The Forecast // Shopping & Retail

The Forecast The Future of

Shopping & Retail By Usbek & Rica I March 2015

Introduction!

The retail industry is undergoing a phenomenal transformation. On the one hand, the spectacular technological advances are transforming the traditional shopping journey and retailers are scrambling to keep up with the newest trends. On the other hand, consumers have changed; and they are breaking the rules of traditional models. They are more informed, mobile, connected, empowered and they operate in an always-on world with more options to browse and buy as the Internet and social networks provide easy access to product and price information, as well as feedback and reviews. In consequence, they have become more demanding than ever before, and retailers must find innovative solutions to cater to this new lifestyle and stand out from the competition. Marketers and designers need to create experiences that strike a perfect balance between efficiency and enjoyment, relevance and surprise.

Partnering with their solution providers, retailers are focusing on improving business processes as well as the convenience and efficiency of the shopping experience throughout the path to purchase. Another ongoing major shift is the new ability of smaller retailers and services to compete on the same level as major brands thanks notably to online retailing and social media. Overall, the retail industry is challenged than ever before and needs to strongly engage in innovation in order to deliver the shopping experience today’s customers expect and demand. Usbek & Rica’s report will help paint tomorrow’s retail picture and give organizations the keys to decipher evolving shopper needs and expectations, in order to drive better sales, service and engagement.

"We will see more disruption in the next ten years of retail than we did in the previous one thousand." - Doug Stephens, Founder Retail Prophet

Shopping & Retail | March 2015

Interviewed experts!


Yann Rivoallan

Commercial director & co-founder of France-based online retail and customer experience company The Other

Store

Jérôme Monange

Luxury retail expert & founder of France-

based consulting firm Lab Luxury and Retail

Christel Bollen

Director of Brussels Apple Store and former director of flagship store

Nespresso

Guillaume Cadot

Trend forecasting consultant & founder of France-based branding and retail consultancy

Lab.

Part 1 -

CONSUMERS’ SHOPPING ATTITUDES!


How are consumers different today from in the past?!


Customers have become more demanding, and this is happening in all sectors, even luxury. They used to be more flexible and receptive in the past; today they are often rude or arrogant. This is certainly due to the recession that has changed the attitude of luxury brands. Yesterday, the customer was king and salespeople needed to be entirely dedicated to him. Customers have become accustomed to that, because there is similar level of service even in supermarkets. - Christel Bollen, Store director at home furniture brand Heytens (March 1st, 2015)


How do young consumers differ from older generations? !


The great advantage of young consumers is that they were born with computers and the Internet. They have grown up with it, so they’re not afraid of it. But there are also many mature consumers who are true adepts. If I had to target a specific audience, I would target the 25-35 bracket especially because they are more open to innovation. - Christel Bollen, Store director at home furniture brand Heytens (March 1st, 2015)


The big difference between Millennials and the older generations is in the speed of information that is due to the globalization, digitalization and internationalization of brands. Depending on the place, time and the tool available to them, young consumers will purchase either online or offline. They just don’t think about it. - Guillaume Cadot, retail consultant and founder of consulting agency LaB (March 2nd, 2015)


What are consumer expectations when they shop?!

Above all, the customer wants to be warmly welcomed. If he is greeted with a smile and a kind word, he will be more open and more receptive to questions asked by the salespeople, which will in return allow them to better know and meet his needs. - Christel Bollen, Store director at home furniture brand Heytens (March 1st, 2015)


The price factor is stronger because of the recessionary environment and the rise of e-commerce that guarantees consumers make a good deal every time they shop. - Guillaume Cadot, Retail consultant and founder of consultancy LaB (March 2nd, 2015)


A shop is like a museum : visitors wander and look, touch and feel objects or test services. This is what everyone calls an "experience". This also contributes to the way we consider a city, a street : a shopping street with no shops is unthinkable. Shopping is a journey almost like a travel trip is. - Guillaume Cadot, Retail consultant and founder of consultancy LaB (March 2nd, 2015)


Find out our complete analysis in the full report! Contact us at: [email protected]

You want to know more about the consumer’s shopping attitudes?


Part 2 -

GLOBAL RETAIL TRENDS!

Contents!

