SPECIAL REPORTS

RETAIL TRENDS / 2010/11

In partnership with

retail trends /

02/03

INDEX /

RETAIL TRENDS / 2010/11

07 / pages 41 - 42

01 / pages 04 - 06
CHAPTERS / 01 / INTRO 02 / CURATED 03 / TECH 04 / DEMOCRATIC 05 / SALON 06 / CAUSE 07 / SERVICE 08 / S-COMMERCE 09 / M-COMMERCE 10 / V-COMMERCE 11 / FUTURE VIEW 12 / CREDITS

INTRODUCTION / THE CHANGING LANDSCAPE OF RETAIL

02 / pages 08 - 13

SERVICE-CENTRED TECH / PEOPLE DRIVE TECHNOLOGY IN-STORE /

By John Jones, R/GA Retail /

CURATED CONSUMERISM / INTEGRATING ONLINE AND IN-STORE /

03 / pages 14 - 19

08 / pages 43 - 47

S-COMMERCE / WHERE SOCIAL MEDIA MEETS ONLINE RETAIL

09 / pages 48 - 50

IN-STORE TECH / CAPITALISING ON CONVERGENT LIFESTYLES /

04 / pages 20 - 25

M-COMMERCE / THE BRIDGE BETWEEN AT-HOME AND IN-STORE

10 / page 51

DEMOCRATIC CONSUMERISM / RE-THINKING THE SUPPLY CHAIN /

05 / pages 26 - 32

V-COMMERCE / USING VIDEO CONTENT TO DRIVE SALES / Q&A with Nick Timon, Adjust Your Set /
11 / pages 52 - 53

SALON RETAIL / SPACES FOR COMMUNITY AND PERSONAL DEVELOPMENT /

06 / pages 33 - 40

FUTURE VIEW /
12 / page 55

By Nick Parish, Contagious /

CREDITS /

RETAIL WITH A CAUSE / THE NEW SOCIAL CONSCIOUSNESS /

retail trends / introduction /

01 / pages 04 - 06

INTRODUCTION / THE CHANGING LANDSCAPE OF RETAIL

The global retail scene has been fraught with tales of shop closures, vacant malls, skittish consumers and an overall sense of economic doom and gloom. Many retailers have been forced to cease operations or downscale. However, others have weathered the storm and even seen growth in revenues and store numbers. Survival has centred on speedy adaptation to changing and unforeseen circumstances, investment in customer service delivery across all touchpoints, experimentation with different store formats and a focus on enhancing the shopping experience, both in-store and online. Growth & expansion / US consumer electronics chain Best Buy, for example, saw revenues grow last year from $45bn to $49.7bn despite overall declines in the sector. As well as new large-format stores, the company opened a number of smaller mobile stores and expanded into the UK in partnership with Carphone Warehouse. The company has been lauded for its Twitter-based customer service team, Twelpforce, and has introduced other customer incentives such as free financing for full shopping carts, as opposed to one item at a time, and a recycling initiative for old electronic goods. Meanwhile, UK fashion chain Topshop, known for its affordable but stylish clothing and high profile celebrity partnerships most recently with model Kate Moss continues to create compelling and buzzworthy brand developments and expand its enthusiastic fan base. The retailer successfully launched its first US concept store in SoHo, New York, during the worst of the US economic crisis. The store, which mirrors the London flagship and makes a feature of its British design heritage, spans four floors and includes a Style Studio, a Shoe Lounge and even a DJ booth to add to the entertainment experience. It has done so well (with sales reputed to be running at 30-40% ahead of expectation) that owner Philip Green has recently announced plans for a second store on Chicagos Michigan Avenue. Apple, of course, continues to underpin its product success with shiny new often award-winning stores that offer a wealth of in-store experience from workshops to creative talks and youth programmes to now even business briefings. The highest profile opening this year was in Londons Covent Garden Apples 300th and largest store to date and it opened seven stores in one weekend this September, bringing the tally of new openings in 2010 to 43. Apple stores around the world have been host

CHAPTERS / 01 / INTRO 02 / CURATED 03 / TECH 04 / DEMOCRATIC 05 / SALON 06 / CAUSE 07 / SERVICE 08 / S-COMMERCE 09 / M-COMMERCE 10 / V-COMMERCE 11 / FUTURE VIEW 12 / CREDITS

