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The Vision Of Retail 2020: On-Track Or Off-The-Tracks?

  • Written by  Laura Davis-Taylor, HighStreet Collective

0aaaLaura Davis-Taylor HighStreetIt’s nearly here folks! We’re spiraling towards 2020, where the rubber meets the road on whether our many prolific pontifications of the retail future reside. Walking both the floor at NRF and the city stores of New York, it was hard not to look at our industry through this lens. After all, 2020 was to be the year that cataclysmic indictors came to fruition…where we’d stand back in awe of how far we’d come.

So, how are we doing?

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First, let’s revisit the common themes most shared. There are many, but we’re going to dive into our favorite forecast: PwC’s Retailing 2020: Winning in a Polarized World. It was originally published in 2011 and in it, they talked about the impending challenges of properly positioning retail brands to master the highly dynamic marketplace. The primary focus was their view of an increasingly polarized world — and how that translates to our sector. The ways in which they said this dynamic would manifest are below.

  • Channel fragmentation. “The US landscape is expected to experience a significant increase in non-store retail. Successful brick-and-mortar formats will look markedly different from one another. Most major retail outlets will operate a multitude of physical footprints, all aimed at pleasing their target customer in a variety of shopping modes. In fact, these footprints may not involve physical stores at all.” CHECK!
  • Non-store retail’s accelerated growth. “According to Kantar Retail's Global Database, by 2020, non-store retail is expected to account for 12% of the overall US retail marketplace for non-automotive goods. The concept of a wall-less omnichannel retail world underpins many of the drivers, trends, and strategies that will evolve by 2020.” CHECK!
  • Smaller footprints. “The retail environment of the future will see retailers increasingly opening smaller stores to generate new growth as already seen in several urban markets such as the UK, and Mexico. The online world will capture an increasing share of planned shopping trips, leaving brick and mortar retailers to capitalize on immediate, or impulse, needs.” CHECK!
  • Income fragmentation adaptation. “The US is the most income-polarized developed economy in the world, according to US Census Bureau and Operation for Economic Co-operation & Development (OECD) data. This polarization will continue to drive success stories at both ends of the economic spectrum — increasingly catering to a wider income range.” CHECK!
  • Growth of recession-trained and fixed-income shoppers. “These groups, regardless of wealth, are expected to pursue increasingly polarized shopping decision processes. For categories these shoppers care deeply about, we expect a rise in premium products that are tailored to their specific needs, and in the ‘indifference’ categories, we expect a rise in the extreme value segment. The middle of the market will need to react with distinctive positioning to thrive.” CHECK!

Uncanny, wouldn’t you say? They didn’t see the hyper-speed in which Amazon would spread its tentacles, but they sure nailed the basics of most everything else. They went on to talk about ‘the end of the middle,’ sharing that retail would move into high price/high experience and low price/low experience — and those in the middle needed to differentiate or die. Which many didn’t. And they either have died or they are in the slow agonizing process of it.

Retailer Polarities

Leaders (enlightened)

  1. vs. laggards (there’s still time!)

Pure Play

Legacy

Direct to Consumer

Retailer Rules

Long-term Investment

Short-Term Balance Sheet

Understated and Perfectly Appointed

Flashy Flagship

Pop-Up

Permanent

Smartest Tech Ever

Coolest Tech Ever

Uniquely Exclusive

Me Too

What did they say the implications would be? Interesting as well — and equally on-point. Read the white paper for the deep dive, but the items that stick out for us are:

  • Non-store retail (driven by online today, and likely mobile and tablet commerce in 2020) will lead retail channel growth;
  • “Perpetual connectivity” will be the norm;
  • Product merchandising at the shelf will be more interactive for the shopper;
  • Packaging will actively show products in use or communicate directly to smart devices;
  • Pricing will be a fluid dynamic between the price initially offered, the interaction with the consumer, and the final price (based on rewards or special deals offered to the individual to close the sale);
  • Promotions will be triggered by a shopper‘s physical presence, personalized and tailored to the shopper;
  • Shelf tags will have ratings that change as shoppers review and purchase, as well as usage suggestions derived from social media groups providing product information at the store;
  • As deal hunting becomes fluid and the time investment disappears, pragmatic frugality will become part of most all routine purchases, regardless of income;
  • Internet-enabled shoppers will be able to more clearly define and find specific products to meet their needs;
  • Shoppers will pay a premium for products or services that reflect their values, or for products that accomplish very specific things — a new premium that will require brand transparency, global and health-related preservation and social purpose;
  • Retailers will have a deeper view into their shoppers through the exchange of information generated during and after a transaction;
  • Individualized pricing, as defined by what consumers are willing to pay, will become normal; and
  • There will be a need for retailers to review ways in which to keep stores profitable through shrinking formats and shorter terms associated with property, despite the higher costs incurred (*They called out pop-ups as one of them).

We are indeed moving towards these visions, and we’re seeing proof in our industry newsfeeds. One just needs to read our quarterly Retail Innovation Radar Report for examples of each of these. PwC forecasted these 8 years ago, well before some of the technology existed to realize them. You know how? They thought about how we could better serve our customers and they took it from there. They asked themselves, ‘What would they want? How could we look hard at the changing world and respond in sensible, empathetic ways? How could technology enable us, not hamstring us? How can we redefine our role in the world?’

Pulling back the microscope, this retail phenomenon we are currently enduring is nothing but life on its typical course of evolution. Our world has evolved, our culture is ever-evolving, technology is changing almost everything about how we live, communicate, create and solve our challenges. The message is crystal clear to retail: evolve accordingly or get left behind.

At HighStreet, we coined the term Destination Retailing because the store’s role has changed. It’s no longer just a place to buy things, but also a place with potential for community, experiences, creation and more. It’s a service offering at the core of our ethos because we feel so strongly it IS the way forward for retail.

In this new, polarized retail landscape, we must acknowledge and nurture this reality, but our retail leaders also have to buy in and play ball for it to happen. It’s hard to do when they are not rewarded for risk and many have not yet embraced that they must be servants in this game — the crowns must come off. History has shown that few kings willingly handed over control to serve their people, but those who did often became the most historically beloved. But, make no mistake — captive people will revolt when the opportunity presents itself, and shoppers have indeed revolted. Now it’s time to evolve how we view our role in relation to them, which means how we serve them.

 Ruler Retail Stewardship:

Servant Retail Stewardship:

   

Plan

Observe

Dictate

Inquire

Fixed

Agile

Install

Resolve

Report

Measure/Optimize

We all know that retail has undergone similar transitions and we’re clearly on track for 2020 — some of us are anyway. For those that are still grasping to hold on to the past, I implore you — please go deep and ask yourself if how you’re currently leading is the right approach. Think about these changing times as opportunities, as a wonderful and exciting new runway for expanding your job and what your retail brand can be to the world. Revisit your stance on getting into your stores and talking to the staff — and the shoppers. Attach yourself to some of the young bright talent walking the halls and get inside their heads — maybe even get them to teach you some new tricks. Don’t fall for gimmicks and flash-in-the-pan ideas that may get you quick press but don’t really make a real impact on every shopper that encounters your brand. Embrace an agile mindset, not just with technology, but with how you approach testing and learning inside of your store. 

Be the brand your shoppers always wanted you to be. There’s still a little time left.


 

Laura Davis-Taylor is the Co-Founder of HighStreet Collective, a consultancy hyper-focused on innovating the in-store shopping experience to meet the demands of today’s digitally-enabled shopper. She can be reached at ldt@highstreetx.com.

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