Stores of the Future: Retail

Part
01
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Part
01

Stores of the Future: Concept Stores

Nike House of Innovation, Starbucks Reserve Roastery Tokyo, Tim Hortons 130 King, Tiffany Cafe @ Cat Street, Zara (London) and Sonos are six examples of concept stores that demonstrate stores of the future.

STARBUCKS RESERVE ROASTERY TOKYO

  • Starbucks Reserve Roastery Tokyo is the largest Starbucks Reserve Roastery and the fifth of the company's roastery.
  • The roastery’s first floor hosts its main coffee bar, it offers a variety of "unique coffees and coffee-based beverages". The baristas offer "one-on-one consultations, tailoring the bean, brew style and preparation to individual tastes".
  • The baristas serve signature beverages such as a barrel-aged cold brew that have a rich flavor, are sweet and smooth but still retain the alcohol-like burn at the back of the throat.
  • The Starbucks Reserve Roastery Tokyo's second floor houses the Teavana tea bar, which offers 18 loose-leaf teas and other tea-based beverages.
  • Its third-floor is a full-service Arriviamo bar that offers both coffee and tea-infused cocktails. It is features a Japanese twists on the standard classics and non-alcoholic options.

TIFFANY CAFE @ Cat Street

  • Tiffany Cafe @ Cat Street in Japan is a six-level concept store that features Japan’s first Tiffany Cafe. It is the second of its kind in the world.
  • The Tiffany Cafe @ Cat Street is more modern and casual with diner-like booths decorated in signature Tiffany Blue. The café serves breakfast that includes hot dogs, cheese pretzels and the signature Tiffany blue doughnuts.
  • The other five levels of the cafe offer futuristic designs, with variety of areas for jewelry personalization, designed to appeal to young and creative people that frequent Harajuku.
  • The cafe also has a jewelry vending machine and photo booth with a large Tiffany Blue backdrop that reads “Greetings from Tokyo”.
  • The cafe offers "an exclusive collection of charms engraved with the Tiffany @ Cat Street logo (which also appears on the store’s facade) will be sold in limited quantities to celebrate the store’s opening". The charms are available in sterling silver and 18K rose gold, featuring a basic tag shape or a key shape.

TIM HORTONS 130 KING

  • Tim Hortons 130 King (Toronto) is the first of the company's locations to feature its “innovation café” concept. This concept is a "modern representation of the Tim Hortons brand and a space to test new menu items and technology initiatives."
  • Tim Hortons 130 King offers a "24 hours service, traditional menu items, a “brew bar” with seven different coffee brewing methods and made-to-order beverages, a new assortment of 12 “dream donuts,” four new flavors of “dream Timbits” bite-sized dough snacks, and an assortment of breakfast, soup and sandwich items."
  • Tim Hortons 130 King also offers in-store technology that includes "a 98-inch 4K video wall that greet customers when they enter through the Exchange Tower, wireless charging integrated into seating throughout the store for compatible mobile devices, a dedicated mobile order pickup area and self-order kiosks, and a digital coffee education screen featuring new beverage innovations, brewing methods, and seasonal single-origin coffees."
  • The store tests sustainability initiatives that include "coffee cups made with 30% post-consumer recycled material, strawless cold cup lid, paper straws and wooden stir sticks to help reduce single-use plastics, all-new china and glassware for dine-in customers, and fully recyclable take-out packaging, including cutlery that is 100% compostable."

NIKE'S House of Innovation

  • Nike’s House of Innovation, located on 5th Avenue, requires customers to download the Nike App on order for them to enjoy the touchpoints in-store and get the most out of the experience.
  • Customers can scan the QR code at the bottom of a mannequin for an item they like to view the available sizes and colors.
  • The store allows customers to virtually shop and checkout instantly using the app in order to avoid waiting in line.
  • The app also offers a customization bar that allows customers to create their own unique sneakers.
  • The store has a floor that is dedicated to customizable apparel which allows customers to change the color of garments, switch out materials, and combine two different pieces of clothing into an entirely new apparel.

SONOS

  • Sonos' In-Store Sonos Sound application connects multiple speakers in different rooms for a powerful customer experience.
  • The store has a long corridor that is aligned with sound-proof booths designed to look like rooms of a home. Each wall of the booth symbolizes a room — living room, dining room, and kitchen.
  • There is tablet in the center of the booth that allows customers to play with the Sonos Application. The software "connects the multiple speakers around the booth and allows customers to change songs, control some features such as sound, and also check the speakers in each room." (source 1).

ZARA (LONDON)


Part
02
of three
Part
02

Stores of the Future: Retail Store Models

Experiential retail, check out free retail, and Instagrammable retail are three models for operating a store in the future. All of these models encompass elements of the consumers changing attitude to retail shopping and our changing lifestyles. A number of retail stores are already successfully embracing these concepts globally.

