Store of the Future

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Store of the Future

By Dan Ochwat - 10/18/2017
So-Lo-Mo Central editor and regular Shopper Marketing contributor Dan Ochwat walked the P2PX exhibit hall discussing the future of retail as it relates to the exhibiting companies.

In the Year 2025 … What will retail look like? P2PX exhibitors offer their thoughts on NFC, Amazon and more to get your thinking started

 

A glimpse at China’s store of the future shows an unstaffed, self-driving, product-stocked pod offering 24-hour access by a mobile app called Moby. It’s the Moby Mart from Wheelys, as featured in Fast Company, Wired and Forbes.

The United Kingdom and France lead in online grocery and will continue to do so, per a McKinley podcast providing a look ahead.

Tokyo, not surprisingly, is already a playground to virtual reality shopping at retail and robot assistance.

Compared to the global retail marketplace, the United States has long offered a more temperate vision of the future. That’s not to say there aren’t companies playing in the aforementioned areas, but the U.S. tends to have a more practical focus.

Talking to companies who exhibited at the Path to Purchase Expo in September, we found there are things to be concerned with other than self-driving pods.

Amazon, for one. And developments such as Apple relinquishing to NFC. And the need for more engaging in-store experiences. Those all help paint a picture of the “store of the future,” per a selection of companies representing the full path to purchase whom we talked with at P2PX. Here’s a summary of our conversations:

3 Tier Logic

“With Amazon’s acquisition of Whole Foods, I believe that Amazon will solve the online grocery challenge and that by 2025 we might all be buying our groceries online with drone delivery,” says Jordan Kling, director of client services, 3 Tier Logic.

Kling wasn’t the only person at the show discussing the potential of Amazon and its turning Whole Foods into a natural produce fulfillment center. He does see e-commerce continuing to grow, but he doesn’t count out stores. “I don’t think that brick-and-mortar will disappear, and research has shown that consumers prefer to shop in-store for some categories such as clothing and perishables,” he says. “The key thing for brands is to best understand their consumers and their preferences, and why they buy, in order to build meaningful relationships and nurture loyalty through relevant messaging and offers.”

3 Tier Logic is an agency that helps brands leverage the mobile phone and has an artificial intelligence-based, automated retargeting technology that scrapes receipt basket data and identifies behavior to automatically send retargeted messages.

Great Northern Instore

Ninety percent of purchases today still happen in stores, and unless that vastly changes in the next few years, don’t expect the retail landscape to change all that much, says Mike Schliesmann, senior vice president, business unit manager. “Retail consolidation and the growth of online” are the disruptors, but people will still visit stores and expect more when they’re there. Schliesmann’s store of the future is one with more shopper interaction and bigger brand experiences; if the retail footprint shrinks, that retail footprint will be sure to give shoppers a reason to be there.

“People will research on the internet, Amazon, anywhere else, but a lot of times it’s showrooming. People want to go in and touch, feel and see it. So you have to react differently to give that customer an experience and an opportunity to purchase,” he says.

In addition to a new high-speed digital print solution, Great Northern Instore is looking at video screens, product demonstrations and simpler interactions inside the store. The retail display and solutions provider also recently developed a mobile app called Instore Vision to offer clients store audits and field data.

Explorer Research

With a new 9,000-square-foot shopper lab that just opened in Chicago, Explorer Research expanded its behavioral research capabilities that include virtual reality with eye tracking. The company worked with Tobii to trick out its headset, and the lab will have a dedicated space to use this function. Coming from 15 years of studying shopper behavior, Explorer Research echoes that an increase in experiential stores will differentiate retail from the proliferation of online.

“By 2025, most retailers will have reinvented their space,” says Anne Stephenson, partner. “For grocery, that might mean reducing center of store space with more warehouse space in the back. Center store items will be ordered on screens and the rest of the store will be focused on experiences, with a focus on fresh and prepared foods.”

She expects to see more drive-through pickup locations and showrooms at retail, and physical stores will be increasingly linked to smartphones. “We may also see brand stores that communicate the brand’s value rather than sell products: community involvement, sharing customer stories and providing product and ordering information.”

