014
There are now less than 50% of the warm bodies in US retail stores during the biggest shopping season of the year than were there 5 years ago.
How many will there be in our stores 5 years from now?
The 19-year commercial Web experiment has shown; you can't hold attention for very long, can't offer a point of view, can't control the experience, and, in a sense, never own your audience — at best, it's a fleeting, utility-like relationship.
Source: Michael Wolff, USA Today, 2013
Stores re-imagined around unique, defensible branded experiences may well be the biggest change over the next 5 years.
And tomorrow’s shopper craves these experiences.
An Experience Signature is a distinct collection of brand led moments, totally unique in combination from one brand to the next.
A retailer’s Experience Signature lies at the heart of why we choose one store over another.
They are the things retailers become known for.
They are the reasons we come back for more.
Only with touchpoints in harmony, and infused with a brand’s DNA, have we achieved an Experience Signature
By 2020…
We believe the brands who are thriving will be the ones who have crafted the strongest Experience Signatures.
And are well on the road to redefining a bright future for physical stores.
“But equally no-one can afford to be unprepared for what does arrive.”
Source:(Wa+s(Wacker,(Futurist(
FITCH thinks of Seamless as a palette of touchpoints
Physical: The tangible – from objects that can be touched to settings that can be experienced
Human: Dynamic interactions – with individuals, employees and social groups
Digital: Electronic Tools – technologies that talk to everyone, or just talk to me
PHD
Exploring Purchase intent in the category
Locating Specific product or service
Dreaming No specific purchase intent
Being inspired Learning
Having fun
Browse easily More information Narrow choices
Easy to find Useful reminders
Reassurance
The Holy Grail of Seamless is true omnichannel retail
multichannel
crosschannel
omnichannel
Shopping using different channels
Several channels, same purchase
Simultaneous use of channels and seamless delivery between them