Store of the Future

There will be physical stores in the future, but those that survive won’t necessarily look like the stores of today. Consumer demands and expectations, as well as competition from online retailers and innovative companies, all mean stores must transform.“The word ‘store’ itself is a clue to why and how grocery and mass retail will need to evolve,” says Nick Jones, EVP, innovation & growth, Arc/Leo Burnett. “The physical storage of products will become the lowest priority in a world of networked distribution systems. We will see new ways to deliver products such as through shared transportation and delivery systems and maybe even self-guided vehicles, robots and drones. Retail will need to attract shoppers based on its ability to inspire, host, entertain, create social occasions, promote wellness and become the center of communities and groups.”“Stores will have more entry and exit points based on trip types, and merchandise adjacencies based on optimizing where you entered and why you came.”— Bill Chidley, ChangeUpCompetition from Amazon.com is real, and the company continues to innovate. Ever heard of its Echo and Dash products? “Whoever is going to come along to compete with Amazon is also going to be innovative,” adds Lee Peterson, EVP, brand, strategy & design, WD Partners. “If you needed detergent, toothpaste, apparel, you used to have to go to a store. You had to make a list, put the kids in the car, park. Not anymore, you don’t have to go. You have to want to go to a store, and that’s a major shift in how consumption is viewed by the consumer.”Retailers and manufacturers will need to move beyond the purely transactional to relational. “Retailers need to understand and deliver an authentic, welcoming and seamless connection at every touchpoint,” says Lynne Robertson, Fame’s president and CEO.Tony Bynum, director, client innovation & program strategy, RTC, agrees that the future is about creating meaningful relationships. He sees this new “third-generation of the shelf” (first as a way to organize and hold product, and then as a product communication delivery method) as a “stage, where retailers and brands working together deliver stories and curate meaning.”Read on for more thoughts about the store of the future from our virtual roundtable discussion:In 10 or so years, how will physical stores have changed?Paco Underhill: Retail will change more in the next five years than it has in the last 50 because we are over-stored. These can be exciting – or scary – times. Most chains would be imminently healthier if they shed properties.Lee Peterson: Stores are going to have to become better fulfillment centers. Buy online, pick up in the store, maybe pick up through a drive-thru. Secondly, stores need to become social playgrounds. More about touching and feeling the product, talking to someone who knows a lot about it, sampling, testing. Less purchase-oriented and more experience-oriented. You see “chief experience officer” titles cropping up more and more.Carrie Shea: We will move to much more online ordering for staple items. For example, doing that through mobile ordering or kiosks in the store. Drop your list off on the way to work, come back at the end of the day and it’s delivered to your car, or even to your home.The physical space is going to become much more shopper-tainment; the place you go to have unique experiences. It might be with the food they carry, but also there will be opportunities to create health and wellness centers inside the store – get checkups, diet and nutrition advice, experiment with food.And in the next 10 years, we will see the emergence of a national Hispanic retailer – I don’t know which one yet – that will really cater to the growing Hispanic shopper. It will be very multi-generational and offer a total family experience.Bill Chidley: Many of today’s stores are oversized. Innovation will be required to turn surplus space into new services or product offerings that will generate revenue – healthcare, pet services, beauty/aesthetic services will be interesting pursuits.And what will that do to store layout?Shea: It will be more lifestyle and disease-state oriented – diabetes, arthritis, heart-related, vegan.Lynne Robertson: There will be ample room for upfront pickups, demo spaces for “try before you buy” needs, educational areas for product introductions/tutorials. Store footprints and fixtures will need to be more modular and possibly temporary to accommodate morphing demands.Tony Bynum: Products will share space based on shared-use cases, lifestyle attributes or their ability to deliver a solution when used together. Like a fingerprint, retailers will use layouts to differentiate and create signature experiences for their customers by creating ownable spatial equities unique to their brand. Brands need to work together with retailers to create category-level experiences that celebrate and enhance the shopping experience in a way that is agnostic of brand.Chidley: One big factor will be how we pay. What if shoppers just collected the RFID-tagged products and walked out the door, and their Apple Pay, PayPal or bank accounts are automatically debited?Stores will have more entry and exit points based on trip types, and merchandise adjacencies based on optimizing where you entered and why you came. Design will change to create clusters of merchandise around each entry that are focused on trip type. Parking lot layouts will be rethought, and drive-up/drive-thru zones will be more common. Think about a large grocery store with multiple entry doors – one for drug and HBC, one for convenience meals, one for the farm market produce and meats, one for stock-up/staples, etc.What will become of the center store?Shea: A bigger portion would be a warehousing piece.Underhill: The pickup/storage area. ... Is there any incentive to walk down the laundry soap aisle if I’m not buying laundry soap? No. Better adjacencies will need to be figured out, and those go against the natural wishes of manufacturers. It needs to be grouped in ways that make sense for the customer.Nick Jones: Many commodity CPGs will be automatically replenished based on instructions sent by our refrigerators and pantries, so the shelf-stable world of center store will instead become a source of inspiration, community, entertainment and experience. Shelving will disappear. Digital interfaces will offer access to limitless inventory.Chidley: New technology that integrates your list to store navigation will map your journey, reducing the need to navigate intuitively (think how your car navigation makes you lazy about directions). The center store can provide excitement and tempt shoppers off their path into more immersive boutiques that inspire them with ideas, versus only displaying an inventory of merchandise. Categorize the center store around need states vs. categories – “meals in minutes,” “weekend headquarters,” “company’s coming” and “quick clean up.”How will retailers communicate in-store with shoppers?Peterson: Graphic communication will be super simplified with a focus on quality. And a focus on brand color – think blue for Warby Parker; silver for Apple. And it will be a well-oiled machine on a human scale. Better sales help, better training for associates and people that like people.Jones: They will communicate in real time, but as defined by shopper preferences. Shoppers will customize their experience or have it curated based upon their interests and how they like to be engaged. Stores will know as a shopper walks in whether she needs/wants personal help or to be left alone. Technology will be built into every store but will recede into the background. What we are interested in will simply be there for us without us even noticing the technology behind the curtain.Robertson: Retailers will rely more on their associates and begin to hire stronger, more specialized employees to provide expert advice.What role will mobile and beacons play?Chidley: Mobile is critical, and as the adoption of digital payment and wearables increases, it will be fundamental. Beacons will need time to catch on, but shoppers will embrace them if they provide convenient ways to save money by switching brands, find new items they saw in the media, or trigger items they want to be alerted about if on sale.Jones: There will most likely be a shakeout in which a few communications technologies will combine and emerge – RFID, NFC, Bluetooth, beacons, digital watermarking and mobile “listening” technologies cannot all continue to do battle indefinitely. The winning technology will allow for two-way communications without the need for special apps. Simplicity will win. We don’t want to deal with apps, codes, scanners, or having to turn things on and off. Mobile devices will simply tell us what we need to know when we need to know it. They will even begin to combine biometrics and wellness with shopping – using biometric data gathered to recommend nutritional and wellness product needs.Who is the shopper who will visit physical stores in the future?Chidley: The advent of subscription-replenishment services will divide shoppers along socioeconomic lines and age. Lower-income shoppers will be biased toward physical stores as they won’t be able to afford Amazon Prime or have consistency of income to participate in subscription replenishment.Jones: Everyone. Each new generation will bring its own, new and technologically enhanced expectations, but the human desire for social engagement, inspiration and entertainment will be constant.

Store of the Future

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