The Future of Retail - The World Beyond Recession

The Future of Retail:
The World Beyond Recession
GlobalShop 2011

Patrick Rodmell
President + CEO
Watt International
prodmell@wattintl.com

www.wattisretail.com

Watt International | Overview

Integrated Retail Agency

+40 years; +40 countries

We help retailers and brands find ways to sell
MORE things, to
MORE people,
MORE often.

“Watt International is a unique group of talented people,
encouraged to think beyond their specialty…”


The Integrated Retail Agency


Moderate Entertainment: Realtime Polling

1. Read the question

2. Select your answer by pushing the corresponding number

3. Change your mind if you want to – you‟ll have 10 seconds

4. We’ll see the results in real time…and results from 2007!


Predictions from 2007
Engaging through in-store technology

1. Energy expended through the course of our everyday lives will
be captured and used as a major power supply

2. Authenticity will be a key brand attribute in the new world of
skepticism

3. The potential to scan codes and obtain product information
will soon be mainstream

4. In a world of “accelerated adaptation of technology”,
companies that look for “competitive edge” vs. “bleeding
edge” will be the winners.


YOUR turn to make a prediction:
Ten years from now, the Biggest Change We Will See At Retail Will Be:

2007
16% 19% 1. Smaller stores with more streamlined
product mix
20% 28% 2. More stores and brands that are aligned
with environmental and wellness values
47% 41% 3. New technology playing a greater role
in information and transactions
17% 12% 4. Reduced store traffic, as consumers buy
more online and get home delivery


Conclusion:

Consumer/Shopper behaviour and the retail landscape are
going to change dramatically in the post-recession era.

But don’t blame the recession.

The recession is simply accelerating changes that were already
underway due to other factors, for example;
-Too many stores and product options
-Shrinking middle class
-Demographics….


Trends that will shape the Future of Retail:

Trend

1 Shopper + Consumer Insights go mainstream


Who „Owns” the Consumer?
The brands/products we buy The places we buy them

The game changer…

Who‟s calling the shots now?

But this only told us “what”;
NOT “who”


Then came rewards programs and the data started flowing…


All we can do is learn everything we can about them


How many Reward Programs do you belong to?

2007

13%
1% 1. None

21% 18% 2. 1 to 2

31% 36% 3. 2 to 4

36% 45% 4. 5+


The brands/products we buy The places we buy them

Who‟s calling the shots now?


Make no mistake – the Shopper is now in charge!

…and it‟s only going to get
worse…or better!


social media and mobile connectivity have
changed the Path to Purchase and dramatically
increased the importance of understanding the
“Perception” of your brand


Understanding shopper perceptions is key…


…and understanding how they shop is essential



Trend


1. Women: Chief Purchasing Officers


Women: Chief Purchasing Officers

1.Women make;
Trend
- 93% of over-the-counter pharmaceutical purchases,

1 - 93% of food purchases,
- 92% of vacation buying decisions,
- 66% of personal computer purchases...
[Too Busy To Shop: Marketing to Multi-Minded Women]

2.Women influence 95% of all purchases and control
80% of all household spending [Marti Barletta, Marketing to Women]


Marketers still aren’t getting it

1. 59% of women feel misunderstood by
Trend
food marketers

1 2. 66% of women feel misunderstood by
health care marketers

automotive marketers

investment marketers
[Source; Too Busy to Shop: Kelley Skoloda]


Women value authenticity, community,
connectedness and quality of life.

The more „virtual‟ our life gets, the more me
crave authentic experiences

Does your brand and retail experience exhibit
these qualities?


The Dove ads celebrated “authenticity” and self-esteem…
and drove up soap sales 600%! (Unilever)


Harley Davidson

Today, women riders
constitute roughly 12%
of Harley sales, up from
2% in 1995.


Trend



2. Perdido en la traducción


Perdido en la traducción

1. By 2015, Hispanic consumers will play a major role in contributing to
the upsurge of retail spending

2. Hispanics are adopting the internet twice as fast as the general
market - 14 percent growth vs. 7 percent (Ethnic Technologies, 10/06/09)


Papa John‟s

A greater proportion
of Hispanic customers
place orders using
cellphones.

http://espanol.papajohns.com


Trend



2. Perdido en la traducción

3. Generation M.


Generation M
• Born after 1990: The coming consumer generation
• Don‟t know life without the internet
• Short attention spans
• Don‟t trust advertising – look to their social network
• Mobile technology is a commodity
• Sensitive to our environment


Pick the Statement That Most Accurately Reflects Your Opinion:
Generation M (16-21 years old) will:

2007

20% 14% 1. Be more brand loyal than consumers
are today
6% 9% 2. Demonstrate about the same loyalty as
consumers do today
40% 43% 3. Be more likely to switch brands
4. Have few, if any, real brand
34% 34%
relationships.



Trend

2 Economic Instability changes the value equation
1. It’s smart to save


Target

Saving can be fun!.

