Retailtrends 2012

LS:N Global Market Report – Retail Trends 2012

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Retail Trends 2012

The lifestyle news networkTrends that innovate and inspire

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Retail Trends 2012A fresh breed of post-Crash consumers is emerging: the New Normals. They shop with ethical, environmental and community principles firmly in mind, demanding convenience and value with real values. Vasstige, super-convenience and hyper-localism are the buzzwords that touch their hearts, and open their wallets.

Our researchers identify how the most progressive retail brands are keying into the New Normal value system, helping these demanding consumers to realise their dreams of a community-based, rural existence in an urban setting, rediscovering heritage, artisanal and hand-made through innovative and inspirational use of online and digital.

In this report:

Re-invented Retail, A New Normal world, Vasstige, Retail Trends, Innovate

: Re-invented Retail – we outline the way in which post-recession consumers are rewriting the rules of retail by demanding a synergy of value and community-based heritage craftsmanship, and cutting-edge online, digital technologies.

: A New Normal world - Digital super-convenience, multi-channel retail and stripped-back Leanomic product ranges. We reveal just some of the ways that brands from Nike and Adidas to Waitrose and Issey Miyake have risen to the challenge of the New Normal demand for genuine eco-credentials at affordable prices.

: Vasstige – We unpack the combination of ethical principles and value prices shaping New Normal retail sensibilities, and identify how brands like Diesel, Punkt, Aesop and Starbucks are using corner shop comebacks, no-frills products and covetable private to labels to reach out to them.

: Retail Trends – We show how Gucci, Nokia, Stumptown, and Levi’s have found ways to use rural themes, artisanal skills and heritage narratives to tap into the New Normal’s desire for retail conviviality.

: Innovate – We focus on how specific future-facing retail brands such as Rapha, Erik Schedin, and Stella Artois are creating a new world of Wraparound Retail.

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M-commerceForward-focused retailers are turning their attention from ‘share of wallet’ to ‘share of pocket’, as sales of smartphones increase and consumers switch on to the convenience of in-the-moment mobile retail.

Shoppers around the world are expected to spend about $119bn (£73bn) on goods and services through mobile phones by 2015, according to tech market researcher ABI Research. In Japan, m-commerce is already responsible for 50% of all transactions, according to service provider O2, thanks to the number of price tracking and price comparison services available.

Meanwhile, handsets are increasingly behaving like wallets that enable on-the-spot payments. In the US, the mobile money market is expected to be worth $8.6bn by 2014, according to ABI Research.

Near-field communications (NFC) technology enables consumers to pay at the counter with their mobile instead of a credit card. The Starbucks Card Mobile service enables customers to check and top up their Starbucks card balance, as well as pay for drinks and snacks, by using their phone as a mobile wallet.

‘The ideal NFC future scenario is that a shopper will walk down the street and shops will be able to communicate with the consumer’s enabled device to entice them with offers,’ says Richard Johnson, chief strategy officer of Monitise, which provides banking and payment systems to businesses worldwide.

From mobile payments to mobile vending, hardware apps such as Square and Mophie are making mobile vending more efficient, by plugging into smartphones and turning them into payment-taking, credit card-scanning devices.

This page, from left : John Lewis iPhone app; Net-A-Porter iPad appOpposite page : Zara iPhone app; eBay fashion iPhone appPrevious page : Pave bike shop by Joan Sandoval, Barcelona

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App-tailingThe last decade saw the steady rise of online retail. In the New Normal, online and offline are increasingly merging as web-savvy consumers translate learned internet behaviour – such as searching for bargains and conducting comparative research – into real-world decisions and actions.

‘This is the second generation of e-shoppers. They don’t distinguish between online and offline shopping,’ says Robert Bready, CEO of online fashion store ASOS. ‘To them, it’s all the same and they’re as exacting of the retail experience in-store as of their experience online.’

Smart apps that bridge online and offline browsing, research and purchasing turn mobile devices into essential shopping companions. Apps such as Google Shopper, RedLaser and ShopSavvy use smartphones to scan barcodes and product labels to instantly find additional product information and compare prices online. Elsewhere, users create virtual wish lists on Amazon’s iPhone app by taking pictures of real-world items with their smartphone’s built-in camera.

