THE FUTURE OF RETAIL
WGSN Report Takes a Look at the Future of Retail
Los Angeles has become one of the world’s leading centers for retail experimentation. Think Nordstrom Local, a new style of store with no inventory that now has three L.A. locations. Or a new Nike store on Melrose Avenue where you can book styling sessions and get styling advice sent to your mobile phone.
“There’s a lot of innovation that is happening in the city,” said Petah Marian, the author of a WGSN report called “The High Velocity Consumer.”
“There’s a lot of stuff [in Los Angeles] around well being, healthy living and being part of an urban environment. Most things coming out of L.A. will be applicable to other places,” said Marian, who works out of the WGSN headquarters in London.
With consumer trends and habits changing so drastically over the past decade, WGSN and the World Retail Congress, an Amsterdam group of retail executives, decided to do a study on how retailers can address consumers who have new wants and tastes.
“Everything is constantly changing. Change continues to accelerate. There is more to come,” Marian noted.
The WGSN report focused on six trends changing the way retailers relate to their customers. Those trends included an increasing reliance on mobile phones, looking for a human touch in a technological world, rising consumer interest in recycled goods seen in vintage clothing and resale stores, trusting retailers in a world where fake news has people worried, and getting retailers to pay attention to an older population.
With these trends in mind, Marian said there is no going back to the more predictable 20th-century world of retail, but she didn’t forecast a retail apocalypse or a revolution that would turn retailers upside down.
One big change in the future will be fewer people working in a store as more consumers rely on shopping via their mobile phones and consumers increasingly embracing artificial intelligence.
This automation evolution was underscored by a separate WGSN survey, which found that 64 percent of retailers say that mobile checkout is a priority for their businesses, which means that the job of running a cash register is endangered. In addition, retailers want to install more self-service checkout stations.
However, as businesses become more technology oriented, consumers also are seeking a deeper level of human interaction. It’s crucial for retailers to balance the conflicting initiatives, the report said.
Retailers employing stylists see them develop relationships with consumers, who often buy 30 percent more.
Retail concepts looking to deepen the human touch include the Nordstrom Local stores in the Los Angeles area that have stylists who build consumers’ wardrobes by consulting with Nordstrom Local’s digital look books.
Virtual assistants such as Amazon’s Alexa also bring a “human” touch to retail. Because people can relate to Alexa’s voice, the WGSN report said this form of artificial intelligence will continue to grow in popularity.
Personalizing products and store experiences is another important factor for retailers. At the Nike by Melrose store in West Hollywood, Calif., consumers can book sessions for styling and get styling advice via text message. The Nike by Melrose store also offers merchandise tailored to the neighborhood’s specific needs, which is determined using digital commerce data from the surrounding neighborhood.
Room for retail
The past decade has seen major changes in stores’ role in shopping as retail traffic has declined at many malls. During some of the busiest shopping days this past Thanksgiving and Black Friday weekend, foot traffic at malls and stores declined 1 percent over last year, according to market researcher ShopperTrak.
With this in mind, stores must adapt. “There will be space for malls and physical boutiques, but their role in the shopping process will change,” Marian said. “They will be less about becoming sites for product discovery and more for confirmation, styling, fitting and experiences.”
Retailers must cater to customers’ fickle moods too. Some days they will want to go to a store to try on a new pair of jeans. Other times they will merely want to make a quick visit to pay for a preordered item.
Figuring out what consumers want is something Walmart is trying to do. It has patented a technology that scans faces in-store to better identify and service agitated customers. The system recognizes when people are becoming frustrated and sends an associate over to help.
Resale is the new retail
The popularity of vintage- and luxury-consignment retail is growing. In 2022, the resale apparel market is expected to be worth $41 billion, an increase from $20 billion in 2017, according to a report from thredUP, a resale retailer.
Resellers including The RealReal, Poshmark, Depop and Tradesy have gained a fashionable cachet once reserved for purveyors of new clothes.
Resale’s popularity is linked to the environmental movement and the belief that recycling is better than producing more waste. English fashion designer Stella McCartney announced Dec. 13 that she is extending through 2019 her campaign with The RealReal to encourage reselling clothes. Shoppers who consign Stella McCartney clothes with The RealReal will receive a $100 store credit at Stella McCartney stores.
The WGSN report recommended that brands and retailers get involved in the resale market to take control of their destinies in the marketplace. Retailers should develop a process that allows consumers to bring old clothing back to the store for reuse, which is something that has been done at Eileen Fisher stores for some time now. In addition, they should produce merchandise that won’t fall apart and can retain value through the resale process.
Retailers also must be aware there is a demographic shift in the developed world, according to a 2016 report by the McKinsey Global Institute. Retiring and elderly people in the developed world will grow from 164 million in 2015 to 222 million in 2030. This group will increasingly drive consumption. Retailers need to develop ways to cater to seniors and build ways to drive store experiences and digital experiences around them.