retail trends / in-store tech /

03 / pages 14 - 19

IN-STORE TECH / CAPITALISING ON CONVERGENT LIFESTYLES /

There has never been a better time for retailers to get techsavvy. Smartphone penetration continues to grow exponentially: McKinsey estimates that out of the worlds four billion mobile phone-owners, 450 million are connected to the mobile web. Added to which, ever-more sophisticated devices such as the iPad are evolving; meaning that consumers are increasingly more switched on for more hours of the day. This has enabled retail stores to become multi-layered experiences where shoppers can use their mobile devices as cursors to access digital content about the store, the brand, and specific products including reviews and price comparisons. Post Digital / Retailers have an incredible opportunity to use digital interfaces to enrich tangible goods (a trend that has been termed postdigital or more commonly the Internet of Things see feature in Contagious issue 23). Along these lines, charity shop Oxfam and research organisation TOTEM recently attached QR codes to the price-tags of selected products in-store. When scanned with a smartphone, the codes enabled consumers to access an audio narrative about the items, recorded by their previous owners. Meanwhile, the World of Whiskies store at Londons Heathrow Airport allows users to scan RFID-tagged products over touchscreen table tops to reveal blend and tasting notes; and the LAB range of cosmetics for men saw a 300% uplift in sales at its concession in London department store Selfridges as a result of implementing a similar technology in-store. QR codes, RFID tags and stickybits (an app that allows users to tag bits of video, or images or messages, to the barcodes displayed on physical objects) are providing greater opportunities for conversation both online and in-store, and they can also have a very practical application. In Switzerland, RFID technology was used to advance the self-service store concept seen in the case study Touch & Pay (p. 17) which details how shoppers entered a closed store and shopped for items using smartphones and RFID). Meanwhile Barclays Banks contactless technology system, in the UK, enables consumers to make fast and secure payments by simply holding their bank card up to a reader.

CHAPTERS / 01 / INTRO 02 / CURATED 03 / TECH 04 / DEMOCRATIC 05 / SALON 06 / CAUSE 07 / SERVICE 08 / S-COMMERCE 09 / M-COMMERCE 10 / V-COMMERCE 11 / FUTURE VIEW 12 / CREDITS

Keds+Whitney@Bloomingdales /

Orange Multimedia Centre /

retail trends / democratic consumerism /

CHAPTERS / 01 / INTRO 02 / CURATED 03 / TECH 04 / DEMOCRATIC 05 / SALON 06 / CAUSE 07 / SERVICE 08 / S-COMMERCE 09 / M-COMMERCE 10 / V-COMMERCE 11 / FUTURE VIEW 12 / CREDITS

01 / WOLF & BADGER / LONDON

02 / MODCLOTH / BE THE BUYER / ONLINE

03 / QUIRKY / NEW YORK / ONLINE

Providing an affordable platform for emerging designers, Wolf & Badger is a concept store in Londons Notting Hill that showcases design talent from across fashion, accessories, jewellery and product design. Designers apply online for space within the store and, if chosen, can rent a dedicated unit for as little as 55 ($86) a week. Units come in the form of individually illuminated black and white veneer boxes, each with a metal plaque embossed with the designers name. There are currently over 50 designers with work on display. Wolf & Badger allocates a page to each one on its website, where they can upload a biography and links to their own site. They are offered mentoring from the owners and co-founders husband and wife team Samir Ceric and Zoe Knight. The store also provides insurance and stock management. The shop interior was designed by an architect graduate from the Royal College of Art reflecting the stores support for young design talent. Unlike more common wholesale arrangements, designers selling through Wolf & Badger are given complete control of pricing, products and profits. Designers also keep 90% of profit. Since the launch of the flagship store, Wolf & Badger has opened a pop-up concession in British department store Selfridges. The space delivers an exclusive edit of Wolf & Badgers most exciting new season finds as well as a programme of live art, video, music events and screenings. www.wolfandbadger.com Design / Gus Brown Graphics & website / www.ishothim.com

San Francisco-based online womens fashion retailer ModCloths Be the Buyer invites the public to vote on which potential clothing designs should go into production. This effectively eliminates the problem of producing large orders of new garments without knowing how successfully they will sell. Whilst browsing through the clothing, shoes and accessories designs, users can select the Pick It or Skip It options to vote for or reject each item. Only the most well-received pieces are then manufactured and retailed online. Participants can share favourite designs via Facebook and Twitter, while feedback is used by the creators to improve unpopular styles. The quantity of items produced is dependent on the number of votes received and the production capacity of the designer, and users who voted for a winning design are notified by email as soon as it becomes available. Users are also given the chance to win new clothing items by entering Name It and Win It contests, where they can submit names for designs, with the best ideas being put to an online vote. Prices range between $4.99 for accessories and $249 for coats. Since Be the Buyers launch in October 2009, the company has posted 300 samples online and produced 50. Each item has had an average of 3,625 votes and 114 comments. ModCloth has seen a higher sell-through rate for Be the Buyer items, and customers participating in the scheme tend to spend more time and money on the site. www.modcloth.com

