beyond 2020 retail (future foundation)

Beyond 2020RetailThe 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 characterise the future marketplace as a result of the shifts we describe.

For more information please contact Jason ManderEmail: [email protected] number: +44 (0) 20 3008 6105

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Contents

Beyond 2020 : The Future of Retail

The 2020 series : an introduction

Shopping futures : some working assumptions

Retail 2020+ : the constants

Retail 2020+ : the changed landscape

Concept : The Experience Bazaar

Concept : Autopilot Shopping

Concept : 3D Vending

Pen portrait : the shopper’s day in 2020

3Beyond 2020 : The Future of Retail

The Beyond 2020 series examines how various sectors and themes will evolve in the next decade and beyond - employing quantified long-term data forecasts, global manifestations and the trends which matter most to a) project changes already underway into a technologically more advanced future and b) capture how developments currently in their nascent stages will progress in the years ahead.

To anticipate the longer term future in this way is to stimulate into play the best new trend insights - and thus maximise marketplace advantage.

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Some working assumptions as we look beyond 2020…


The competitive pressures facing conventional high street retailing will have intensified to the point where innovation in, say, the online shopping experience will provoke counter-innovation from the owners of physical spaces.

Bricks-and-mortar retail locations will place an increasing focus on experiences - providing the shopper with tactile, sensory, playful and unique encounters which simply cannot be replicated online.

Technology will enrich so many of our day-to-day retail moments, with smartphones in particular becoming indispensable in-pocket shop assistants which help us to navigate stores, gather offers, manipulate prices, augment the shopping experience…

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Some working assumptions as we look beyond 2020… By the start of the next decade, online

retailers will be capturing much more of our attention (and spend). But there will remain certain occasions when shoppers actively want to visit the high street, as well as times when the need to purchase and own is so instantaneous that physical retail outlets are the only viable option.

No serious weakening in the price sensitivity of the average and even the wealthier shopper should be anticipated.

Brand loyalty will remain under intense pressure, especially as smart technology makes it ever easier to locate a better deal and / or inform any retail decision in any sector. The appeal of premium customer service will be energised accordingly.


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Retail 2020+ : the constants


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 all technological advances and revel in a more traditional type of high street encounter

(browsing unassisted, using written shopping lists, paying an employee at the POS…).

There will be no weakening in the thrill attached to physical sale shopping (its

appeal being perpetuated by the consumer’s desire to touch, participate, grab-a-

bargain…). The post-Christmas or flash sale will thus retain its ability to stimulate a

pilgrimage to the high street.

Cornershops and similar venues will remain go-to locations for consumers in need of quick retail fixes or emergency top-ups.

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Retail 2020+ : the changed landscape (1)


One cannot envision the long-term future of retail without taking a view on the Internet of Things. There can be little doubt that the decade to come will see further revolutions in the situational display of highly personalised intelligence.

Specifically, the shopper will carry round with her a personal augmented reality accessory which can, in fun ways, guide the search for the most suitable winter coat, the one with the strongest CSR credentials behind it, the one you did not buy two weeks ago but should have done (because the price has risen by Euros 50), the one that your friend Laura recommended for you on Facebook, the one Miley Cyrus wore when she arrived to judge The X Factor World Finals in Kiev.

Connected shopping

Google Goggles allows users to capture images of any product and search its extensive library of images to find a match.

Buyyou is a “virtual mall” which brings together “all your shopping in one place” through a “simple, seamless and intuitive” interface.

Online consumers : % who use the internet at least once a year

Source: ITU World Telecommunication ICT/nVision

UK J

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A S R P C T Br A M I I0%

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40%

60%

80%

100% 2010 2012(f) 2017(f) 2020(f)

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A blurring between the high street and online will occur as brands become truly multi-channelled - harnessing online, in-store, mobile and social platforms.

Beyond 2020, some brands will use bricks-and-mortar stores as the last touch point for customers who have done their shopping in advance, online or via mobile phone, going in-store for final approval, alterations or merchandise pick-up.

The propensity to try before you buy, to check the quality of goods through touch and feel and size will remain. Online retailers will begin to address this with the development of more sophisticated virtual fitting rooms and, eventually, computer and mobile apps with screens which can imitate the feel of various fabrics.

Multi-channel shopping

Innovations in the early 10s : a sign of things to come

Digital showcase stores from House of Fraser

In-store kiosks from Debenhams

ASOS allows customers to collect items from partnering brands on the high street

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As the ubiquity of smartphones is solidified, it will be standard play for every high street shop to have its own app, to assist customers with queries and allow them to browse product ranges during moments of downtime.

