• Project: Sephora Sephora's new store concept in San Francisco is built on its 'teach, inspire and play' approach
  • Project: UGG Brand signatures punctuate the new UGG store in Florida

Retail 2016: What's in store?

As the year draws to a close, we ask several industry professionals what they will take away from 2015 and what trends they predict will impact retail in 2016.

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Beta brand mentalities
Katie Baron, head of retail, Stylus

2015 witnessed many retail trends that I believe will be sticking around in 2016, notably the editorialisation of retail, the advent of fully shoppable virtual realities, an uptick in ethical attitudes as a driving force not a compromising burden, and the dawn of ‘beta’ (trial-and-error) brand mentalities. Contextualised, culturally astute and super-socialised commerce were also more widely embraced, as were revised understandings of gender, identity and consumer tribes and ‘fandoms’.

In terms of new, or interestingly evolved trends for 2016, here are some more key predictions:

  • Shape-shifting or ‘splinter’ store spaces: The direct result of brands needing to extend their role and remit as entertainers, educators and also enablers. This will take the form of new collectives, still deeper examples of hybridisation and also concepts attuned to borrowing. The premise is ‘owning over becoming’.
  • Experiential and exploration-based modes of commerce that acknowledge a growing desire for experiences over outright ownership, as well as a distinct need for retailers to counterbalance the rising use of predictive analytics and algorithms with concepts rooted in unpredictability, choice, impulse and the exhilaration of surprise.
  • Ephemeral moments and digital delay: Two ideas that illustrate how digital retail must evolve from being synonymous with everywhere, anytime ubiquity to a playing field in which to generate both ‘now-or-never’ moments of absolute shopping hunger and the ‘wait-and-anticipate’ thrill of sustained delayed desire. Staggered releases, physical-digital-store-marketing crossover concepts and drip-fed content will all be part of this shift.

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Speed and disruption
Aaron Shields, EMEA strategy director, FITCH

The retailing industry is going to see more change in the next five years than in the next 50. Speed and disruption are the only things on the agenda, so we can expect the following three big trends to hit the mainstream with retailers:

  • Customers prefer beta. FITCH identified GenZ’s preference of ‘new’ over ‘perfect’ in 2013. Now most of us expect new products, new delivery, new events and new delights in internet time and find ourselves a little more like Janet Jackson in a ‘what have you done for me lately?’ sort of way.
  • The mind shift from iterative to agile retail. Software companies have used agile working methods since the 50’s for their ability to handle complexity. Many retailers in fashion and tech already use agile methods that favour running many smaller experiments over creating a ‘perfect’ solution. It’s about letting 100 flowers bloom and backing the winners without a 100 per cent clear view of the ‘final’ outcome.
  • Stores evolving from fixed to flowing. The days of renovating a retail estate every 5-10 years are slipping into extinction. Retail is being managed more as an evolving platform with a core that is semi-fixed, while other key elements flow in to continuously enrich the experience in new ways. It’s the only way to safeguard against disruption and keep our ever-demanding appetites satisfied.

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A braver approach to ephemeral retail
George Wainwright, partner & creative director, PWW London

This year, brands have finally started to embrace temporary installations and pop-up experiences. Although these aren’t new concepts, it’s not until now that they have started to encourage engagement with customers and build enthusiasm about the potential of retail as an event.

With the emergence of technology in our everyday lives, we’ve become used to transient experiences. However, retail has still been a rather static experience for a while. Through the development of pop-ups, brands have demonstrated a flexibility that traditional bricks and mortar didn’t offer. By default these experiences become less formal, more exciting, and have greater potential to reflect the immediate needs of consumers. This has shifted the perception of what a great retail experience should be, and might even spell the end of the flagship store as a brand hero.

Through 2016, I want to see brands show a braver approach to ephemeral retail. By avoiding the tried-and-tested physical locations, they should enter new territories, using pop-ups as live testing grounds for brands to experiment. This would demonstrate their potential to reach a broader audience reach, with a less precious attitude towards brand management. Temporary experiences have the potential to make a permanent impression.

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Rise of the innovation lab
Colin Gentry, innovation researcher, GDR Creative Intelligence

One thing that 2015 has highlighted is that the traditional hard sell is no longer fit for purpose and brands fixated on this approach are finding themselves unceremoniously dropped from the shopping list. Retailers who act as an unassuming and knowledgeable confidant are turning customers into advocates and are reaping long-term benefits.

Target’s Open House in San Francisco is a case in point, with staff standing shoulder to shoulder with the customer during their product discovery. In this way, Target has been able to successfully sell the benefits of smart technology. Target’s Open House is also indicative of the enormous potential of innovation labs, something GDR thinks will only come to have an increasing presence in retail in the coming year.

Actively seeking their customers’ opinions and addressing pain points, many retailers are beginning to trial prototypes by transforming existing physical stores into hybrid, experimental spaces. McDonald’s Customer Learning Lab restaurant in Sydney and British Airways’ use of hackathons are just two examples of this already taking place, and there are no doubt many more to follow in 2016.

At the core of innovation labs is a new way of thinking: failing fast is a cheap, smart and valuable way to learn. Opening the floor to feedback, be it positive or negative, provides realistic insight into how products will be used once they are launched. Brands that look at the future of retail as a two-way street are more likely to succeed at a much quicker pace.

