Five takeaways for the future of physical retail
Retail is rapidly evolving, and we’re at the forefront, working with cutting-edge brands and innovators to prepare for the present — and future. We’ve identified five key aspects that define the physical retail of tomorrow, which will be increasingly focused on community, empathy, discretion, dynamism and — above all — experience.
1. Communities are the new target groups
A community is no longer confined to the physical world and its geographic limits. People from all over the world can find common ground and bond over shared interests and identity. A set of specific mindsets is emerging, and the importance of community is changing in both definition and scale. That humans strive for and thrive in a community is nothing new: What is novel is the role of brands as leaders in forging meaningful movements with strong signifiers — both emotional and aesthetic — that unite and attract like-minded people.
2. Technology will blend seamlessly with infrastructure
Technology is now advanced and ubiquitous enough that it needn’t stand out from other aspects of life. In Silicon Valley, this concept already has a name: Shytech. While in Europe, technology has remained engineering-driven, the US already has an established digital lifestyle culture, more focused on solving specific problems and applied to particular use cases. Technology that’s seamlessly integrated into infrastructure will be a core aspect of physical retail. Companies and brands will need to get creative about how this plays out; digital signage, for example, is costly and passive, while adding zero value to the customer. The successful retail store of the future will feature discrete and unobvious technology that nonetheless enhances in-store experiences.
3. Not all products will be offered at stationary retail
There’s no longer any need for people to purchase everyday items at a physical store, thanks to ever-improving same-day delivery services and Internet of Things systems that enable automatic product replenishment or reordering. As a result, consumers’ motivation for visiting a bricks-and-mortar store is changing fundamentally, requiring retailers to shift to a focus on specialist, original, one-off stock. In order to do so successfully, brands will require an overhaul not only of their in-store offerings but also the way they present them to customers.
4. We must differentiate between shopping and buying
Following on from the previous point, it’s important to draw a clear line between shopping and buying. Shopping is a leisure activity: An immersive, multisensory experience that evokes an emotional response. Buying, on the other hand, is a practical, quotidian exercise that will increasingly be prompted, assisted, or carried out by artificial intelligence. The motivation for consumers to travel to a physical store is, therefore, completely transforming: It’s about a willingness to spend time on such activities. For retailers, the challenge (and the opportunity) is in crafting attractive offerings, both in terms of products and, most crucially, experiences.
5. Welcome to the Point of Experience
The concept and reality of experience are both complex and holistic — and it’s changing profoundly. Consumers do not buy products anymore; instead, we buy into the consequences of our experiences. The digital age has solved many of our spatial challenges — to the extent that in the future, whenever people come together in a physical location it will be about experience. For retailers, this means creating a robust and compelling brand, product, and service experience, and a rethink of fundamental measurements of success. Where now we talk about sales density per square meter, it’s time to move towards the notion of experience per square meter.
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