Retailers will use mobile phone connections to draw consumers in-store by offering tailored incentives and rewards. Window shopping gets smart. And playful, too.

Virtual maps will be available in-store and via mobile phones, letting customers easily navigate the store to find the exact item they want at a minimised spend of effort and energy.

Mobile-enabled consumption : anytime, anywhere

Mobile coverage : already extending overground and underground…

2005

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Mobile consumers : % of internet users who access the internet on the go

Source: nVision Forecast | Base: % of internet users aged 16-64 who use mobile internet at least once a week

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Owners of retail spaces will face remorseless competition from any offer which would keep people at home. And thus, we will go to shops and malls in the future in the same way that medieval populations went to cathedrals : for the artistic beauty, for the enjoyment of ceremony, to hear talented people speak and sing, to feel part of a special tribe, to be entertained.

Increasingly, the space-owner will deliver experiences as much as putting objects for purchase on display. In an age in which one can buy anything from pretty well any location (especially the home), reasons for in-store visits will shift and diversify accordingly.

As e-commerce soars, in-store theatrification blossoms

E-commerce in Europe : % who have ordered goods or services, over the internet, for

private use, in the last 12 months

E-commerce in the UK : in the ascendancy in all age groups

16-24 25-34 35-44 45-54 55-64 65-740%

20%40%60%80%

100% 2008 2011 2012(f) 2017(f) 2020(f)

Source: Eurostat Survey on ICT Usage/nVision | Base: All respondents aged 16-74, EU27 / UK

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100% Actual Forecast

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As the 21st century progresses, the world is host to more shopping experiences beautified by fabulous futuristic architecture on the model of Il Vulcano Buono, Mall of the Emirates, Khan Shatyr...

Often, we reference here malls which are inter alia ski slopes, displays of son et lumière, golf courses, fashion catwalks, seven-star hotels with personalised concierge services, swimming pools, gourmet restaurants, theme parks with their own weather systems, carbon-neutral eco-farms...

The invitation is to see shopping less as possession hunting-gathering and more social capital accumulation of a kind that cannot be replicated elsewhere.

The shop as work of art

Starbucks’ concept store (Netherlands) State Farm’s insurance café (US) Konzepp’s Design store (Hong Kong)

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Beyond 2020, so much more will be available at 21st century street-corner / in-store vending machines - which will feature more than the cola, choc and chips fare we know today.

Currently common in some Asian markets and tested in a few Western countries, luxury vending will provide consumers with an even speedier way to purchase a last minute birthday present, a designer shirt to replace the one on which the brainstorm americano was just spilt, the necklace he forgot to buy for the anniversary dinner... at any time of day.

In-store, employees freed from the POS will act as customer service specialists - assisting the consumer with their unrivalled expertise about products.

Self-service : a serious proposition

Vending in the early 10s : showing the future of 21st century self-service

Facial recognition machines (Kraft, US) Pay for items with a Tweet (Electric Ireland) WiFi-dispensing machines (Asahi, Japan) Rewarding interaction (Coca-Cola, Singapore) Baguette vending machine (France) 24-hour cupcake ATM (Sprinkles, US)

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Concept 1 : The Experience Bazaar


In the 20s, we foresee retail spaces abounding with experience-heavy and value-adding offers - all designed to transform shopping into something approaching a leisure pastime in its own right.

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…

In the following slides, we visualise how we foresee the Experience Bazaar being manifested in a supermarket or travel setting.

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The Marketplace 2.0


The Marketplace 2.0 speaks to a retail future in which large numbers choose to buy their bulky, repeat purchase and low interest grocery items via online channels.

In-store visits, meanwhile, are reserved primarily for the selection of fresh or high-value products - those where the desire to retain personal input is strongest.

Thus liberated from the need for their stores to display all of their products in vast quantities, supermarkets have become more spacious environments in which customers can stroll through the aisles and engage with customer service specialists and product experts.

Along the way, shopping has become augmented, with stores featuring a range of interactive displays and in-store events.

The TravelTank Capitalising on the growing interest in

unusual or once unlikely destinations (Libya, Iraq, the Arctic…), The TravelTank “pops up” on a regular basis inside shopping centres and large stores with the aim of revitalising the travel booking experience.

Once a shopper enters the tank, they can engage with augmented reality and sensorial technology to see what destinations might be like and experience their sights, tastes, aromas and sounds.