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Give me a reason (to shop in store)
Irene Maguire, co-founder, Caulder Moore

The in-store experience must focus on delivering the sensory, tactile, engaging, social experience and give a reason to shop in store. Many of our retail clients are conscious that their competitors are not other retailers, but hospitality businesses. Increasingly, expenditure is about experience; eating, drinking and socialising; basically those activities that cannot be replicated online. This is the new competitive context.

Linked to this is the discussion about brands investing exclusively in digital. Pepsi returned to mainstream advertising after devoting their spend in 2010 to digital/social media and experienced a five per cent drop in market share. Byron Sharp, in ‘How Brands Grow’, (and his even better TED talk), explains that digital largely targets existing customers, and brands cannot increase market share on the back of loyal customers alone.

Employing more sensory armoury to get noticed and stay top of mind is evidently seen in making sure your stores deliver immersive experiences. The transactional element can easily be delivered online, but the emotional engagement is where physical stores can deliver beyond all else, and where merging the digital and physical become a key element of creating new brand fans.

Witness how the new Lush store on Oxford Street has created a buzz by creating a space where customers can play, experiment, engage and have fun — this will hopefully encourage more of this inspiring retail initiative in 2016.

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Connected experiences
Amy Thom, customer experience strategist, Household

2016 will be an exciting time for physical retail with customers demanding more, such as a personal, seamless experience on and offline, spot-on service, human, tactile interaction and to be inspired. Online and consumer brands are moving in and retailers will up their game in order to attract customers and drive sales.

  • Connected response. This year, McDonald’s introduce ‘smart menus’ that recommend products based on the weather. Next year, in-store technology will really come into its own as a considered, agile tool, enabling meaningful, connected experiences. Digital communications will play a greater role, contextualising products, providing layered information and responsive pricing.
  • Super-charged convenience. Starbucks’ ‘Express’ Wall Street store combined its app with an ultra-efficient service journey to move customers through to fulfilment in record time. In 2016 more retailers will trial smaller, ‘micro’ formats, streamlining their offer with convenience still being king. Every moment of the customer journey will be optimised, from pre-ordering to fast-track fulfilment with self-pay options as standard.
  • Customer-first. The customers’ voice will become more explicit throughout the retail environment. From personalised products to the type of loyalty scheme rewards they are offered (Waitrose’s ‘Pick Your Own’) to the way in which the retail spaces they shop are laid out (Birchbox, USA uses customer feedback and tech tracking to modify product positioning).
  • Try before you buy. In the US, Pirch connected all its homeware products, from showers to ovens, so customers can get hands-on and try them out. We predict this trend to continue in 2016 with customers able to test and try out more products, the way they want to.
  • Time well spent. This year we were wowed by Lush’s Oxford Street store, which provides 360-degree immersion with demonstrations, interactive displays and a multisensory event space. In 2016 physical retail will provide more brands with the opportunity for tactile discovery, where brands come alive, bring communities together and facilitate social sharing. Where customers are engaged through storytelling, sensorial interaction and enhanced, theatrical service offers.

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Irresistible rise of the pop-up
Nigel Collett, CEO, rpa:group

Over the past year we have seen increasing flexibility in retail strategies with continuing dedication to making omnichannel work hard to deliver customer engagement and satisfaction. But, one of the most noticeable trends, and one that will continue well into 2016 and beyond is the irresistible rise of the temporary store format.

At last ‘pop-up’ has grown up, and faster than predicted. Now worth £2.3 billion a year to the UK economy, an annual average of 10,000 pop-up stores employs at least 26,000 people. The line between pop-ups and traditional retail is rapidly disappearing and the transient retail concept has now become a central plank in the strategy of many big brand names like Foot Locker, which has recently employed a pop-up strategy to evolve and define its Sidestep brand acquired in 2013.

Sidestep has already launched three pop-ups in Europe, made from a 'kit of parts' that can be rejigged to suit customer preferences, a fine tuning strategy that allows the store to act as a retail lab in which design and presentation can be changed to suit customer behaviours and needs. This flexibility is also being built into the new Runners Point stores across Europe. I think we will see a lot more pop-up action in 2016, particularly in the UK where eight per cent of retailers have launched a pop-up store this year.

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A tactile approach
Joan Insel, retail brand strategist, CallisonRTKL

'Millennial shoppers', who now number more than 'baby boomers', spend some $2000 shopping online. In 2016 retailers are focusing on specific strategies to entice these shoppers away from their screens and into real stores.

You can’t feel rich textural surfaces on a screen, so retail stores are moving away from crisp, clean and chemical, offering up the tactile with designs that might include fleecy sheepskin seating, rustic patterned flooring and open industrial ceilings as at Charming Charlie's new Manhattan flagship. 

More and more stores are finding dynamic ways for their bricks-and-mortar customers to have an interactive and entertaining experience. MUJI's new concept store, also in Manhattan, includes an embroidery station, a stamp bar and a perfume lab. The proliferation of in-store dining options remains unabated. Food and fashion continue to be a match made in heaven. Urban Outfitters, which recently announced it was buying the wood-fired pizza chain Pizzeria Vetri, will test that out. 

Retailers with off-price outposts are expanding their numbers, including Bloomingdale's and Macy's, while others are testing out shops that focus on used clothing and accessories. 

Main image: Lush, Oxford Street, London

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Out & About

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Karl McKeever

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