trending Market Intelligence /marketintelligence/en/news-insights/trending/XICAiGTtWBLp_SAM3eLUtQ2 content esgSubNav
In This List

Retail entering decade of hyper-evolution, consultant says

Case Study

A Sports League Maximizes Revenue from Media Rights


Japan M&A By the Numbers: Q4 2023

Case Study

An Investment Bank Taps S&P's Real Estate Modeling Expertise


FIMA EUROPE 2023: Exploring the Intersection of Data, Governance, and Future Trends in Finance

Retail entering decade of hyper-evolution, consultant says

Retail has entered a period of hyper-evolution and in a decade's time will be barely recognizable from today's landscape, according to a prominent industry consultant.

"Change is constant," Herculano Rodrigues, associate director for locations and analytics with the London-based retail strategy consultancy Javelin Group, said. "We'll make more changes ... in the next 10 years in retail than in the previous 40 years."

Every year for the last five years at the International Council of Shopping Centers' annual RECon conference in Las Vegas, industry leaders' predictions for retail's future in the era of big data have increasingly sounded like science fiction. This year was no exception.

Rodrigues, in a presentation, cited key technologies that will transform the retail business over the next few years: virtual reality, artificial intelligence, digital traceability, robotics and drones. All of them will be deployed in the spirit of greater transparency, to give consumers what they truly want personalization, which is another way of saying an individual experience with a product, and less "friction" at the point of sale, he said.

The storefront of the not-too-distant future may have nothing to do with sales, which increasingly will be the province of online platforms. For everyday necessities like baby diapers, purchase and delivery will be automated. For products that necessitate engagement, storefronts may only serve as "environments" for the purpose of building a relationship with the consumer base, Rodrigues said, citing the Google store that opened in New York in late 2016.

"They didn't sell a single product, and they had a queue for hours," he said.

Other brands in other industries are already adapting to radical shifts in consumer expectations. Rodrigues flashed photos of the multistory Nike store in New York, where a basketball court with 23-foot-high ceilings a nod to legends Michael Jordan's and LeBron James' jersey numbers occupies the fifth floor. It is the kind of store where kids might spend an entire afternoon after school, not shopping but playing.

Even banks are drastically altering the layout and feel of their branches in a bid to generate an admiration for and relationship to the brand, Rodrigues said.

"What are you going to bring to your shop to create an environment that people actually want to go to?"

All of this is another way of saying that retail real estate will certainly continue to exist, and even thrive, Rodrigues said.

"We're moving away from buying stuff, and using up stuff, to actually gaining experiences," he said. "And I truly believe the experience economy is the participation economy. ... Retail of the future will be living spaces. ... Retail will be the hub of the social economy of the future."

There was, throughout the conference, plenty of other testimony about the vitality and importance of the storefront going forward. A millennial tech entrepreneur in the space, Karin Cabili, maintained that in the realm of apparel and fashion, the majority of shoppers still prefer the store experience to online shopping, and even to the so-called click-and-collect model.

"People want to see and try before they buy," Cabili said, citing statistics showing that roughly 40% of online purchases are returned, while only 3% of in-store purchases are returned.

During a presentation on the startup she founded, the U.K.-based Dropit, Cabili offered a glimpse into how technology might merge the convenience of online platforms and the essential appeal of in-store shopping by getting rid of one of the latter's principle nuisances: the hassle of carrying around previous purchases, which can dissuade a shopper from an impulse buy. A shopper downloads the app, makes purchases at partner stores and, for a flat fee, Dropit delivers all the goods as one package to the shopper's front door, even if hundreds of miles away, at a preferred time.

Technology, she said, can help resolve the costly problem of last-mile delivery and allow all stakeholders to optimize their offerings.

"We all serve the same consumer," she said.