Phil Soanes writes:

I spoke earlier this week at a WPP workshop run by The Store on the future of retail , and the form was a series of short sharp presentations (for example, by Kantar Retail, Fitch, and Ecommera) with discussion. My theme was the future of consumer segmentation in the age of austerity, but what I wanted to do here was to share – unattributably, unfortunately – the ten big things I heard during the day from the different presentations.

  1. Retailers are moving away from their traditional segmentation models.  The classic segmentation combines a ‘Why’ (need-state) on one axis with a ‘What’ (value or attitude) on the other. Now retailers are segmenting occasions and missions. As one speaker said, there are fewer missions than consumer types so it’s easier to segment that way. For me this feels like the easiest way to segment, and closest to point of purchase, but it doesn’t negate the need to understand what’s driving the consumer.
  2. Retailing is now about data. There’s lots of it and the winners will be the ones who can collate and understand it to their advantage. Getting to a ‘single customer view’ (with integrated data sources) is the holy grail, but it’s a massive task and most retailers won’t achieve it. Retailers are reluctant to hand their data over, but may need to if they’re to make the most of it. One other implication of this: less market research. People will have less need to collect survey data.
  3. The discount noise in the market is deafening. This isn’t surprising given the economic climate. But when you look at who is doing well (or less badly) it shows that the secret of good retail is still having a great proposition at the heart of the business, and this defines the ‘value for money’ test. This also means that brand really matters, probably more than before.
  4. Consumer motivation to buy and shop for different categories differs widely. so working this out is important. Close up, motivation by category looks different, while there is a repertoire of behaviour within categories. It is also clear that making shopping easy is the tipping point in some categories. And the need to deliver ‘easy’ is replacing the need to optimise customer satisfaction.
  5. Trust and transparency matter more than ever. It was true before austerity struck. It keeps on getting more true because in tough times consumers expect, more than ever, that brands won’t take advantage. They’re less concerned with the ‘fluffy’ idea of ‘on your side’ as with a ‘fair deal’. Getting found out has more severe consequences for brands than it used to.
  6. The future will be multi-channel. But not in the way people sometimes think. The purchase path is increasingly complex, with consumers jumping between online and offline as they go. But offline retailers need to understand better why their customers are there instead of in front of a screen.
  7. The value exchange on a shopping mission is critical. What do consumers need to get out of a shopping ‘trip’, actual or virtual, to make it worthwhile for them?
  8. Shopping mind states fall into three groups. One contributor conceived shopping ‘mind-states’ as falling into three types: locate, explore, dream. For another this division was more operational, via stages of a shopper journey: plan, search, select, and buy. Consumers switch between offline and online within many of these stages,  so understanding the role that each plays at different time is crucial draw out. I think we’d say there’s more work to be done here, in particular in understanding the role of ‘reviewing’ and who’s involved in that, and also to map how these behaviours apply to different categories. And conventional shopper journeys also tend to neglect the shopper relationship after purchase, from service to sharing to word of mouth. One more thought on mind-states: what is the potential to offer ‘dreaming’ online?
  9. Online retailers have to get everything right to be successful. Contrary to the received wisdom, online retail is a less forgiving environment than physical; ‘everything’ includes vision and planning as well as ‘enablers’ and delivery. Amazon are the only one to hit all the numbers and this is partly down to a relentless focus on what they can control.
  10. There are some important questions where we don’t really know the answers yet. For example:

The picture at the top of this post was taken by Peter Curry. It is published here under a Creative Commons licence: some rights reserved. If you’d like to see a copy of Phil’s slides from the conference, please contact him.

3 thoughts on “Ten notes on the future of retail

  1. I think number 7 is the most interesting as it speaks to the quality (or lack of) engagement with the customer. As a shopper and author of a book on retail, I see this as a the most consistent weakness of retailers in a wide range of categories.

    I go into a store for: 1) physical beauty — a great store design, not just the merch; 2) terrific associates — smart, friendly, know their stuff; 3) decent staffing — I won’t stand in line and if you make me do so I will enjoy this experience much less; 4) a wide variety of merchandise displayed in a way that entices me to try it or buy it; 5) physical comfort — if you have a chair, sofa and/or coffee or cold water to refresh me, you’re way ahead of your competitors who don’t care if I’m comfortable. Shopping is tiring. Make your store welcoming!

  2. Phil Soanes says:

    Love that comment ‘broadsideblog’ and I agree that 7 is indeed the most interesting and powerful. Thanks for sharing what you’re looking for when you go into a store too. Phil

  3. plfhoen says:

    I am, as retail designer, especially interested in the mindsets of the shopper. They are become increasingly important to segmentation of this shopper. Nice touch of Fitch but I think the mindsets of IDEO are far more interesting.

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