Quirky is a New York-based social product development company connecting would-be inventors to knowledgeable potential collaborators and customers. Inventors pay $99 and hand over intellectual property rights to contribute their idea to the Quirky community. The top voted-on idea moves into the development phase, where Quirky designers work on the specs and figure out how it would work. Then, if it gets 500 pre-order commitments, a factory begins production, and the inventor shares revenues from online sales and at bricks-and-mortar resellers. If the idea doesnt make the cut at any stage, the inventor gets all the data on who was interested and what they said. Products developed so far include DigiDudes, expandable keyring tripods; Cloak, an iPad cover; Scratch-n-scroll, a notepad/mousepad combo; and Powercurl, a cord organiser. The interesting bit about Quirky is the influencer funding. If you drive the conversation around an invention and engage in its development, youre eligible for a cut of revenue, be it 0.01% for commenting or a bigger slice for voting and rating. The site is growing consistently at 20-25% a month, according to founder 24-year-old Ben Kaufman, and passed the 25,000 member threshold in June, when Contagious profiled the company in our regular Small but perfectly formed feature (see Contagious issue 23). www.quirky.com

retail trends / service-centred tech /

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07 / pages 41 - 42

SERVICE-CENTRED TECH / By John Jones, R/GA Retail /

R/GA Retail, part of New York-based agency R/GA, works with clients such as Nike, Nokia, and Zain to enhance their customers in-store experience using innovative mobile, signage, and touchscreen technologies. Here, R/GA Retails VP and executive creative director John Jones argues that the best innovations come from asking the most basic questions. People have become used to getting user reviews, comparisons and the best prices online. So what would make them want to go into a store? Often solitary online shopping and virtual interaction with products isnt enough to help customers figure out what they want. People like to get out, pick up and examine products, try on things, ask questions, and talk to people who know something. They dont want to lose the pressure-free experience that comes from figuring it out on their own, but good service is important to them. And, simply put, people go back to the stores where they get the best service. The best innovations in retail are based on answering fundamental customer needs. They provide experiences that combine the tactile interaction of retail with the power of sales reps, often integrating customers mobile devices to deliver information where and when its needed. How do I find things? In larger stores or venues, customers can often have difficulty finding what they what. From this simple observation came the idea to use GPS or mapping. Some of the mobile location mapping in places like the American Museum of Natural History in New York gives us clues into the way we can guide people through large spaces. Visitors to the museum can download on their mobile device an application that guides them through the massive halls and gives information on all the exhibits. Is this product any good? Online customer reviews have become a key part of shopping. Bringing dynamic user reviews and product ratings into a store is a good way to build loyalty. US beauty chain Sephora incorporated the use of customer reviews in-store when they introduced a mobile application that lets customers compare products and reviews as they shop. Customers can browse products by SKU (Stock Keeping Unit), category, or keyword or refer to the bestselling items when making their purchasing decisions.
American Eagle Outfitters / 77kids /

CHAPTERS / 01 / INTRO 02 / CURATED 03 / TECH 04 / DEMOCRATIC 05 / SALON 06 / CAUSE 07 / SERVICE 08 / S-COMMERCE 09 / M-COMMERCE 10 / V-COMMERCE 11 / FUTURE VIEW 12 / CREDITS

retail trends / m-commerce /

09 / pages 48 - 50

M-COMMERCE / THE BRIDGE BETWEEN AT-HOME AND IN-STORE

By 2015, there will be a staggering 1.5 billion mobile broadband users across the globe, according to ABI Research, and for these increasingly connected consumers, mobile provides a bridge between at-home and in-store. Theyre using their phones for researching products, comparing prices, checking in to stores, and increasingly buying products and services. Indeed, global spending via mobile phones is set to reach $119bn by 2015 (ABI Research). Japan is leading the way, but mobile shopping more than tripled in the US last year, and Europe is expected to outpace North America by the end of 2010. As ahead-of-the-curve retailers have been quick to realise, mobile benefits from being a direct and instant link to customers, while GPS tracking allows messages to be targeted to a specific location. Yet many retailers still havent taken advantages of the opportunities: while Forrester Research suggests 74% of online retailers are working on a mobile strategy, a report from Multichannel Merchant in February 2010 revealed that nearly four in five multi-channel retailers in the US were not yet using any m-commerce features. Apps and sites / Among those retailers that have implemented clear strategies, mobile optimised e-commerce sites or mobile apps are popular. The last year has seen a 91% increase in the number of online retail mobile apps accessed by consumers, and mobile web use for shopping has also increased by 47% in the same period, according to research by comScore. eBay, for one, is seeing the benefits. The company has emerged as a leader in mobile commerce and predicts that it will move $1.5bn worth of goods through its mobile channels in 2010, more than double last year. Part of the companys success can be attributed to its broad and inclusive approach: its current range of apps is compatible with iPhone, iPad, Android and BlackBerry. It has also been quick off the mark: with 14 mobile apps already under its belt, it aims to produce another every five weeks, according to eBays vice president for platform business solutions and mobile, Steve Yankovich. We pick and choose what will move the needle, Yankovich told Bloomberg Businessweek in an interview, and then we do it fast. Whats more, as the majority of eBays sales are by auction, the immediacy and accessibility of mobile allows users to receive alerts if they are outbid, or when a sale is about to end. This sense of urgency is making mobile a primary focus for New York-based flash sales site Gilt Groupe too. Since the launch of Gilts iPhone app in October last year, it has been downloaded over 280,000 times and on 4 April, a day after the iPad debuted, 2.4% of Gilts sales came from the device. Sales from both apps so far account for around 7% of overall sales. Following the introduction of the iPad, retailers have rushed to develop apps for the device, particularly luxury brands targeting a specific demographic such as Mercedes-Benz with its SLS AMG app. This was loaded onto an iPad and sent to the top 220 French footballers inviting them to book a test drive - all of them did, say the agency Proximity BBDO, Paris. Fashion retailer Gap benefited from first mover advantage with the launch of its 1969 Stream an app that makes use of the iPads exciting display and pinch, tap and drag functionality while allowing users to browse, share and buy from the latest Gap product range. Exclusive content included a music video, Twitter streams from Gap designers, and contributions from musicians and fashion insiders. Although Gap wouldnt report any actual results, AKQA, San Francisco, the agency responsible for the campaign, commented that womens jeans sales exceeded expectations.