App-tailing – selling through mobile apps – reflects consumers’ confidence in technology as well as shoppers’ enhanced expectations. Consumers increasingly expect to be able to access the brands they want to buy while they are on the go. From brands such as fast-fashion labels H&M and Zara, and luxury retailer Net-A-Porter, app-tailing is proving increasingly appealing. Beauty apps such as MakeUp, NewBeauty and WeightMirror have been turning smartphones into smart compacts, using photo recognition technology to enable users to test colours and shades on photos of themselves.

‘Users can now try on hundreds of shades and narrow their selection to three or four, which they can then try on in-store and purchase,’ says Parham Aarabi, CEO and founder of ModiFace, the company behind the MakeUp app. The company has already tapped into this trend, which has seen up to 10m mobile users download a beauty-related mobile phone app, according to mobile ad exchange network Mobclix.

From mobile banking and virtual tickets to clip-on payment systems, m-commerce futures are well under way. The next step will be augmented reality (AR), where digital information is superimposed onto a real-world environment as seen through a mobile device’s screen. AR apps such as Streetmuseum and Acrossair already give tourists and travellers detailed information about landmarks and hotspots. GPS-enabled devices will add to the experience by providing relevant hyperlocal content to engage with customers in real time.

‘The future for AR in retail is limitless,’ says Maarten Lens-Fitzgerald, co-founder of AR mobile browsing software developer Layar, which enables consumers to explore and connect to this hidden digital layer of information. ‘In retail, people can have new engagements with brands in-store. The parking place of a supermarket, for instance, could enable children to run around collecting branded virtual items while their mother is shopping. Instead of aisles, children could see racing tracks in-store, helping to keep them busy, but in a branded way.’

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Show Your WorkingConsumers have long been fascinated by the provenance of their food. Now they are demanding to know the back story of the other products in their lives, too.

Retailers are responding to this growing desire by using interactive or educational displays to bring the factory process to the shop floor, creating a new sense of theatre for shoppers.

When Andrew Gage traded in his car to buy the first bag of coffee for his fledgling business, he expected to be selling coffee, not educating people about it.

Now Gage’s company, Velo Coffee Roasters, based in Chattanooga, Tennessee, brings the roasting process to the shop floor. ‘Education is a big drive for the company,’ he says. ‘Having customers come in and learn about the coffee helps them to engage with the product and increases their loyalty. They like certain coffees the more they understand about the processes that go into making them. And they trust the methods we use because they are familiar.’

The factory also enables the shop to act as a social space for the community. ‘We are trying to pioneer an experience for the customers,’ says Gage. ‘That way they will remember us and come back. And most of them do.’

Other brands use the internet to demonstrate their manufacturing. Notebook company Moleskine has launched a series of online videos that document the making of special-edition notebooks. People can see the process involved in printing artists’ illustrations. ‘In these videos we tell the story of the product,’ says Giovanni Pesce, head of PR and events at Moleskine. ‘The idea is that Moleskine products are story-telling objects, so the relationship is that they should have a story too. The work of the craftsmen and craftswomen in the videos is worth documenting. They are creating a piece of art.’

Consumers are also interested in the processes that go into making clothes. British brand Albam has published a book of portraits called Factories that provides a snapshot of the people, tools and places that bring the brand’s garments to life.

‘People are looking for an increased understanding of where food comes from,’ says Albam founder James Shaw. ‘I think clothes are going that way too. People are important. Ours is a people business, for people, made by people. We’re proud of the relationships we have with the factories we use and we want to display that.’

This page, from left : Bench-Made Boots by Horween Leather Co, Chicago; Albam Factories by No Days OffOpposite page, from top : From the Heartland by Tim Adler for Red Wing Shoes; Factories by John Spink for Albam

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‘People now want to come together in a more authentic way. They are putting technology back in its place.’ Maggie Jackson, author of Distracted: the Erosion of Attention and the Coming Dark Age

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This page and opposite page : The Creative Factory by Puma

Puma Creative FactoryIt’s second nature for today’s digital natives, the teens and 20somethings growing up online, to want to hack, mod and customise a product. Smart retailers are allowing them to do just that.

