Posted 06:21 AM by Callum Booth & filed under future of retail, retail .

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To paraphrase (and to some degree ruin) a famous quote; writing about the future is akin to dancing about architecture. Yes, we can get across some broad stroke information, but accurate predictions are as rare as a dry English Summer. Retail in particular seems very tricky to divine.

The entire industry is a curious case in advancement. For example, who would have predicted that a small online bookseller founded in a garage in 1994 would now be one of the world’s retail leaders? Or that we could test what furniture looks like in our homeswith just our phones?

Yet, at the same time, there is something uniquely steadfast about retail. Harrods is still going. Aside from the ever-expanding menu, buying a hot drink is basically the same process as it was a hundred years ago.

Retail is, at its core, an expression of humanity. For example: think of your favourite town or city. You have its landmarks – the infrastructure, parks and sights – that give you an impression of its shape, but it is the shops, the bars, the restaurants that give an area its personality.

Predicting the future of retail – especially from a marketers perspective – is fraught with difficulty then. There is a knife’s edge balance of desire for the familiar and the rush of the new. To understand this, we are going to look at three pillars that we believe will continue to shape the industry, before moving onto how these will directly impact retail.

The customer that never sleeps

It has never been easier to get in touch with a customer. Billboards, radio and television – old, but dwindling methods of marketing – relied on luck as much as science to reach someone. Now we have mobiles.

The change has been seismic. In the UK – a country with a 2016 population of 65.6m – there will be 42.7m smartphone users this year. This exists alongside the 54.4m internet users in this country. We’re also quite fond of using our devices. According to dscout, we touch our phone on average 2,617 times each day, using the devices for 145 minutes over 76 sessions.

Where we are also spending our time on the devices is important. The same report reveals that Games (understandably) are the apps that are touched most on our phones, with Shopping apps coming second. On top of this, nearly half of all touches are on apps owned by Facebook or Google.

So, what we have is millions of people who are constantly active in a prescribed set of channels. A third of these (33%) – according to Deloitte – check their devices within 5 minutes of waking up (a figure that rises to 86% within an hour). We can try and think in a utopian manner, convincing ourselves that we aren’t addicted to the constant stream of updates, but that is not clear thinking. Ask yourself this: do you see people becoming less dependent and focused on smartphones in the coming years? Or, is a burgeoning generation of young people who have grown up with these devices going to create a group of consumers who push being online and connected to new heights?

The technology that never stops

Technology’s ceaseless march and the the always-on consumer are inextricably intertwined, but there are clear boundaries between the two. Take mobile internet. 4G – which has a 90% coverage in the UK – has allowed people greater access to various types of content, something that will only increase with the rise of 5G, driving slicker shopping experiences.

Then we have the birth of basic AI with the voice-activated assistants like Alexa and Google Home. Operating alongside smartphones, these devices are adept at gathering huge amounts of data from millions of people. The analysis of this data – a once impossible task, but becoming easier on the account of more advanced computing (both power and intricacy-wise) – will soon be so advanced that incredible personalisation will shift from ball-park adverts into detailed, specific recommendations.

Linking all this together is the Fourth Industrial Revolution. The World Economic Forum has a terrific piece on this – which I cannot recommend enough that you read – but the rough outline is this: the revolutions went from water and steam (the First), electric power (the Second) to electronics (the Third). The Fourth is where the lines between technology and our lives blur, all of which is happening at an accelerating rate.

It’s multi-faceted and hugely complex change that no-one can truly predict, but we can make some simple statements that will most likely become true. The Fourth Industrial Revolution will make the world a smaller place, reducing transportation (both human and supply-chain), manufacturing and trade prices.

There is a strong chance that this will reinforce inequality, as the machine-replacement of labour will disproportionately impact the lower echelons of society, driving an even bigger wedge between them and higher earners.

The society that is splitting

This division is already happening in this country. Incomes in the UK are dividing. The Financial Times has a solid piece on this inequality, highlighting that the wealthy are set to get richer and the poor even worse off. The reasons for this range from tax, house ownership to income and are explored further in the piece. The Equality Trust has also compiled a list of statistics – from a variety of sources including the ONS – that shows the scale of this wealth split. Throughout this, we have also seen the middle classes ‘squeezed,’ with both America and Europe seeing a decrease in the size and wealth of the population segment. You can find more about the trend from the World Economic Forum again.

When we get a bit narrower with our scope and focus on the UK specifically – where all the above still applies – the upcoming risk of Brexit and plummeting value of the pound is only going to continue to accentuate this wealth equality and the squeeze on the middle. Tumultuous times indeed.

Summing up

So, we have three interconnected pillars that we can broadly agree are going to shape the future of not just retail – and industry tied heavily to the consumer economy – but the country as a whole.

We will soon be living in an even more technologically advanced world, with a huge disparity between the have and have-nots, yet where people of all classes can be reached using universal tools, in this case Facebook, Google and smartphones.

Now, there are some basic for retailers in the above already, ones we have no need to explore (yes, technology is going to get better, so why not invest in that? Drones, right?). Instead, we are going to explore where the three above pillars will most likely drive the industry.