Another trend she notices is “we are seeing a polarization in retail with stores catering to the very wealthy or lower income demographics,” citing Nordstrom and Walmart having success while mid-tier stores like Sears are “disappearing.”

Wild Blue Technologies

The store of the future seemingly requires reimagining the physical space, and Wild Blue Technologies is an experiential design firm that has been reinventing category layouts for brands, designing pop-up shops, redesigning retail locations and more. The company added a virtual lab to test concepts, and when it comes to looking forward, Steve McLean, president, sees stores adhering to a more fully developed ecosystem of options that caters to the consumer.

“Retail will be ambient, engaging and converting throughout the day at nearly every touchpoint in our lives,” McLean says. “It will be seamlessly woven into our routines in a frictionless way, balancing the convenience of replenishment with the opportunity to surprise and delight.”

For McLean, the challenge will be designing an aligned ecosystem of experiences that include physical, digital and virtual experiences. “If you subscribe to the simple truth that people will spend their money where they spend their time, it helps to identify the strongest opportunities. Physical, digital and virtual retail are all platforms ripe with opportunity to reimagine and reinvent the experience.”

Ahalogy

“There will be a battle for the list,” says Bob Gilbreath, co-founder and CEO of influencer marketing company Ahalogy. The shopper inside the store of the future will be driven less by price and promotion and more by loyalty and how that brand is making the shopper’s life easier, he says, adding that shoppers will have one or two stores with a list.

To Gilbreath, the biggest impact will occur during the pre-shop phase, where more native and content-driven ads will impact a shopper’s loyalty, such as recipes or new ideas. He says in 2025 shoppers will have little patience for digital ads that interrupt the experience, citing YouTube and Facebook pushing toward six-second video ads.

“We’re in a low growth, slow growth, no growth world in the United States and Europe, so now the challenge is, can you generate growth?” he says. “Growth is not going to come from another 50-cent off promotion or another meaningless line extension.”

Ahalogy opened up its Muse platform to brand, agency and retail clients, enabling them to identify trends happening among its influencer network. Rather than a “social listening” platform that tracks brand mentions, the platform seeks category trends. For example, “make ahead breakfast” is a growing trend, where moms are making oatmeal overnight in the crockpot or coffee cake to be ready in the morning.

He sees video as the next big thing, and says people will continue to use social apps like Pinterest, Instagram and Facebook to discover. The networks themselves are fighting for ad dollars from brands, but at the same time they are fighting for consumer attention. Interrupting ads and fake news stories, for example, is what will have consumers turn off the apps.

InContext Solutions

At the forefront of virtual and augmented reality technology as a more efficient way to test retail concepts for a few years now, InContext Solutions believes retail is at a turning point. “I think 2017 is going to be the year we look back on and say, ‘That’s when things started to really take a turn toward truly changing the long-running status quo that this industry has held onto for so long,” says Mark Hardy, CEO. He attributes a lot of that change to Amazon, whom he says “has thrown down the gauntlet for innovation,” and stores and brands are out to respond.

The response will come in the form of smaller stores with less inventory and more local distribution centers for faster deliveries, he says. He believes automation and AI will influence more alongside auto-replenishment, and that clothing stores will be using technology more than others to give shoppers accurate measurements and customized solutions.

“I think virtual commerce, or v-commerce, is heading in an interesting direction and is going to be a large component of the way people shop in the future,” Hardy says. “InContext is already preparing the technology that can support v-commerce capabilities, but it’s just a matter of waiting until the industry catches up.”

Eyeview

A specialist in video marketing, Eyeview offers a platform that leverages AI machine learning and consumer data to find the right consumers and personalize videos and messaging. Vice president of corporate marketing Julie Harnek acknowledges the big dark cloud of Amazon looming over stores in 2025, and she says everything depends on Amazon’s ability to deliver immediate and personal satisfaction. For example, if your child is sick, Walgreens is still easier.