EXPERIENTIAL RETAIL STORES

  • The desire for experiences is currently rising. A recent survey of millennials found that 52% of their holiday spending goes on experience-related purchases, compared to 39% of older consumers.
  • The evolution of e-commerce means that consumers can select and purchase products from the comfort of their own homes. For a retail store to be successful in the future, it will need to offer something more. Consumers want to leave the store with memories.
  • By offering an immersive consumer experience, retailers can maximize the likelihood of consumers frequenting their stores.
  • Despite predictions that the brick and mortar store is on the decline, the 2017 US Census Bureau Analysis found that 90% of purchases are still made in-store.
  • There is no doubt the digital world poses a significant challenge for traditional stores. To flourish in the current environment and the future retailers will need to combine the digital and physical worlds to create an experience for the consumer, "wherever and whenever they are engaging with the brand".
  • The experience offered by these stores will include in-store robots, augmented reality, virtual reality, interactive product displays, consumer facial recognition to personalize the shopping experience, the ability to order food or drinks while shopping, in-store drones and connected fitting rooms.
  • Farfetch (London), House of Vans (London), IKEA (UK), Space Ninety 8, Beerwolf Books (Falmouth, UK), Reebok (US), and Nike (US) are examples of companies that are embracing this retail concept.

CHECK OUT FREE RETAIL STORES

  • Consumers are spending less time shopping than they did 15 years ago. A recent survey in the US found that the average person will spend 10 hours per month shopping for consumer goods, compared to 12 hours per month, 15 years ago.
  • Retailers in the future will adopt check out free retail to allow consumers to use the time spent in the store to maximum benefit.
  • The concept of check out free stores is one that has developed from the self-checkout model, which has become increasingly popular in the last few years. In the last 12 months, this concept has gained momentum as one which will shape future retail stores.
  • The 2018 RIS News survey found that the leading retail option sought by consumers was "grab n go" technology. This option allows users to self checkout using a mobile phone app.
  • 59% of consumers said they would use this technology. 9% of consumers were already using it.
  • In the US, 29% of retailers surveyed expressed satisfaction using a mobile checkout app.
  • 34% of retailers had implemented a mobile checkout app. 65% of the retailers that had implemented a mobile checkout app ranked it as the highest option for potential value.
  • The Amazon Go store revolutionized this concept when it was launched. Other retail stores are adopting this approach and it is likely this model will continue to expand into a unique model of the retail store of the future.
  • Sam's Club, 7 Eleven, Giant Eagle, and Tesco have all recently announced that they intend to implement check out free retail stores.

INSTAGRAMMABLE RETAIL STORES

  • In 2018 a number of prominent retail stores closed. To overcome this challenge, retailers began to get creative in the model of retail stores they operated.
  • One of the concepts that has gained momentum over the early part of 2019 is Instagrammable stores. Current developments suggest that this concept will become a model for the retail store of the future.
  • Retailers in the future will recognize the importance of not only making stores destinations in their own right, but investing in spaces within the stores for the sole purpose of Instagramming (or whatever other social media trends develop in the future).
  • The retail stores of the future will need to tell stories. Those stories will need to be visually appealing and immediately shareable.
  • This may require stores to adopt an approach whereby the store is reinvented every four to six weeks, to ensure consumers have an ongoing desire to visit.
  • Pop up stores will play a huge role in the future development of this concept.
  • The era of the instagrammable store is fast approaching. Stores need to visually appealing with the capacity to create "a perfect visual moment".
  • Different parts of the retail store will be developed to incorporate a different look, feel and experience to maximize the concept.
  • Store interiors are increasingly being developed by retailers to "wow" the Instagram crowd. This concept will continue to evolve in the future.
  • Examples of stores adopting this concept include Alchemy Works (LA), A Vida Portuguesa (Lisbon), Bikini (Berlin), Charlotte Tilbury Beauty Wonderland (Dubai), and Gentle Monster (London).
  • Winky Lux (New York) demonstrates the extent to which this concept is likely to evolve in the future. The store charges a $10 entrance fee to visit the seven different rooms of the store.
  • Each room has a different ambiance and design, linked to a Winky Lux product with similar characteristics. The store is specifically orientated toward young consumers who use Instagram.

RESEARCH STRATEGY

We extensively searched a range of industry publications, media stories, blogs, and press releases to determine the retail store models and concepts of the future. Initially, we focused our research on those concepts that were either theoretical or just starting to be discussed. Unfortunately, there was very little publicly available information discussing future retail store concepts that had not been trialed or adopted by the retail industry.

Given this, we considered the most recent developments in retail store models and concepts by searching the aforementioned sources. We restricted our search to recent developments which show the potential for evolution and development in the future. After developing a list of models for future retail stores, we searched the retail publications, blogs, and media releases to determine the models and concepts which were mentioned consistently in these resources as shaping the future of retail. Experiential retail stores, check out free retail stores, and Instagrammable retail stores were the three models that were mentioned across a wide range of reputable sources as new concepts or models for the retail store of the future.