Online stores enable consumers to personalise their goods. Now you can virtually build your own shoe on the NikeiD iPhone app, or create your own headphone colour scheme in Kotori’s online store.

Sportswear brand Puma, however, has gone one innovative step further by allowing an intimate, loyalty-building exploration of texture and material. Its new Creative Factory store concept – launched globally in cities such as Mumbai, Prague, Moscow and Cape Town – is a digital retail idea that has an added element of tactility.

‘We thought: ‘Let’s do a shoemaker’s studio’,’ says Ryan Eckel, head of marketing for Puma in Eastern Europe, the Middle East, Africa and India. ‘We wanted to make it as close to the sneaker design experience as you can get.’

In The Creative Factory, customers are invited to explore their creativity at a round wooden table. Slots hold different shoe parts in assorted colours and textures.

Above the table, iPads – housed in rustic wooden frames – are loaded with custom shoe design software. Customers play, touch and feel the deconstructed shoe parts. This gives them a hands-on way of imagining their final shoe design.

‘It helps to visualise the design process in an analogue way,’ says Eckel. ‘The whole thing screams: ‘Make a shoe!’’ Once customers have played with the components, they take their creative ideas to the iPad. The software lets them choose different colours and textures to help them create a personalised shoe.

The iPad is an ideal device for this process, according to Eckel. ‘Firstly, the iPad is small and lets you have a lot of scope to work with,’ says Eckel. ‘It’s also very tactile, which lends itself to the hands-on process. And it’s a very intuitive device.’

Once the customer has completed his or her shoe on the iPad, they can send the digital design to a customer assistant and make the purchase. Next, Puma wants to add a Web 2.0 element to the idea. ‘We’re appealing to a creative core of consumers in their early 20s to early 30s,’ says Eckel. ‘We want them to share their shoe designs on their social networks. Eventually, people could have their own online boutiques that sell their designs.’

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‘It’s a business born out of passion. Every product we make has a story linked to a place or person.’ Simon Mottram, founder, cyclewear and accessories brand Rapha

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This page : Hoxton Street Monster Supplies shop by We Made This, LondonOpposite page : HK Honey urban bee farm, Hong Kong

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ValueAs value has become more important for consumers hit hard by the recession, a few smart retailers are helping customers get the most for their money.

More than ever, people around the world are seeking value from their purchases. Food enthusiasts in France are trading down on costly specialist foods. In Japan, shoppers are shunning expensive luxury in favour of frugal consumption. Value-driven grocers now top British consumer satisfaction studies. And in the US, consumers are learning to live without luxuries, and are even forfeiting service and convenience for greater value, according to a study by advisory firm AlixPartners.

‘The digital age has made information available 24/7,’ says Tarlok Teji, UK head of retail consulting company Deloitte. ‘Products, prices and opinions can all be researched online and, with mobile technology, on the go. This has created an unprecedented level of transparency. Retailers are adjusting the way they interact with these smart shoppers.’

Some retailers are not only adjusting but are also giving their customers extra tools to help them achieve the most for their money. Asda, for example, has launched a social networking site called Your Asda to offer more transparency to its value-seeking customers.

Site users are able to crowdsource money-saving tips that are passed on to customers via the grocer’s YouTube channel. A blog also updates followers on money-saving in-store concepts, such as a vending machine for less-expensive fabric conditioner refills. To give customers the value products they need, Asda lets them vote for specific products they would like to buy in their local store.

Similarly, consumer goods manufacturer Procter & Gamble has launched a fashion-driven, value-conscious website called Supersavvyme.com. It offers insider tips on optimising the brand’s products and online money-saving forums aimed at mums seeking style and shopping advice.

Tesco has gone even further, announcing plans to introduce an allotment scheme to help frugal consumers produce their own food.

Sainsbury’s has taken a more subtle nudge-style approach, encouraging customers to mix key premium food products with offers on basics via menu ideas distributed around stores. ‘We know that our customers want to mix our top end products with our basic ranges. It’s about teaching them they can have taste and value at the same time,’ says a Sainsbury’s spokesperson.

LS:N Global predicts that post-recession consumers will keep returning to retailers that not only offer good value but act as a mentor to help them achieve even more for their money.

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