#1 Anywhere, anytime (19)

#2 Easy, fast, flexible (29)

#3 E-commerce goes brick & mortar (38)

#4 The ‘phygital’ shop (48)

#5 The lifestyle space (59)

#6 Nomadic retailing (69)

#7 Multi-sensory places (77)

#8 Ultra personalization (86)


#9 The end of the check out (96)

#10 Social shopping (106)

#11 Gamification (117)

#12 The new loyalty (128)

#13 Mobile is king (137)

#14 Ethical boost (146)

#15 Small & local (156)

#1 Any place, any time!


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Analysis of the trend!

The convergence of channels, devices and platforms is on the rise. Retailers are now providing customers with a seamless shopping experience across laptops, tablets, smartphones, brick-and-mortar stores, catalogs, and advertising. The path to purchase is now becoming an ongoing and non-linear journey since all touch points consumers interact with are always on and accessible. People are no longer making a distinction between online and offline channels and their routine evolves to something more asynchronous, hybrid and continuous. They have now the possibility to browse from a channel to another as often as they desire, irrespective of time or location. Possibilities flourish and brands and retailers need to be present both online and offline, allowing customers to shop according to their moods and needs. If omni-channel retailing guarantees

consumers get what they want, when they want it and where they want it, they are facing challenges. First, they have to be present at the right time, through the right channel and on the right platform and adapt their design, ergonomics, user path and content to the format. For instance, mobile Internet users favor visual content, which means brands should focus on images and videos and keep the text clear and concise. Second, what’s key to optimize the experience is to do this with consistency. Third, they must consider targeted, niche publishers as the best way to attract these highly-segmented audiences. However, a recent study by Accenture states that while nearly half of the companies own a dedicated team, only 6% of them manage to implement such projects easily because of the difficulties to integrate the back-office technology to various sales channels.



71% of consumers now plan to participate in 'webrooming' – browsing online and then going into a store to make their purchase. Meanwhile, 68% of consumers say they are likely to participate in 'showrooming' - going into a physical store to see a product and then searching online for a better price and making their purchase online, up from 63% in 2013.

Accenture Holiday Shopping Survey, 2014

Hyper connected, knowledgeable shoppers are typically spending 50% more than single channel shoppers and 15-30% more than multi-channel shoppers.

IDC Retail Insights, 2012

Supporting insights!

What do experts say?!

Shoppers today ping-pong from physical stores to laptops to smartphones, and a purchase can come via any of these avenues at any time. As the lines blur between in-store and digital shopping, retailers believe they must win over these shoppers if they are to thrive in a fast-changing retail landscape. - Sarah Halzack, journalist (The Washington Post, November 27, 2014) With the increased penetration of digital usage, there’s no two ways about it: The consumer who shops across all platforms, they are the most important consumer to capture. - Alison Paul, leader of the retail practice at the consultancy Deloitte (The Washington Post, November 27, 2014)


In August 2014, US department store Nordstrom has integrated in its Instagram profile a link that connects its users to Like2Buy, a solution developed by Curalate. The retailer’s Instagram photos are associated to product pages on its Web store and consumers who click on the photos they like are able to buy the featured items. Shopping & Retail | March 2015

Paris-based concept store “Chez moi” now allows people to do their shopping not in a store but in a house. A French young entrepreneur lets shoppers feel like guests in his (boutique) flat, where everything is for sale.


#2 Easy, fast, flexible!


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In a society where time has become scarce, consumers are no longer willing to wait. Retailers have had no choice but to adapt to the new need for immediacy, so they developed new solutions such as same-day delivery, real-time updates, no shipping delays, one-click information access, etc. Successful retailers are those that manage to improve the quality of their supply chain in order to bring products into the hands of consumers as quickly as possible. Moreover, shopping experiences are also expected to guarantee the best convenience and efficiency. In response retailers are starting to develop solutions such as shop pick-up and drop-off, touchless payment, click and collect and extended opening hours. On top of that, customers increasingly

desire a more intuitive, fluid and cohesive shopping journey, which is now possible through a bunch of tools mobile apps. On-demand services are gaining great popularity among flexibility-oriented consumers. Consumers don’t want to waste time in the subway, in shops, or beauty salons; instead they are expecting that the service comes to them. The phenomenon has already gone way beyond car sharing to embrace the tourism & hospitality, food & beverage, health, beauty and entertainment industries, and more is to come. Basically, it is now essential that both online and offline retailers invest in ever more efficient technologies in terms of both speed and accessibility to cater to the ever impatient and urgency-driven customer.



79% of French people consider a good delivery to be one that is done in the same day.

ISA, 2014

Click & Collect volumes are anticipated to rise from 26.1% to just under 35% from 2013 to 2018.