Same Store Sales - 2010

Source: AC Neilsen: Company press releases; latest monthly or quarterly report


Trend

1. It‟s smart to save

2. Buy American



Trend



2. Made in America

3. The rationalization of retail


The Rationalization of Retail – Changing Retail Formats

• Retailers are open to new options, such as becoming
landlords to other retailers

• Retailers are opening smaller format stores

• Reigning in previously stand alone stores and nesting them
in existing stores


Smaller Store Formats

Smaller Store Formats

• Walmart will open its first Express
store this year

• Best Buy Mobile, Office Depot
and Staples are all coming out
with small format models

Gap

• Away from stand-alone: The Gap
is gradually reverting to nesting its
Baby Gap and Gap kids offerings
within its Gap store


Trend



2. Made in America

3. The rationalization of retail

4. The continued assent of private brands.


Private Label Unit Share

Economic Growth Recession

Post Crisis Norm

Pre Recession Norm

2005 2006 2007 2008 2009 2010

Source; Nielsen



Trend

3 Conscious Consumption becoming a decision driver

1. Environmental Distress


Marks & Spencer

„Sustainable Learning‟ store

• Harvested rainwater will
supply all the toilets

• Heated by expelled heat from
its refrigeration units

• Electric car charging points
will be available in the car
park

• Goal – to be the world’s most
sustainable major retailer by
2015

P&G Compacted Detergents

Could help save
up to 22 million
pounds of total
packaging in
North America
each year

Wine Self-Service Kiosk… in France!

Electric Cars

Charging Stations at Retail
What happens to gas stations?


Trend


1. Environmental Distress

2. Social Concern.


Social

1. Human Rights
2. Fair Trade
3. Philanthropy
4. Diversity


The website has received over 3
million “Likes” on Facebook

Which of the following technologies do you think will deliver the
most value to your business within the next five years

2007

18% 66% 1. Connecting with customers through
cellphones/smartphones
10% 5%
2. In-store media

37% 15% 3. Internet e-commerce

36% 14% 4. In-store interactive media



Trend Adaptation of Technology: putting control in the
hands of the shopper
4


Mobile Rules

1. Mobile usage up: In December 2010, nearly
47% of mobile subscribers in the US accessed
mobile media

2. More than 64% of consumers want to
receive information and notifications about
shopper loyalty offers via email

3. Redemption rates for mobile coupons are
10x that of paper coupons


Game-changers:

1. Location-based Marketing

2. Mobile Self-checkout POS
- no price tags; personalized pricing
- reduced in-store labor


QR Codes and Barcodes

1 2 3

4
6
5

Levi‟s

The Facebook “Like” button:
when will it start showing up in stores?

Mobile Apps

Loopt and Neer‟s location-
triggered reminder apps

Loopt: limited-time perishable-
inventory deals close to their real-
time location.

Neer: link tasks to retailers and
sends a reminder message when
the user is close by.

Virtual Coupons

Virtual butterflies appear on consumers phones as they approach one of the participating shopping
centers. Shoppers must “catch” the butterflies in order to activate the coupons.

What people love about the virtual world;

1. Limitless Horizons
2. Personalization
3. Connectedness
4. Engagement
5. Entertaining

How can you deliver this through physical retail?


Since it‟s inception, the digital world has tried to emulate
the positive features of the real world.

It’s time to turn the tables.


rewards

social PRX
Personal Retail eXperience access

entertaining


If you asked your customers, they would tell you that it’s exciting
to shop your store

2007

10% 22% 1. Absolutely

52% 33% 2. Somewhat

36% 35% 3. Not really

1% 10% 4. Not at all


Personal Retail Experience technology
Engaging through in-store (PRX)

In a recent survey in the UK, 40% of respondents said they
recommended retailers to friends as a direct result of a positive
technology-enhanced experience at the store


Adidas

The new touch-screen interactive adiVerse
Footwear Wall displays as many as 8,000
shoes for shoppers to view. The wall renders
products in 3-D, and allows a shopper to spin
and zoom in on the shoes, and call up
specs.

JCPenney

Self-Service Kiosk
• View product availability
• E-mail images and information
• 360-degree views and zoom features
• Scan the bar code of an in-store item to learn more about the
product‟s features
• Provide product recommendations for complementary items
• Online “dressing room – with directions
• Print out a receipt and purchase an online item at an in-store
register, with the rest of their in-store purchases.

Walgreens

Virtual makeover booth at Walgreens
features a built-in camera for customers to
take their picture and experiment with
various looks while in store.

Intel Interactive Screen

The informational overlay onto the physical space
behind is similar to augmented reality.

Step 1:
It‟s NOT about a retail experience;
it‟s about experience retail.


IKEA

Pop-Up Stores
IKEA – Created displays in dense urban locations to
reach their target market (New York City, Downtown
Toronto, Subway Terminals).

Self-Service Vending Machines

1 2 3

6 7

4 5

What makes this an “amazing retail experience”?

Products, People and energy!

Convergence:
As virtual experiences and the physical
world collide, the need for integration of
all brand touchpoints becomes even
more critical


Rogers

“We appreciate your business”

“Valued Rogers Customer”

“These exclusive savings… are
not available to everyone”

“…a price reserved exclusively
for you”

Rogers

“Exclusive” deal is $30 more than the
standard offer on their website

The Future of Retail is being shaped by;

1 Shopper + Consumer Insights going mainstream
- Rewarding Shoppers will be price of entry
- Women and Ethnic sensitivity – Authenticity and character
- The M-Powered Generation

- Redefined value equation – it‟s fun and smart to save
- “Buy American”
- More private brands

- Cause Marketing
- Packaging innovation
- Game change at gas/convenience

4 Adaptation of Technology putting control in the hands of the shopper
- Smaller stores; pop-up stores
- Personal Retail Experiences (customization, flexibility)
- Flexible retail – including Vending/Kiosks
- Experience Retail – connected and engaged
- Integration of all brand touchpoints – online and off


Thanks for your time!

prodmell@wattintl.com

. . .
Insight Strategy Creative

The Future of Retail - The World Beyond Recession

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