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Introduction
Introduction
D i s ru p to
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Disr
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Introduction
TE
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A N TA I LO
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Our study of the worlds most innovative retailers
left us marvelling at the number and diversity of methods
that are being used to seduce and serve todays consum
ers. The examples in this publication are the crme de la
crme: a handpicked selection of our favourite cases.
Trends
ENABLEMENT
THROUGH
TECHNOLOGY
These days, when you book a hotel, whats the first thing you do? If youre anything like us,
you check the guest reviews online. The hotels website showed you spacious rooms and an infinity pool
but it didnt mention the construction site next door.
Consumers are better informed and more demanding than ever. Blogs, social networking, price
comparison and travel sites allow them to uncover the truth about brands. And brands that fail to provide
impeccable service will be exposed.
Some brands have bravely taken matters into their own hands. For instance, American Apparel
customers can critique their purchases on the retailers site. Uncensored feedback strengthens the relationship
with the consumer.
Technology has put the consumer in the driving seat. Self-check-outs and cashless payment (just
swipe and go) are creating a swift and efficient shopping experience. There are even stores that turn windowshopping into a reality. Ralph Lauren has experimented with touch-screen window displays. Customers can
touch the item they want and then pay for it by swiping their credit card through a wall-mounted reader.
Or they can create a digital shopping cart and pay for the items online the next morning.
All of these developments will have a massive impact on store design and shopping habits.
S U P P O RT T H E
T I M E - S TA R V E D
CONSUMER
We know youre in a hurry, so well make this quick. Today, time is a luxury. According to Trend
watching.com, half of US consumers now say that a lack of time is a bigger problem than a lack of
money . Even teenagers feel there are not enough hours in the day. New services and solutions are spring
ing up to help consumers grab back some time.
Concierge services are becoming familiar. Door-to-door luggage delivery services help time-starved
travellers avoid lines at check-in. A site called City Servant in the UK offers a whole range of services, from
supermarket shopping to dry cleaning. Just fill in the form online and at one click a concierge comes to
your aid.
The existence of magazines like Organize in the US underlines consumers deep-seated desire to
bring order to their busy lives. Brands that wade into the breach will win.
Trends
NO MORE
ONE SIZE
FITS ALL
Todays consumers defy easy categorization. Populations are becoming more cosmopolitan as
borderlines blur and overseas living becomes more accessible. Age does not define attitude: the boomer
generation refuses to grow old. Can I borrow your PlayStation, grandpa? Society is a kaleidoscope of
social situations: singles, non-married couples, empty nesters, older singles. Retail concepts need to reflect
this diversity.
The resurgence of items made just for you is part of this trend. Objects can be personalized or
made to measure, from jeans to laptop computers.
Practically the only thing that unifies consumers is their expectance of high standards. Price is no
longer a deciding factor. Todays shopper demands value AND quality. Hard discounters are being
forced to rethink because cheap and cheerful is not enough to retain customers. Fast fashion must offer
cut-priced clothing AND cutting-edge designs.
Consumers refuse to be trapped in class categories. If they cant afford a Louis Vuitton handbag or a
Prada dress, they can rent one for the evening via an online service. Be whoever you want to be, as long
as youre unique.
COST CONVERGENCE
OR THE RACE TO
THE MIDDLE MARKET
Dont mess with Mister In-between. Luxury brands introduced accessible items in order to boost their
profits and satisfy shareholders. As a result, consumers developed a taste for luxury and began to won
der why cheap had to equal nasty. In order to please them, retailers like H & M, Zara, Target and Japans
Uniqlo began trading up, improving the retail environment and adding catwalk zest to designs. H & M
even brought in the firepower of designers like Karl Lagerfeld and Stella McCartney.
Other sectors have followed suit: McDonalds is giving many of its restaurants a sleek makeover.
Burger King has launched the worlds most expensive burger, made of Kobe beef. But with high-end mov
ing down and high street trading up, some brands may be left floundering in the middle. Accessible luxury
and cheap chic are both on the money. Retailers selling so-so goods at mid-market prices should start wor
rying, and this squeeze is likely to intensify within the context of the global credit crunch.
Trends
SUPER BRANDS
KEEP ROLLING
O N ward
E- COMMERCE
KEEPS
GROWING
The giants will not be vanquished. Despite occasionally expressing concern about the growing reach
of retail super brands, consumers continue to use them. Thats because the sheer scale and power of WalMart, Carrefour, Royal Ahold, Metro Group, Tesco and their ilk allows them to constantly innovate. Super
brands can cater to every whim of todays super demanding consumers.
