The Future of Retail Lies in the Experience it Delivers

In the retail sector, we have witnessed the profound impact of new technology. Fast fashion brands churn out nearly 52 “seasons” each year, social media showcases and elevates these trends, and e-commerce brings them to the consumers’ mobile devices and homes. A combination of consumer data and innovative technology is guiding these decisions and the consequent evolution of retail businesses. The result is a set of minor changes that appear to be an intuitive progression for the sector—yet, the enabling mechanisms can feel like the stuff of science fiction. Brands appear to know what we want before we do; in reality, they’re often dictating our desires and then merely fulfilling them.

But has e-commerce broken retail as we’ve known? Far from it.

Destinations of the Future

Retail hubs, whether super-regional malls or community centres, are focused on bringing foot traffic through the door, delivering customer delight and enticing consumers to open their wallets.

Sounds like their age-old raison d’etre. What has changed?

Today’s shopping centre cannot just be a mall. The convenience and variety of online purchases coupled with a focus on experience mean consumers now expect retail hubs to be interactive playgrounds for the entire family: feelings trump everything else. The term for in-the-know professionals is retailtainment—a portmanteau of retail and entertainment, and a fancy word for experience marketing. How an item is sold is now arguably more important than what it is.

Retail destinations must realise they have to reconsider the customer journey and recalibrate a decades-old business model for tomorrow’s customers; e-commerce is winning because it responds to current needs.

Consequently, leasing managers now skew toward dining and leisure. This tenant mix has become more inclusive, with value-centric fast fashion brands and innovative experiential formats.

Cutting-edge technology is also being baked into the mix at varying levels, and is now incorporated at the design stage, rather than after a destination is up and running. On the ground, beacon technology highlights relevant sales and promotions to visitors. Heat sensors and smart tech direct traffic organically through the servicescape, improving crowd control in peak hours and providing historical data on less busy areas where enticing activations can be sited.

Operators are also investing deliberately in placemaking, working more closely with their catchment communities to support local entrepreneurs and unique artisanal brands, while organising feel-good events to attract more visitors. Destination marketers are ditching the superlatives to leverage the ecosystem within which they exist.

Stores of the Future

Once there is a bustling destination in place and visitors are coming through, the real work begins.

State-of-the-art store design is integral to conversion. Over the years, brands have tactically embraced technology, such as with augmented reality-enabled mirrors to help consumers imagine how an outfit would look without trying it on. But as technology gets more intelligent, it can enable new business models, while serving up better customer metrics.

The Silicon Valley start-up b8ta has 24 experience centres that deliver retail as a service. As an offline version of Shopify, it rents out precious square feet across the shop floor through a subscription model. Conversion is not an objective, but a mere outcome. At the same time, “retail next” brands can test products and interact with consumers to understand how they are reacting to their display. The resulting insights through listening to consumers on the shop floor help drive conversion within and beyond the b8ta store.

The future of brick and mortar is to inspire, engage and learn from customers.

So how must the retailer evolve?

Retailers of the Future

Brands, more than ever before, must be attentive to the changing marketplace and be guided to deploy newfound customer knowledge to create value.

Investment in logistics infrastructure, for example, is among the most significant decisions for any retail conglomerate.

The MENA region’s largest non-food retailer—Landmark Group—recently launched a $300 million mega-distribution centre that is completely automated. Thanks to robotics, the facility processes 300 million units per year, interchangeably handling pallets, cartons, pieces and garments-on-hangers (GOH). Up to 74,000 cartons are moved across 10 automated and three manual docks daily. In addition, 36 outbound docks can handle up to 90,000 cartons and 250,000 GOH every day. In addition to the Landmark Group (an APCO client) there are other examples of companies, from Dell Computers to Amazon, that have either integrated a sophisticated logistics infrastructure into their business model or have enabled hundreds of business partners to create a distribution network which is at the heart of their operations.

So what’s in it for (you and) me?

Retail has inherent issues, such as greenwashing and a greater sensitivity to fair-trade, which provide significant opportunities for improvement. Consumers have more access to the workings behind the scenes, want more bang for their buck and have pushed retail further than it was prepared to go—and will continue to do so.

Brands now realize the only way to be bigger is to get better. In the MENA region, operators such as Majid Al Futtaim are taking tangible measures to reduce their carbon footprint and offset the operational costs against the long-term impact on reputation.

Technology is only a part of the story; how that technology can be harnessed for the greater good is the question consumers will be asking. Can we teach brands to answer that?

In 2020, retail must be among the hardest working sectors, innovating faster and listening more attentively. And we need to show up to the conversation, well-prepared to deliver a comprehensive solution and with the stamina to sustain the journey of transformation.