Part
03
of three
Part
03

Modernizing Brick and Mortar Stores: Retailer Perspective

Several statistics suggest that a significant fraction of retailers worldwide are planning to modernize the brick-and-mortar store experience they offer. For example, 23% of retailers in North America plan to install virtual mirrors in their stores within three years, 59% of manufacturers and retailers in Belgium say they have started preparing their stores for the future, and 85% of retailers in Latin America plan to invest by 2021 in technologies that would help them personalize the in-store experience. Among retailers worldwide, there is a considerable desire to invest in technologies that would improve in-store inventory monitoring, customization, and customer footpath tracking.

FINDINGS FROM BRP CONSULTING

  • BRP Consulting, a management consulting firm specializing in retail, polled retailers in North America in the last two months of 2018.
  • Based on this survey, 9% of retailers have implemented virtual mirrors, which enable customers to visualize themselves in glasses, garments, or cosmetics, while 23% plan to implement said technology within three years.
  • Nine percent of retailers have implemented augmented reality, while 29% plan to implement said technology within three years.
  • Seven percent of retailers have implemented virtual reality, while 30% plan to implement said technology within three years.
  • Nineteen percent of retailers have deployed Internet of Things or IoT devices, while 36% plan to deploy said devices within three years.
  • Twenty-three percent of retailers have implemented a technology that is powered by artificial intelligence (AI), such as a digital assistant or a voice-activated point-of-sale (POS) system, while 30% plan to implement said technology within three years.
  • Forty-three percent of retailers have implemented electronic receipts with personalized suggestions, while 30% plan to implement said service within three years.
  • Thirty-seven percent of retailers have implemented a scan-and-deliver service, which allows customers to purchase an item by scanning its bar code and have this purchased item delivered to their home, while 20% plan to implement said service within three years.
  • Thirty-two percent of retailers have introduced personalized promotions that are based on analytics, weather, or real-time location, while 38% plan to introduce said service within three years.
  • Twenty-five percent of retailers have implemented a persona-based POS user interface, while 39% plan to implement said service within three years.

FINDINGS FROM PWC

  • Professional services firm PwC polled 186 manufacturers and 84 retailers in Belgium, and asked whether their stores are ready for the future.
  • The survey revealed that 10% of respondents claim their stores are ready for the future.
  • Twenty-one percent of respondents say their stores are "as good as ready" for the future.
  • Fifty-nine percent of respondents say they have started preparing their stores for the future but are not yet done with the preparations.
  • Six percent of respondents say their stores are not yet ready for the future.
  • Four percent of respondents say they are not doing anything yet to prepare their stores for the future.
  • Retailers say that following are the technologies they have implemented or are working on for their physical stores: mobile payment (30.6%), self-scan cash register (27.8%), digital signage (22.2%), tablets (22.2%), smart tags (19.4%), radio frequency identification or RFID (11.1%), near-field communication or NFC (8.3%), cashier-free shop (5.6%), virtual reality (5.6%), smart mirror (2.8%), and beacons (2.8%).
  • Manufacturers say that following are the technologies they have implemented or are working on for their physical stores: mobile payment (60.6%), digital signage (47.4%), smart tags (43.8%), self-scan cash register (38.0%), tablets (29.9%), cashier-free shop (24.1%), NFC (23.4%), virtual reality (16.1%), RFID (16.1%), beacons (9.5%), robots (5.8%), and smart mirror (5.1%).

FINDINGS FROM ZEBRA TECHNOLOGIES

  • Zebra Technologies, a provider of enterprise-level automatic identification and data capture solutions, surveyed nearly 1,700 retail decision-makers from around the world in 2017, and asked them about what they plan to invest by 2021.
  • According to this survey, 70% of respondents plan to invest in IoT to improve supply chain visibility, customer experience, and revenue opportunities, 68% plan to invest in machine learning and cognitive computing to facilitate the personalization of the customer experience and the improvement of inventory demand forecasting, and 57% plan to invest in technologies that would automate packing, shipping, in-store inventory monitoring, and help customers find items faster.
  • Seventy-nine percent of respondents in North America plan to invest in IoT technologies that would facilitate automated inventory verification (e.g., sensors on shelves).
  • Eighty-five percent of respondents in Latin America plan to invest in technologies that would help them personalize the in-store experience.
  • Seventy-five percent of respondents in Europe plan to invest in location technology that would help them determine when and where customers are in their store.
  • Seventy-nine percent of respondents in Asia Pacific plan to implement a service that would allow customers to buy online and pick up purchased item in-store or at a third-party location.
  • Zebra Technologies also conducted a global survey of 430 retail decision-makers in 2018, and based on this survey, almost 80% of retail decision-makers concur that "staff checkout areas are becoming less necessary due to new technologies that can automate checkout."
  • The survey also revealed that retail decision-makers are transforming staff checkout areas into self-checkout POS spaces (52%) and online order pickup spaces (62%).
Sources
Sources