High-end/Low-end chasm: Budget

Just like society, retail is going to see growth in two particular areas: the budget and premium. While most of the industry has spent the last fifty or so years concentrating on the middle class, there will be limited growth in this demographic. Instead, retailers need to change their tact.

UK society is already seeing the rise of the budget brand – in May of this year Aldi and Lidl took their market share to 12% in the country. Need more anecdotal evidence? Walk down any high street in the country and count the number of poundshops. People are increasingly interested in good prices.

Considering the chains mentioned above have succeeded with minimal marketing budgets and low-profit margin products, it might seem counter-intuitive that this could be a prime ground for the future of marketing, but this is not the case. Traditional large scale marketing campaigns might miss the mark though.

Retailers should look at either incorporating own-brand, low cost items into stock (something Amazon has very quietly and very effectively done – it even owns ‘secret’ brands). We expect this sort of activity to become more and more common, but a bigger question is how you target these individuals and remain profitable though is another issue.

First off, messaging. Simple, powerful slogans and a product line that unabashedly focuses on completing its task in the simplest way to market this line. Branding included, there is a reason why we value essentials lines – at the end of the day, many people do not want to be sold a lifestyle and instead just want to buy some pasta. This approach should imbue your marketing. Do not talk down to consumers, do not patronise them, instead think of your contact with them as an informative conversation. This segues into our next section – reaching them.

Getting across to consumers interested in budget items should focus on stoking word-of-mouth discussions and channels where people are. This is where concentrating on an effective, amplification-focused social media team can be worth their weight in gold. Not selling the product directly, but supporting its spread and awareness. In terms of technology, investing in social reach tools and data analysis should be routes for retailers.

High-end/Low-end chasm: Premium

Wealth – in the Baby Boomer sense at least – used to be about more. Bigger televisions, faster cars, designer clothes, but this is no longer true. What we are seeing now is a shift away from materialism for materialisms’ sake in high socioeconomic consumers. Instead, there has been a shift to experiential retail by what Elizabeth Currid-Halkett refers to as the aspirational class. I would recommend reading her article on Quartz here for a deeper look at the trend.

In a nutshell, it reveals the trend of people “preferring to spend on services, education, and human-capital investments over purely material goods.” Now, for a retailer aiming at a premium market, this is a vital point to understand. Over the next few years, as society splits, there is going to be more opportunity to reach this incredible lucrative market share. There are some key points to remember though. No matter what it is you’re selling to a premium consumer, you need to make it less about the item, instead selling a lifestyle, a thought or, as Currid-Halkett puts it, an aspiration. This is the lesson that marketers need to take to heart.

From a technological stand-point, the key areas of growth here are going to be companies specialising in data collection, analysis and personalisation (something that is undoubtedly going to be AI supported). We are already working in a market where people expect a higher, more tailored level of service from retailers and organisations in general. The idea is to create a messaging framework that can be tweaked and reorganised for each specifically targeted person. Easy? Not at all, but it is going to be vital.

Aside from this, there are a range of other tactics that can be used. High-end stores are already embracing experiential design, focusing on delivering a feeling rather than a wide selection of products. This sort of marketing can be taken to the next level, driving a new era of interactivity – of course propped up by more consumer data and advanced technology – that delivers an actual one-on-one experience, rather than the faux-version operating today.

Concentrated convenience

Despite a split between the have and have-nots changing the nature of retail, both growing segments will be influenced by technology and cultural change, something retailers have to be aware of. In other words, contact methods and how people must be treated will remain consistent. For example, convenience is only going to get more important as the world evolves. Again, this is occurring already, with us getting more impatient – something displayed by the fact that almost half of people won’t wait 3 seconds for a webpage to load. We want what we want now.

We can see the evidence of this change in retail already. Amazon’s success with Prime’s one-day delivery service – as of March 2017, there were 8 million subscribers in the UK, a 33% household penetration rate – and the fact it is already looking towards drones as a way of improving convenience displays the growth still to occur in this area. There’s a reason the retail giant now controls 43% of online retail sales in the US.

There is almost no way that consumers will accept a step-backwards. In fact, this should be a concern of retailers of budget brands, as what percentage of purchases in this market are completed as that is the easiest way to shop? So, location of a bricks-and-mortar store will become even more important. On top of that, a delivery platform that can provide cheap one- or same-day shipping is going to be a vital cog in the retailer’s arsenal. Phones have changed how we perceive service and convenience, something that is touching almost every corner of the modern retail experience.


Predicting the future is not easy, especially in an industry like retail where societal trends can explode on the scene and alter everything. Yet, as the sector is so intertwined with how we live our lives, if we take into account the work of economists, futurologists and various other experts, we can get a vague outline of where we expect the world to be in the coming years. From here, we can extrapolate.

The biggest lessons that retailers and marketers can take from this is the importance of agility. How the consumer views and interacts with the world is in a consistent state of flux. Now, how this is achieved – through AR, VR or some other yet uninvented device – is important, but not the be all and end all. Instead, it should function as a framework of flexibility. Think of arranging your business like a set of building blocks that you can shift around to remain competitive. The above advice – such as focusing on smartphones, personalisation and splitting product categories – are a foundation that should support your business for years to come. Retail is a special industry, let’s make sure it stays that way.