With the acquisition of Whole Foods, Amazon poses two major threats to brick-and-mortar, according to Harnek. One is if Amazon solves same-day, instant gratification. The other is being able to leverage Whole Foods’ in-store buying data in combination with its search, browsing and online buying data. “Amazon can use its findings to improve its pricing and promotions in all the categories it covers.”

As for digital video, marketers have become frustrated with legacy ad serving platforms and traditional measurement. “One of the biggest advantages of emerging addressable TV options is how a campaign can work together across desktop, mobile and TV – working with one partner, which ultimately solves huge problems around scale, personalized creative and measurement.”

TPG Rewards

With Apple’s iPhone 8 and iPhone X adapting near field communication (NFC) technology, the store of the future could involve a lot more phone-tapping signage in stores, according to John Galinos, president and CEO, TPG Rewards. Until these launches, only Samsung phones and the Android Pay function leveraged NFC.

In addition to being able to make displays in-store more personalized and interactive, NFC automatically gives the coordinates of the user’s phone, Galinos says, a key for data. He sees brands leveraging this technology to tap displays that can change content by time of day and change promotions. Content will change at home, too. If a package is scanned in-store, a promotion may be added to the phone. At home, a package is scanned and maybe a recipe finder appears mixing that product with ingredients already in the house, he says.

As a rewards company that witnessed an evolution from a physical toy in a cereal box to codes put on a box to receipt scanning and getting a digital reward texted, rewards can be truly frictionless in 2025 by putting offers directly on a user’s credit card, Galinos says. “With seamless rewards, there’s an issue: I have to ask the consumer for their credit card,” he says but adds that Millennials and younger generations will overcome this fear as they give credit cards to many apps already.

Quad/Graphics

Retail display firm Tempt In-Store Productions is a business unit of Quad/Graphics, which also owns an in-house integrated marketing agency called BlueSoHo that delivers mobile experiences that can be triggered by beacons, NFC technology, Snapchat codes and more. It’s a combination that enables the company to “make print work harder,” according to Mike Draver, senior vice president of sales for Tempt.

John Puterbaugh, managing director of mobile and digital, BlueSoHo, says, “We are using mobile to amplify and connect print (in-store displays, direct mail, inserts) together with digital engagement (social, web, email and messaging).”

As he looks five years out and more, the biggest change he sees is “we will stop pretending there is an online vs. an offline.” Draver agrees: “On a very basic level, no one should be waiting in line for anything, ever, as mobile and BOPUS [buy online, pick up in-store] or similar solutions evolve.”

Draver sees retail evolving further, such as how Nordstrom opened a store with no merchandise and Kohl’s teamed with Amazon for a common purpose around product returns.

Puterbaugh identifies a change of thinking, less focus on KPIs such as same-store and year-over-year sales and more toward “where a shopper is at a given point in time is often more important than who the shopper is.”

A dramatic change in in-store analytics and insights will support this, he says, with the convergence of the Internet of Things, smart products and rich-tracking data.

Inmar

A data-driven digital promotions company that recently acquired Collective Bias to marry social engagement data with its transaction data, Inmar leverages a range of data and has had its hand in load-to-card coupons, rebates, healthcare prescriptions and more. Kris Beutel, marketing director, promotion network, says 2017 was a breakout in food retailing. “E-commerce for food and consumables has reached the tipping point. In record time, the industry has gone from ‘wait and see’ to strategically positioning digital commerce as a competitive advantage – one that requires integration with the in-store experience.”

And while she too nods toward the disruption of Amazon acquiring Whole Foods and shoppers demanding healthier options and transparency in food, she doesn’t see the keys of retailing changing – convenience, value, competitive pricing and a positive shopping experience. Retail, if anything, will be more sophisticated, starting with insights that understand behavior all along the path. Retailers and manufacturers will be more agile in consuming data and putting them into action. Lastly, companies will need to be agile in implementing test and learn.

“Winners will go through great lengths to incorporate agility and innovation into their corporate cultures,” Beutel says.