What is the Retail Future?

There is no doubt that the Internet is changing the retail experience, and with it how we shop. Beloved old school stores are feeling the pressure of the prices and convenience e-commerce retailers offer.

Retail Today!

An ongoing study by IPG Media Lab reveals that shopper satisfaction at retail stores is declining up to 15% per year. Stores that used to define the diversity of shopping centers, from bookstores and clothing to consumer electronics and home goods, are closing. Small and large brands alike are searching for strategies to react to the change in customer expectation, where online retailers win on prices and convenience. For the first time in centuries, the role of the storefront is changing.

The value of the local store for physical goods is continually evolving, driven by changes in distribution infrastructures. Recently, we have witnessed a shift in retail from physical to experiential,(see pop- ups) where the currency of value is the experience. However, we are only at the beginning of an economy driven by virtual goods. For example, while eBook market share is rapidly rising, Kindle eBooks only account for around 1% of total print sales.

Retail Future?

As the “goods” we transact change, so do our purchasing behaviors. What was once a simple transactional process becomes a complex web of value shifts across several customer touchpoints. Now, brands must manage multiple revenue streams, where the retail space may not be primarily devoted to income. Following this trend, wireless service providers such as Verizon have transformed their retail environments into places primarily for customer service, not monetary transaction.

Shopping experiences are not just about immediate sales but about creating opportunities for impulse purchases, up-sell, and cross-sell.  Think about the last time you went into your cell phone providers retail store. Future environments will provide a seamless shopping experience that integrates the in-store, transactional, and post-sale goals. The experiences must converge to promote discovery in-store and the continuation of the sales process at home or on-the-go.

We are overwhelmed with choice, and most products advertised to us do not match our lifestyle expectations. Too much choice results in confusion and indecision, the stumbling blocks for purchases. Additionally, as products become commoditized, the perceived value must come from the user experience. Nordstrom’s online and in-store growth can be attributed to their innovative approach to handling inventory to match shopper searches. The recent launch of their redesigned website includes editorial features for a magazine-like shopping experience. Online shoppers looking at products can see where they are available nearby and reserve them for pickup. By creating a fluid and personalized online and in-store shopping experience,

Non -traditional retailers such as National Geographic are beginning to move into experiential offers by opening highly curated entertainment and educational destinations. National Geographic’s offering has expanded from a lifestyle publication to include a TV channel, educational website, museum, and store that nurture lifestyle interests and offer products that match lifestyle goals. Recognizing that the competitive advantage lays in differentiating based on audience desires and not the range of products and services.


Retailers  have the opportunity to become destination spots. Retail spaces can relax customers, offer refreshments, and provide entertainment while creating the conditions to engage in a conversation that builds brand loyalty. Nestlé’s gourmet coffee brand, Nespresso, successfully crafts various types of encounters with their customers. Although the machines are available in several stores, the capsules are only available from the company via mail, phone, Internet, or in Nespresso Boutiques. The boutiques are designed to develop and maintain a continuous relationship, even offering a club for coffee connoisseurs. The boutiques offer complementary coffee, distinguishing the purchase of new capsules from other repetitive shopping rituals.

Retailers can extend relationships with customers by providing a community or gathering around shared events. Pop-up stores are the testing grounds for this format. Starbucks was the original force behind the idea that customers should linger and mingle when they made WiFi a coffee shop standard.

Creating The Experience.

As sales margins decrease, business models must change. Retailers must embrace the fact that monetary transactions are moving elsewhere, and often at a different time. As a result, retailers are becoming places that manage customer relationships and form and maintain brand awareness. These relationships can be built using insights from lifestyle editors, fashion, hospitality, and community to create continuous experiences across various retail channels. In a saturated retail environment, you cannot compete on convenience, price, or relationship alone. To remain relevant, retailers must create experiences that merge the physical and online store.

They way people shop and create a retail transaction will greatly effect the commercial real estate future.  What are your thoughts about the future of retail?

Duke Long

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