The Future of Retail?
- Probably no other industry is currently in such a profound phase of upheaval as retail
- Customer mentality is changing; completely new retail concepts are being tested
- How can retailers successfully handle these challenges?
Probably no other industry is currently in such a profound phase of upheaval as retail.
Never has retail been more exciting than it is today. In 2018, Forbes Magazine found that “The Most Innovative Retail Concepts Ever Are Being Tested Now.” In the years ahead, completely new retail concepts will be launched. This is an enormous challenge for retailers. But for customers it will be a fascinating new era. And, yes, due to automation certain jobs will fall out of favour, particularly in the monotonous transactional fields – such as cashiers. But tasks that require people skills, empathy and creativity will be increasingly in demand.
In 1906, the Austrian economist Josef Schumpeter described a continuous cycle of "creative destruction." Nowadays, corporate management in retail trade likes to use the term “disruption.”
Since Schumpeter’s day, those cycles of "creative destruction" have been turning ever faster. There used to be a longer phase of stabilization after each change. Now, we increasingly find ourselves in a state of “permanent beta” in which change is the norm rather than the exception. Retail concepts will come to be seen as experience prototypes that are raw, unfinished and easy to change. This prototyping is linked to the use of scientific principles to validate business ideas. Ideas will be viewed as hypotheses to be tested empirically in the real world.
Meaning of Experiences
The use of the term “prototyping” in connection with retail experiences seems off-putting at first. The term is mostly used in connection with physical products, while experience is intangible. The millennial generation - those born between 1980 and 1996 – is characterized by its rejection of materialism and growing demand for experience. This generation is more open than ever to experimentation.
Tomorrow’s concrete retail trade will no longer just be vying with other retailers and e-commerce platforms. Its competitors will be hotels, restaurants, co-working spaces, festivals, museums, theatres, sports, and so on. It will have to be assertive, but also draw inspiration from the competition.
Another challenge: With the ever-faster cycles of innovation, it’s getting tougher all the time to forecast the future of retail.
There is really only one way to deal with such a high degree of uncertainty: experiment relentlessly. Tech companies like Google or Facebook introduce new features to the market when they're still in their beta stage. User feedback is then used to optimize the product. Physical retail can learn from this “Test Fast, Fail Fast, Learn Fast” approach. To have a say in the future of retail, you have to constantly develop new ideas. These ideas must be tested by clients in real life situations, quickly and early on, as rough but functional prototypes.
At blocher partners, for example, we think in four design phases: research, strategy, creation and realization.
Social Interaction & Community
In tomorrow’s retail world, empathy, hospitality, creativity and a profound knowledge of consulting – beyond the level of Google – will be of central importance. This also means that people will continue to shop in person, because physical shopping offers something that virtual reality cannot: conversations, sensual experience and empathy.
Physical retail brands need to define themes that bring these groups into the store – the new meeting place.
If tomorrow’s retail is no longer mainly about purchases, the primary task will be to offer experiences beyond what’s possible digitally. What’s needed is a totally new dimension of craftsmanship, fantasy and storytelling. Customers will want to visit an actual store that gives them an extraordinary, experimental, unusual – and memorable – experience.
Real space is more important than ever
People will increasingly need to try out products, to touch, smell and see them. Interactive technologies for configuration and application information can help set the stage.