the future of retail - the world beyond recession

Patrick Rodmell

President + CEO

Watt International

prodmell@wattintl.com

www.wattisretail.com

The Future of Retail: The World Beyond Recession

GlobalShop 2011

Integrated Retail Agency

+40 years; +40 countries

Watt International | Overview

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!

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.

Predictions from 2007

YOUR turn to make a prediction:

Ten years from now, the Biggest Change We Will See At Retail Will Be:

19% 1. Smaller stores with more streamlined

product mix

2. More stores and brands that are aligned

with environmental and wellness values

3. New technology playing a greater role

in information and transactions

4. Reduced store traffic, as consumers buy

more online and get home delivery

Consumer/Shopper behaviour and the retail landscape are

going to change dramatically in the post-recession era.

Conclusion:

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….

Shopper + Consumer Insights go mainstream1

Trends that will shape the Future of Retail:

The brands/products we buy

Who‟s calling the shots now?

Who „Owns” the Consumer?

The game changer…

But this only told us “what”;

NOT “who”

The places we buy them

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?

1. None

2. 1 to 2

3. 2 to 4

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

Shopper + Consumer Insights go mainstream1

1. Women: Chief Purchasing Officers

1.Women make;

- 93% of over-the-counter pharmaceutical purchases,

- 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]

Women: Chief Purchasing Officers

1. 59% of women feel misunderstood by

food marketers

health care marketers

automotive marketers

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

Marketers still aren’t getting it

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.

2. Perdido en la traducción

Shopper + Consumer Insights go mainstream

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

http://espanol.papajohns.com

A greater proportion of Hispanic customers place orders using cellphones.

2. Perdido en la traducción

3. Generation M.

Shopper + Consumer Insights go mainstream

• 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

Generation M

Pick the Statement That Most Accurately Reflects Your Opinion:

Generation M (16-21 years old) will:

14% 1. Be more brand loyal than consumers are today

2. Demonstrate about the same loyalty as consumers do today

3. Be more likely to switch brands

4. Have few, if any, real brand relationships.

1. It’s smart to save

Economic Instability changes the value equation2

IKEA: from cheap to savvy

Target

Saving can be fun!.

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

Same Store Sales - 2010

1. It‟s smart to save

2. Buy American

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

• Walmart will open its first Express

store this year

• Best Buy Mobile, Office Depot

and Staples are all coming out

with small format models

• Away from stand-alone: The Gap

is gradually reverting to nesting its

Baby Gap and Gap kids offerings

within its Gap store

2. Made in America

3. The rationalization of retail

4. The continued assent of private brands.

Private Label Unit Share

2005 2006 2007 2008 2009

Economic Growth Recession

Pre Recession Norm

Post Crisis Norm

Source; Nielsen

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

• Goal – to be the world’s most

sustainable major retailer by

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!

Charging Stations at Retail

What happens to gas stations?

Electric Cars

1. Environmental Distress

2. Social Concern.

Conscious Consumption becoming a decision driver

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

66% 1. Connecting with customers through

cellphones/smartphones

2. In-store media

3. Internet e-commerce

4. In-store interactive media

Adaptation of Technology: putting control in the

hands of the shopper

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

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.

PRXPersonal Retail eXperience

social

rewards

access

entertaining

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

to shop your store

22% 1. Absolutely

2. Somewhat

3. Not really

4. Not at all

Engaging through in-store technology

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

Personal Retail Experience (PRX)

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.

What kind of retail is this?

Arche Shoe Store, Las Vegas

Hollister (Toronto)

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

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

“…a price reserved exclusively for you”

“These exclusive savings… are not available to everyone”

“We appreciate your business”

“Valued Rogers Customer”

Rogers

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

Trader Joe‟s

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

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

3 Conscious Consumption becoming a decision driver- Cause Marketing - Packaging innovation- Game change at gas/convenience

2 Economic Instability changes the value equation- Redefined value equation – it‟s fun and smart to save- “Buy American”

- More private brands

Thanks for your time!

.Insight .Strategy. Creativeprodmell@wattintl.com

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