A broad set of economic, demographic and technological trends are converging to force changes in the way that we need to think about the future of retail – and retail space in particular.
Perhaps the most profound development that we have seen in the retail world – and elsewhere – is the impact of digital technologies and new forms of communication in reshaping how consumers behave and interact with retailers and the physical space. Consumers’ expectations of the experiences they will encounter in a physical environment are now fundamentally different from even just a few years ago. The distinction between virtual and physical space in the retail world has become increasingly blurred and consumers are no longer choosing between the two as straightforward ‘either/or’ options. Rather, they expect an experience that enables them to move smoothly back and forth from one to the next as they wish. And for retailers that means connecting their online and physical environments in new configurations that can deliver a seamless and immersive ‘omni-channel’ proposition.
Achieving that is far from straightforward. One of the keys to unlocking the challenge is the use of big data and analytics. These can help create a deeper understanding of consumers’ behaviour and their changing preferences. Added to these insights, the clever use of technology can enhance and influence consumers’ experience while in a physical retail environment. This is already happening today with such developments as loyalty programmes, location-based marketing communications and augmented reality. The further rapid development of new technologies will expand the art of the possible in ways that we are only starting to see now.
The broader interaction of consumers and retailers is also changing traditional relationships out of all recognition. The flow of information today extends in both directions – creating both pull and push effects. And these also create challenges and opportunities. Consumers’ access to almost limitless information gives them the upper hand in determining range and pricing. Yet products and price are only two of the considerations that retailers will need to balance in order to be successful. How, for example, can retailers reconcile the apparently competing aims of ethically and environmentally aware consumers, who at the same time also want the latest products and fashions? How can they capture and keep consumers’ attention in a media and information saturated environment?
Jones Lang LaSalle’s retail team has explored these and other converging trends that are already transforming the retail environment and will continue to do so in the coming years. The speed of change we see taking place is unprecedented. Making predictions about the future is therefore inherently risky. However, by looking at what we see as possible likely future scenarios, we can tease out the attributes that retailers and developers will need to incorporate in physical space in order to embed resilience.
Over the coming months, we will be exploring these questions – and more – in greater detail to develop a truly global picture of what the future of retail looks like, and what it will take to operate effectively in this new world.