The TravelTank also provides real-time access to local residents and experts - giving potential visitors an “insider’s view” - and allows consumers to build packages (and activities) bespoke to their domestic circumstances (catering to the needs of, say, singletons or multigenerational units).

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Concept 2 : Autopilot ShoppingAutopilot Shopping references a future of

remorseless efficiency, technological facilitation and automatic trigger points where the consumer

pre-sets criteria for buying across all day-to-day and humdrum categories.

The consumer’s smart fridge, smart bathroom and smart shopping cart will automatically replace

key items, with a range of convenient delivery options being offered on the basis of online diaries

and GPS tracking systems.Whilst on the move, consumers will be able to add to

the inventory via their mobile devices by synching with codes, capturing images or using interactive

screens in public places.Over-rides will be available but only if the shopper decides to take over; day-to-day purchasing can

thus be as automated as one chooses.In the following slides, we anticipate how this

concept might be realised in the context of department-store or grocery shopping.


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The iShop


The iShop is the consumer’s personalised online department store and their “ultimate shopping partner”.

Designed primarily for the tablet platform, the iShop is capable of purchasing products in any retail or FMCG category, prioritising items from a user’s list of preferred brands and which best fit their personal criteria (price, eco-ethical, quality, reputation…).

Shoppers can specify permission levels, allowing it to, say, automatically buy 90% of products in low interest sectors but give them much greater control in others (eg clothes, electronics). It can also source complete packages, such as a week’s worth of food, all items needed for a holiday, Christmas presents for the family, supplies to redecorate a house…

SmartCart By 2020, we expect such appliances as

the smart fridge to have entered the mainstream - and to be communicating with a shopper’s SmartCart to ensure that day-to-day products are ordered (and delivered) automatically.

The fridge monitors its contents on a continuous basis, synching with the SmartCart each morning to create an up-to-date list of products required.

Throughout the week, SmartCart uses price predictive algorithms to determine when and from which online retailer each item should be purchased.

Consumers can exert as much (or little) control over the process as they choose - perhaps simply approving its decisions or else allowing SmartCart to arrange all aspects of the purchasing process.


Concept to be visualised

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Concept 3 : 3D Vending

For the producers, brands and companies of this world, the rise of 3D manufacturing has the potential to dramatically alter

established manufacturing techniques and the traditional supply chain.

It raises the prospect of a future marketplace in which products are mass-customised

rather than mass-produced.

As the technology improves and printing times are shortened, will retailers begin

offering in-store, personalised printing services of their own? Will it be the

spectacle of in-store product creation - the “theatre of manufacturing” - that

reverses the ongoing consumer exodus to e-commerce channels? And will it be the

case that the on-the-go consumer can print customised versions of desired

items from smart vending machines?


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3D locales in the 20s : in a retail space near you?


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3D locales in the 20s : smart vending options?


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Pen Portrait : the shopper’s day in 2020 and beyond


07:00 08:00 13:00During breakfast, the shopper reviews the latest report delivered by HomeConnect - a tool which synchronises with their intelligent kitchen and bathroom to determine which repeat but low-interest purchases need to be made this week. Recommendations accepted, the system mines online websites in order to find the best deals and then arranges for a delivery to be made at a convenient time.

As they commute to work, the shopper uses free WiFi connectivity provided across all parts of the transport system to browse an aggregated list of new additions to their favourite branded websites. They then review a series of customised recommendations based on a combination of their previous purchasing history and those products purchased by their friends or endorsed by their trusted experts.

At lunchtime, they visit an in-store café which provides gourmet and authentic food. Taking advantage of a comfortable seating area, they watch the latest brand-produced comedy programme on a tablet computer.

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Pen Portrait : the shopper’s day in 2020 and beyond


15:00 18:00 19:00During their afternoon coffee break, the shopper connects to their preferred social network to see which products are generating the biggest buzz (and highest endorsement levels) among their contacts. Using AR technology, they see how various items might look in their home / on their person.

As the shopper waits for their train home, they use self-service machines located in the station to purchase grocery items supplied by local producers - earning points for their ongoing loyalty which can be redeemed in-store or online.

Keen to buy a present for a friend (which they want to select personally), the consumer decides to visit their local high street (which is open late each night of the week). Once in-store, they browse suitable items via a touchscreen and ask for advice from one of the shop’s customer service specialists. Choice made, they pay via their mobile and arrange to collect the item the next day from the station.

For more information please contact Jason ManderEmail: [email protected] number: +44 (0) 20 3008 6105

beyond 2020 retail (future foundation)

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