The Store of the Future
Chief Marketing Officer
The physical store and retail shopping will change more in the next 10 years than in the last 100. Building integrated retail experiences that are profitable, provide true differentiation, and build loyalty is a key requirement for both retailers and brands to future-proof their businesses in the store of the future.
To help navigate this new era of retailing and ensure the physical store remains relevant for shoppers, retailers and brands, we’ve summarised some key insights that will inform how we jointly reinvent service models and drive innovation.
Changing Consumer Lifestyles
Consumers, along with the way they shop and interact with brands, have changed. We’re now more connected to everything, always on the go, and always on the hunt for ways to make our lives easier.
The urbanisation rate of more than three percent per annum in African countries is higher than that of any other region in the world—and looks to continue well into the future. Additional city dwellers mean not just an expanded workforce, but a larger number of people to sell to as well.
The mindset of today’s fast-paced and urban shoppers is also completely different to what it was a decade ago; there’s an emerging consumer generation gap, and retail leaders must adapt their store strategies to provide the seamless, end-to-end shopping experience that consumers will expect going forward.
The On-Demand Consumer
There’s a new digital generation of millennial shoppers who will make up 75% of the world’s workforce by 2025. Millennials (born 1980-ish to 2000-ish) are in their own right powerful consumers and trendsetters. They’re savvy online customers, but that doesn’t mean they have stopped going to brick-and-mortar stores.
Despite ecommerce’s impressive growth, shoppers in even the most advanced markets still go to physical stores. Moreover, when online shopping can’t or won’t deliver, a consumer will still need to go into a store. Physical stores, then, will always play a role in retailing.
For many new stores, the answer to this question comes down to creating a shopping experience. It’s about letting those who walk inside a store see, touch, and feel products; and engage with a salesperson, while also having the possibility of instant gratification gained from buying something on the spot.
The fundamental definition of what a store is, along with its purpose and function, is changing. Traditional format economics often don’t make sense when it comes to new, urbanised locations. The physical store is getting smaller. Retailers are downsizing (often referred to as "right-sizing") their stores to optimise footprints, address the rise of ecommerce, improve their overall economics, and relook at other fundamental changes in shopping behaviour.
Retailtainment, or the incorporation of entertainment into retail, will be crucial for both brands and retailers. Experiential retailers are reinventing the in-store experience, creating environments that attract and delight consumers through smart features like coffee shops, spas, art exhibitions, and a host of other amenities. They are also adding personalised service, in-store kiosks, pop-up shops, and more.
Brands and retailers will need to carve out a clear market position through a focused selection of products and store-clustering strategies to fuel business growth. Merchandising strategies will become more about the effectiveness and efficiency of physical stores and the services they provide. Brands will need to define market segments intelligently and target customers to ensure that the right product is available and visible in the right place for the right customers.
The New Retail
The physical store is also undergoing a radical reinvention to match the dramatic shifts in how new, digitally driven consumers want to shop. The most significant development will be a shift in the role of physical stores away from being a place of stocking and selling products and towards an environment in which they must act as an experiential portal where visitors learn, socialise and try out new products.
Stores of the future will have to adapt to a world of high-tech, fast-paced, digital-first, and on-demand consumers in unexpected and forward-thinking ways. Getting to know this generation of up-and-coming shoppers will be crucial for future success.
Ultimately, and especially in the short term, not every innovation needs to drastically change shoppers’ lives, but each development needs to be a step forward in making shopping more convenient, while helping retailers remain relevant and profitable at the same time.