For some, 2017 may be remembered as the year of AI, specifically Chatbots. The technology is revolutionising the way brands and retailers interact and engage with customers. But it's not the only trend driving change in the retail sector. So, as we prepare to close the door on 2017, we ask, what's new and next for the industry?
Transparency, Cryptocurrency and Digital Store Fronts
Josh Walker, journalist, The Future Laboratory
Transparency has and will continue to be one of the most important values by which a brand is judged. With tools like blockchain making it easier for consumers to hold companies to account, brands are going to have to go to more committed lengths in proving their transparency. Due to the immediacy and authenticity it offers, live-streaming is already providing a fantastic way for brands to not just prove their transparency, but build a narrative around products on offer.
With countries like Japan and Dubai making moves to release their own digital currencies, cryptocurrency is increasingly making its way to the mainstream. This is bound to have a huge influence on retail. Already, we’re seeing brands launching their own digital currencies as a new form of loyalty, offering consumers access to future perks, sales and events, and greater control in being able to trade them freely online.
Another trend we’ll be seeing throughout 2018 is brands pushing original digital store fronts to define and elevate their offerings. Visual and audio cues will be used to replicate the multisensory nature of physical retail and create an immersive digital escape for consumers. Especially for visual-first Gen Z consumers, demand for experiential and immersive digital retail experiences will be high.
Play and Stay
Lara Marrero, strategy director and global retail practice area leader, Gensler UK
Retail isn’t dying; retail is going through a metamorphosis. We’ve seen this happen a few times in history –the dot com boom of the early 00s being the last time retail experienced a massive transformation.
The biggest changes we’re seeing now are challenging the fundamental notion of what retail is. It used to be a place where people bought stuff. Now it is a state where a person experiences a brand and its offerings. As customers blur the lines, so must brands.
Brands have more of a responsibility to their customers, both their current customers and the customers they are trying to attract. They need to respect and value their time, and 'walk their talk'. If a customer feels that a brand is inauthentic or not considerate of their time, they will vote with their feet.
Some specific trends we’ve seen this year include:
1. A Community of Individuals. 2017 saw the rise in physical retailers giving a voice to customers and providing them with a place to share their brand experiences via communities in retail environments.
2. Service-driven seamless experiences within the retail sector grew exponentially in 2017, blurring the boundaries between channels, putting service at the core of engagement.
3. The Menaissance. Euromonitor International found that men are now outspending women by 13 per cent and as such, many retailers have been focused on understanding their male customers, and creating spaces and experiences focused on men’s preferences and lifestyles.
These trends will continue to manifest themselves in 2018 and beyond.
I also believe that small is the new large. As more and more people migrate into the city, the rise of local, more personal shopping experiences via highly curated and thoughtful product edits will be key.
Deloitte, in a recent survey, found consumption of 'experiences' has outpaced the consumption of 'goods', therefore I think the future of retail will encourage customers to 'play and stay' rather than 'grab and go'. Programming and dayparting will be core to this, thinking of ways to create events and engagement in spaces to provide customers with a reason to go to a physical environment.
In the next few years I predict that more bricks and mortar stores will use the same targeting and personalisation offered online through investments in augmented and artificial intelligence.
Mariann Wenckheim, director, 20.20
Customers and retailers demonstrated astonishing resilience in 2017, despite the falling pound and squeezed household finances. However, consumer confidence is finally waning and retailers must grapple with keeping prices the same, while maintaining quality. Profits have already been hit hard and those without a strong online offer have little hope of driving up sales.
Going into 2018, Amazon will continue to raise the stakes on ‘extreme convenience’, while consumers look for personalised and meaningful alternatives to big stores. Bloggers and vloggers are increasingly swaying purchases and becoming 'retailers' for brands. As a result, traditional retailers have the opportunity to become the physical platform for these influencers or they need to become influencers themselves. Stunts like the 'Ikea House Party', which gave people a glimpse of future interiors design trends, are no longer just PR exercises, but a powerful way to reach customers via social media and real-life events.