CHAPTERS / 01 / INTRO 02 / CURATED 03 / TECH 04 / DEMOCRATIC 05 / SALON 06 / CAUSE 07 / SERVICE 08 / S-COMMERCE 09 / M-COMMERCE 10 / V-COMMERCE 11 / FUTURE VIEW 12 / CREDITS

Location-based / Location-based mobile services are a more challenging proposition. Despite the obvious advantages (relevant messaging, up-to-theminute product and retail information), the fear of alienating an already over-targeted consumer on such a personal device has rendered on-thespot activity mainly the preserve of gaming and mapping applications. However, the new wave of location based apps facilitated by the iPhone and becoming widely available on Android and BlackBerry allows mobile users to opt in to receive messages, neatly side-stepping the risk of bombardment. 48% of Britons would be interested in an app that detected their location and sent promotions from nearby shops, according to Matt Taylor, head of quantitative analysis at London-based research consultancy the Future Foundation, speaking at the nVision conference in September 2010. Layar, an augmented reality (AR) browser, allows developers to create bespoke content

retail trends / credits

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12 / page 55

CREDITS

Produced by Contagious Communications in partnership with GDR Creative Intelligence

CHAPTERS / 01 / INTRO 02 / CURATED 03 / TECH 04 / DEMOCRATIC 05 / SALON 06 / CAUSE 07 / SERVICE 08 / S-COMMERCE 09 / M-COMMERCE 10 / V-COMMERCE 11 / FUTURE VIEW 12 / CREDITS

Editorial Director Paul Kemp-Robertson Series Editor Georgia Malden Edited by Lucy Aitken, Georgia Malden, Mandy Saven Additional writers Stacey Jacobs, Nick Parish Head Researcher Gemma Ball Additional research by Joanne Allison, Katrina Dodd, Emily Hare, Nicky Herbert, Stacey Jacobs, Alex Jenkins, Robin Leeburn, Isolde Roche, Will Sansom Additional insights by Kate Ancketill, Samantha Clarke, Amy Hedger, Jo Murphy Contributors John Jones / R/GA Retail / www.rga.com Alastair Ray / Ray Media Nick Timon / Adjust Your Set / www.adjustyourset.tv Cover images Victor Churchill Sydney / www.victorchurchill.com Design / Dreamtime Australia Design Photography / Paul Gosney Illustrations by Kuanth / www.kuanth.com Production Smita Mistry

Contagious Communications is an intelligence service focusing on future-facing marketing ideas and emerging technologies across a diverse range of media channels and product categories. It is a limited company registered in England, registered number 6183878. Contagious Communications 45 Fouberts Place London, W1F 7QH, UK T: +44 (0)20 7575 1995 www.contagiousmagazine.com This report is part of a series of Special Reports produced by Contagious. The series also includes reports on Mobile Apps, Brand Communities and Entertainment Marketing.

GDR Creative Intelligence is a Londonbased trend analysis and future forecasting consultancy. GDRs quarterly Global Innovation Report highlights the latest developments from global brands in retail and hospitality, with source material direct from the worlds leading innovators in design, architecture, digital media and experiential marketing. GDR works with global consumer brands and retailers, including Pepsi, Starwood Hotels, Sony, Orange, Nokia, P&G and Macys, providing them with the thought leadership needed to gain competitive advantage. GDR Creative Intelligence Dilke House, 1 Malet Street London, WC1E 7JN, UK T: +44 (0)20 7580 5589 www.gdruk.com

Entertainment Marketing /

Brand Communities /

Published November 2010

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