Barclays report, September 2014



Because of the recessionary context, retailers focus less on the customer service and more on self-service because it provides greater rapidity as well as profitability. They invest less in the sales staff but increasingly in digital tools in order to save on wages and provide faster service. - Christel Bollen, Store director at home furniture brand Heytens (March 1st, 2015)

Today, we can question the relevance of hyper or supermarkets when observing the massive popularity of drive-thru, even in little towns, where consumers need to save time as much as those in big cities. - Guillaume Cadot, Retail consultant and founder of consultancy LaB (March 2nd, 2015)


Google Shopping Express is a same-day shopping service allowing people to "shop local stores online and get items delivered on the same day". As part of a promotional package, Google is promising new sign-ups six months of free unlimited delivery.

C-où app uses geolocation in tandem with smartphones to display the journey to follow in the store according to the user’s shopping list. This indoor navigation helps customers find any product and optimizes their shopping route.


#3 E-commerce goes brick-and-mortar!


of time or location.


!e Forecast // Food | January 2015

In parallel with the great momentum of physical shops massively going online through the launch of their e-commerce platforms, some big mortar shopping brands are now entering the physical retail sphere. Reasons for the move include brands’ desire that such outposts act as showrooms for flagship their products, and the implementation of an "omni-channel" strategy that seamlessly integrates brick-and-mortar and digital presences. The physical shop is not obsolete. While e-commerce offers cost advantages to brand owners and convenience benefits to customers, the A.T. Kearney Omnichannel Shopping Preferences Study indicates that the model of the physical shop delivers consumers a more immersive shopping experience and offers a unique value that can’t be found online.

Moreover, the large majority of retail sales are still generated at brick-and-mortar stores. Research studies show that most consumers of all ages still prefer to shop in real life shops, essentially because they are able to see, touch and try on products. Other arguments include the need of human contact and face-to-face service and the immersion to the brand universe. A physical shop is a platform that delivers an experience going far beyond the product, using the brand narrative to engage the consumer more deeply. While online shopping is clearly reshaping consumer-buying habits, traditional shops remain the dominant choice regarding shoppers’ purchasing decisions and patterns and we predict they will continue to do so in the next decade.


90% of shoppers surveyed would prefer to buy in a brick-and-mortar store across demographic and age groups.

A.T. Kearney Omnichannel Shopping Preferences, July 2014

Two thirds of customers purchasing online use a physical store before or after the transaction.

A.T. Kearney Omnichannel Shopping Preferences, July 2014

79% still like to visit the store to feel and see products as part of the purchase journey.

CBRE, summer 2014




I don’t think digital will make traditional physical shops disappear because there will always be customers who enjoy human contact with the salespeople. There are even customers who are willing to wait in the line, just because they want to get that human contact. - Christel Bollen, Store director at home furniture brand Heytens (March 1st, 2015)

One of the assets of small brands is the story they tell beyond the product. For example, the brand "The French Slip" is looking to open its first brick-and-mortar shop in Paris to bring its story to life, although it’s working very well online. - Guillaume Cadot, Retail consultant and founder of consultancy LaB (March 2nd, 2015)


Google opened in March 2015 its first-ever branded shop in central London. Called The Google shop, the place will sell Android phones and tablets, Chromebook laptops, and Chromecast TV services. The shop will hold tutorials showing consumers how to use the devices and hold demonstrations showing off key Google apps. This opening highlights how online companies are increasingly exploring ways to open real life shops.


Amazon has opened its first physical shop — not in downtown Manhattan as announced in December 2014, but on the campus of Purdue University in West Lafayette, Indiana. The e-tailer calls it a “customer order pickup and drop-off location”, which will allow Purdue students to make returns and collect orders of textbooks as well as other goods. Shopping & Retail | March 2015

#4 The ‘phygital’ shop!


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In 2015, retailers will invest technology and the distinction between the physical and the digital will further erode. The rise of e-commerce, the explosion of drive-thru, hyperconnected consumers: retailers must embrace the digital revolution if they want to survive. Highly threatened by the ‘showrooming’ phenomenon (when consumers visit a physical shop, find lower prices on their smartphones and then shop products online) — the most affected categories include household equipment, high-tech and cultural products - they must react. Real life shops are trying to adapt with cutting-edge technologies including augmented reality, wearables, beacons, 3D printing, to remain attractive to over-informed and ultra savvy consumers.