Integration between online and physical retail has reached a point where brands can evaluate the role stores play in driving online sales. Undoubtedly, more shops will disappear. In the physical world, it’s no longer a numbers game but a question of quality, and the most successful stores are either super-convenient or else truly worth the experience. As fulfilment and low-cost retailers thrive, so too will those that are becoming 'clubhouses', 'event spaces' or 'emporiums'.
Philip Handford, creative director, & Ola Handford, research & development director, Campaign Design
In 2017, with an increasing number of sales happening online and via mobiles, retailers continued to develop a new role of physical stores, and venture into other 'physical spaces' to experiment with on-brand experiences.
In 2018 we will see a strong tendency which continues the split between convenience and quality of experience. This year we saw increased shift from 'experiential' to 'transformative retail', as predicted in the 1990’s by Pine and Gilmore (for example, ‘Today at Apple’, Nike Manila running arena). We will see more retailers follow this well-established route and explore their own brand offer through transformative experiences and experimenting how their physical presence can add value to online sales. That will lead to opening stores which are more 'playable', where customers will engage with products in a meaningful, fun way rather well aesthetically design stockrooms.
With many retailers being cash stranded and apprehensive to jump into new, untested models of retail, pop-ups will remain a key strategy to test ideas and new solutions. Physical spaces will increasingly become an extension of marketing strategies as well as sales points.
Retailers will experiment with the frictionless journey, connecting online with in-store. Farfetch OS will continue to lead the way. Also, customers will continue to take more photos in-store. Retailers will start finding new ways to benefit from this tendency and designing more shareable stores. At the same time, with developments in image recognition technology, we will see mobile phones become a missing link to connect online and in-store.
Katie Baron, head of retail, Stylus
Retail has never been more omnipresent. 2017 was defined by live, on-demand, experiential and service-driven retailing. Some of the most exciting disruption however, derived from 'chat-led' commerce – chatbots and voice-activated AI, which is defining the future course of brand-to-consumer interaction.
Building on the desire for non-generic brand communications, we are starting to see voice communications being used to establish micro relationships between brand and consumer. This is key to understanding the subtler, non-retail aspects of consumers’ lives that are now necessary to servicing them holistically.
This will continue to evolve as an important trend for 2018. Fostering personalised and often highly candid conversations, advanced bots and cognitive biometric tools will help retailers better gauge and respond to 'live' behaviours. This will enter a whole new dimension as software like Chinese-based Emotibot, enables AI to respond to human signals like facial expressions, delivering more satisfying responses.
Service-led retail also gained momentum in 2017. Governed by support, advice and additional activities, we started to see smart brands creating imaginative temples to complement product-led services. With 40 per cent of event spaces in London having closed in the last five years (London Mayor, 2017), these spaces offer critical added value to retailers going beyond-brand commercial engagement.
This ties into a broader issue that will influence retail in 2018. As consumers become as knowledgeable as sales associates, a hard sell will feel increasingly out of touch. Combine that with the booming desire for experiences, and retail grounded in 'un-consumption' or 'low-transaction' will increasingly underscore brand success. Opportunities to learn, test, connect and also influence others will become as valuable to brands and their consumers/fans, as physical product.
The Emergence of Full Retail Ecosystems
Cate Trotter, head of trends, Insider Trends
2018 will be the year when leading brands fully start to link information across channels. This is about much more than ordering online to collect in store, and vice versa. Some examples of how retail ecosystems can be optimised, boosting experiences and retailer profits, include:
* Digitally recognising a customer as they walk into a store, and pinging the assistant with everything the brand knows about that customer, in order to personalise and optimise the service they’ll receive.
* Letting assistants add information from their conversation to the customer’s profile after the customer has left, to further improve the online experience.
* Letting customers ping requests to stores ahead of time. Items that they're interested in can be waiting for them when they arrive at the store.
* Encouraging in-store assistants to phone customers or ping customers personally with updates that are genuinely useful.
* Offering in-store perks to customers who use the brand’s app to check into the store.
* Encouraging customers to complete in-depth profiles to help the brand provide much more meaningful in-store and online recommendations.
* Letting customers assess their precise skin tone or body shape in-store, to take them quickly to the precise item that will suit or fit them online.