These brands exist in many sizes, from hypermarket to neighbourhood store not to mention website
with home delivery. They go far beyond food, to provide everything from CDs and books to furniture. They
even offer travel agents and financial services. They have launched organic, fair trade and eco lines. And
they cater to every taste and budget, from cut -price to gourmet. In a time-starved world, they offer a onestop shop.
But retailers have also become skilled in striking partnerships with complementary brands: think of
branches of Starbucks within Borders bookstores in the UK, or McDonalds in Wal-Mart in the US. Well
see more retail brands joining forces to launch store within store concepts.
The store may be the star, but the role of the web will continue to expand in the coming years.
In the US, onlines share of retail sales is expected to reach 6.9% in 2011 ( Jupiter Research). In
larger European markets it could hit 11% (Forrester) and in China it is expected to sidle up to 3%. As you
can see from these figures, the web is not a threat to the traditional retail experience but rather a comple
ment to the bricks and mortar setting.
According to WGSN, vast numbers of consumers as many as 69% research product features
online before buying. And 68% compare prices so they know what they should be paying in stores. As for
online purchases, books still lead the way (according to Nielsen), with clothing, accessories and shoes in
second place. Videos, DVDs and games are third and airline tickets and reservations are fourth.
Even the most technophobe retailers such as the luxury brands have now grasped that an online
shopping offer is an essential part of the marketing mix. But they should also be present on community sites
such as eBay, Facebook and MySpace.
Trends
10
RETAILERS
BECOME
BRAND MANAGERS
Private labels are here to stay, and they re expected to make up 30% of global food sales by 2020
(Admap). In Northern Europe, private labels account for some 40% of sales, falling to 30% in Southern
Europe and 20% in the Eastern countries. In the US, sales stand at 19%. Interestingly, only 5% of brandaddicted Asians prefer to buy products labelled by their retailer. Watch the emerging markets for this grow
ing trend.
The success of private labels is no doubt due to their flexibility. Retailers now have a range for
everyone. Take Carrefour in France as one example. It has several different own brands, covering budget,
organic, baby, mid-range, low calories, kids, gourmet, exotic and traditional. In the UK, Tesco customers
know they can look to the higher-priced Tesco Finest range when they want a gourmet treat.
WELL-BEING,
THE PLANET
AND ME
Ecological issues, ethical consumption and health consciousness have somehow become intertwined
in an aware citizen retail trend that will only get bigger. As IPSOS put it: Until recently the concept of
green or being green was a fringe issue Moving forward, being green will not only become main
stream, but will become the norm for most consumers.
Retailers are still coming to terms with the pressure they face to go green. Many of them have only
superficially addressed the issue, which leaves them open to charges of greenwashing. However, Marks
& Spencer in the UK has publically promised to overhaul its business model, putting the environment at the
heart of everything it does.
Meanwhile, concern about fair trade and the carbon footprint left by imported foodstuffs has driven
an ethical sourcing trend. The provenance of food is clearly marked, allowing consumers to favour local
producers or those who are paid fairly for the crops they grow.
Finally, concerns about over-consumption, diet and obesity are driving a health conscious trend.
Many food retailers now indicate the levels of fat, saturates, sugar and salt in foods. Advertising
campaigns and in-store marketing are pushing healthy eating plans and prominently displaying fruit and
vegetables. And fast food giants face even closer scrutiny.
11
Trends
SHOPPING
CENTRES
ARE SEGMENTING
The mall is about to mutate. The shopping centre as we know it is a jumble of different universes,
experiences and offers, crossing many price ranges and customer typologies. Over the next few years,
new shopping centres will have coherent identities, targeting particular styles of shoppers. Tokyos Midtown
complex, opened in 2007, set the scene: shopping, office, residential, hotel and leisure space, but all at
a luxury level.
Says Trendwatching.com: The shopping centre of the future will need a clear market position
the most promising position for malls will be value, entertainment, luxury or lifestyle driven.
10
EXPERIENCE
EXCELS
Lets face it: you re the customer who has everything. You ve shopped til youve dropped; your
home is bursting with stuff. What could possibly drive you into another store? Lets see. Entertainment?
As trend-tracking organization WGSN says: The big trend is for more engaging store environments that
encourage interaction and entertainment e.g. the Apple Store.
Providing an exciting in-store experience encourages customers to linger. And increased dwell time
boosts sales and long-term loyalty. WGSN adds: Never before has the physical store mattered so much
for making purchase decisions. Up to 75% of all purchase decisions are made in-store and not on the
internet.
Samsung has recognized this by opening an Experience Store in New York. The equipment is not
for sale its just there to play with. That way, customers can have all the fun and get someone else to do
the heavy lifting, by completing their purchase online when they get back home.
Trends
12
tbwa.com