This is what experts call ‘reverse showrooming’ or ‘webrooming’, (when consumers go online to research products, then head to a brick-and-mortar store to complete the transaction). Amazon remains the No. 1 place where showroomers end up making their purchases, but it’s an even more popular destination for reverse showroomers who ultimately make their purchases elsewhere, in physical shops. However, the debate will no longer be relevant since retailers have now identified the business opportunity of combining the benefits of traditional retail with the benefits of online retail, and they are now working to actively capture those sales.


67% of French have practiced Showrooming in 2014. And 84% of them would be ready to leave if the selling point, searching on their smartphones, they find a lower price 10% on a site of e-commerce or a competitor's store.

DigitasLBi, 2014

In the U.S., 69% of people reverse showroom, while 46% showroom.

Harris



I am personally in favor of digitalization. At Nespresso, I suggested to implement an iPad using augmented reality in order to visualize customer’s home interior. Tomorrow, all retailers will digitalize their physical shops. This is clearly the future. - Christel Bollen, Store director at home furniture brand Heytens (March 1st, 2015)

Technology brings new tools and services to improve the fluidity, the experience and contact in the store. Brands can’t avoid digital and social media when it comes to communicate with customers. The challenge is not to be too invasive with technology in the point of sale because the customer comes in store to find human contact in the first place. Too much technology could dehumanize the shop. -  Guillaume Cadot, Retail consultant and founder of consultancy LaB (March 2nd, 2015)



To celebrate the first anniversary of its Shanghai location, Lane Crawford worked with British digital fashion magazine Because to create a series of videos that could only be accessed in-store using the magazine’s app, Fashion Scan. The initiative demonstrates how real life shops can drive footfall through digital interactions.


In November 2014, Rebecca Minkoff brought in digital and cutting-edge technology in her New York’s Soho physical shop. The space boasts a huge touchscreen wall that allows customers to send items directly to the fitting room. Once in the fitting room, another touchscreen allows shoppers to ask an associate to bring them another size or color, and even pay for their purchases.


#5 The lifestyle space!


from a place or device to another as often as they desire, irrespective of time or location.


Welcome to the new normal in retail: the hybrid shop. In line with the celebration of what’s local as well as the values of authenticity and conviviality, brick-and-mortar shops are turning to lifestyle places where people not only go to do their shopping but also drink a coffee, read a book or repair a bike. Retailers no longer contend with just selling their products and finalizing transactional purchases. Instead, they are using the information about their customers as well as their expertise to expand their core business and diversify the scope of their offer. A number of retail spaces are now pulling together complementary services under one roof, turning into major hubs where people spend extra time between two shopping sessions.

Modern customers are finding fun and convenience in these multi-tasking shops as they seek hospitality and leisure solutions alongside products and product-related services. Such ‘third places’ deliver a higher quality experience and become destinations in themselves rather than just places where transactions occur. Interior design is also increasingly renewed to create a more casual atmosphere, since young consumers are on the lookout for places where they can not only digitally shop but also study, work, learn, play, and simply hang out. The positive connection that is then created between a brand and its customers creates additional reasons for people to visit a shop, which is a big opportunity to diversify sources of revenues.


There has been a 41% increase in spending on lifestyle-related retail, including cafes, restaurants and other food services from 2004 to 2014.

Robertsday, 2014




Young consumers consider the physical shop as a meeting point where they come together, gather, meet each other. The approach is not even shopping-oriented but entertainment-oriented. Shops are turning into lifestyle areas. And that's exactly what department stores and airports are trying to achieve. - Guillaume Cadot, Retail consultant and founder of consultancy LaB (March 2nd, 2015) It has the potential to change shopping strips and centres from being primarily commercial hubs into places where people can gather to build the bonds of community – an important part of placemaking. - Andrew Brodie, Australian senior urban designer at RobertsDay, in a report about placemaking (Robertsday.com, October 8, 2014)


Opened in November 2014, Barber & Parlour is a new three-floor multifunctional space located in Shoreditch, London. The building hosts a fashion and accessory shop, a beauty salon, a kitchen with a bar and even a cinema all under the same roof, providing visitors with an all-day hangout.


Opened in early 2014 in the very north of Paris, La REcyclerie is an innovative hybrid place that aims to be a holistic lifestyle spot. While providing a restaurant, a bar and a café for customers who want to eat and drink, the venue also brings together a cultural center, community gardens, DIY workshops, fashion trucks, and more.


Find out our complete analysis in the full report! Contact us at: [email protected]

You want to know more about the global retail trends?


Thank You !

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