The Future of Retail - Five ways e-commerce and high street stores are evolving to suit changing consumer behaviors

The world of retail is constantly changing and evolving. Every year key businesses go bankrupt and new ones emerge from the ashes to claim the top spot. In this highly competitive business landscape the offering is everything and businesses more than ever need to know their niche inside out. More than that though, consumers themselves are always changing and new consumer groups emerge with each generation, each with their own tastes, lifestyle choices and preferred methods of purchasing.

Key Questions Answered:

- Why are so many bricks and mortar stores going bankrupt, yet online companies are moving into the highstreet?

- What new technology is coming to retail to enhance the shopping experience?

- Why is delivery so expensive and why are major players building their own fleets?

- What new opportunities are there in retail and what consumers could be better catered for?

- What are the demands of millennials and generation z doing to companies?

Scope

Today bricks and mortar stores are turning into something new, less sales focused and heavily supported by online retail. Delivery of products is inadequate to meet customer expectation and too expensive and huge investment is being made to help it catch up with the times. Generation Y&Z are the dominant consumer groups today and they act differently than the groups that came before them. Technology is due to enhance stores and close the gap between online and instore.

Key Highlights

- Wealthier older consumers are now much more online and internet savvy and there are opportunities in selling to these customers.

- Regardless of the enormous shift online for retail and commerce, bricks and mortar stores are very far from finished. Customers still enjoy and use the traditional format, but that format now has a wealth of online competitors diluting its brand value.

- As the timely and secure delivery of a product is critical to the overall experience, the future of e-commerce will require new ideas and methods of delivery and in 2018.

- Millennials and in particular Generation Z are deeply entrenched in the internet and many have no experience of life without it, making it of critical importance for retail presence.

Reasons to buy

- Learn about the new key players in the retail market and the direction it is headed.

- See how new consumer behaviour is effecting the retail market.

- Examine the new trends in online retail and delivery services.

- See the direction of travel in bricks and mortar stores.

- Examine the new technology that is being introduced to retail.

Table of Contents

Table of Contents

Executive Summary 2

Bricks and mortar: Actual sales instore might be less important in future 2

Next day everything: Making delivery faster ...

Table of Contents

Executive Summary 2

Bricks and mortar: Actual sales instore might be less important in future 2

Next day everything: Making delivery faster and cheaper 2

Generation Y&Z: New Retail experiences to accommodate new tastes 2

Technology: Getting ready to transform shopping experiences 2

Untapped markets: Retailers will gradually adjust to suit older generations 3

Bricks and mortar: actual sales instore might be less important in future 8

Failing high street stores can be seen in all sectors 8

There are multiple and evolving reasons why online retail is so dominant in growth terms 9

In 2018 the new trend in retail is the slow move back to physical stores with a completely different model 9

After putting bookstores out of business Amazon creates its own 11

Amazon & Whole Foods could be the first of a new generation of stores 11

Amazon Go gives a glimpse into the future of payments 12

Walmart’s Bonobos and the showroom model is the future of the high-street 13

Next day Everything, making delivery faster and cheaper 14

Retailers care about delivery quality because their offering is poor without it 14

Shipping costs are becoming a huge, expensive problem for all kinds of retailers 15

Home delivery is currently failing as a concept, which is a major problem for retailers 16

Amazon already has a significant delivery network in operation in some markets 16

Amazon moving into the delivery business should worry transportation carriers 17

Making efficiencies, speeding up the process and innovating is the name of the game in delivery for the next decade 18

Autonomous delivery is the aim for all kinds of retailers but the current designs are not yet good enough 19

Delivery Drones and Amazon Prime Air is a unique idea but it doesn’t yet beat a delivery driver 20

Airborne delivery airships could provide an answer, but the technology is not there yet 21

Generation Y&Z: New Retail experiences to accommodate new tastes 22

Millennials are extremely online and the implications for retail are extensive 22

Preparing for Gen Z and the tastes of the future will not be easy 22

Generation Z do an enormous amount of aspirational shopping 23

Marketing has to be done very carefully done or it could actually reduce sales 23

Millennial online habits reflected in e-commerce 24

Online retail continues to grow rapidly, because of highly online consumers 24

Apparel is the key beneficiary of the e-commerce boom 25

Traditional retail outlets losing ground 26

Department stores suffering in both US and UK 26

Selfridges invests online in attempt to adapt 26

Sharing economy apps have potential to grow 27

Companies that prioritize convenience and price succeed 27

Tech startups generally lead to aggressive expansion 28

Sharing economy has led to the rise of the gig economy 28

Technology getting ready to transform shopping experiences 29

Virtual reality will change how consumers purchase high-value items 29

In-store retail apps close gap between online and physical store customer experience 30

Holographic technology creating new and immersive shopping experiences 31

Artificial intelligence personal assistant predicted to transform future shopping experiences 32

Interactive mirrors and video technology are propelling change in apparel stores 33

Untapped markets: Retailers must adjust to suit older generations 35

Older shoppers have extensive spending power, offering retailers lucrative sales opportunities 35

Retailers have so far failed to take sufficient notice of older consumers - this will change 36

Retailers are beginning to cater store design towards needs of older generations 37

Bricks-and-mortar stores begin to adapt to spending power of over-65-year-old shoppers 39

Key Findings 41

Appendix 42

Further Reading 42

Sources 42

Ask the analyst 44

About MarketLine 44

Disclaimer 44

List of Tables

List of Tables

Table 1: Growth in UK operations of online retailers 26

List of Tables

Table 1: Growth in UK operations of online retailers 26

List of Figures

List of Figures

Figure 1: UK retail companies declared bankrupt or similar 2007-2018 8

Figure 2: UK Stores and Employees affected by bankruptcy 2007-2018 9 ...

List of Figures

Figure 1: UK retail companies declared bankrupt or similar 2007-2018 8

Figure 2: UK Stores and Employees affected by bankruptcy 2007-2018 9

Figure 3: Google Store 10

Figure 4: Amazon Bookstore New York 11

Figure 5: Amazon Go 12

Figure 6: Bonobos’ Guide Shop 13

Figure 7: Amazon shipping cost, shipping revenue and net shipping costs 2010-2016 $m 14

Figure 8: Amazon, disparity between sales and shipping expenses growth 2010-2015 15

Figure 9: Amazon UK delivery carrier breakdown from Amazon seller 2016 17

Figure 10: Ocado Autonomous delivery test vehicle in the UK 18

Figure 11: Nuro Robotic vehicle delivery 19

Figure 12: Nuro Robotic vehicle delivery 20

Figure 13: Gen Z, aspirational browsing stage 23

Figure 14: Internet activities by age group, 2017, UK 24

Figure 15: Frequency of online shopping, by age group 2017, UK 25

Figure 16: Logos of sharing economy pioneers 27

Figure 17: Ikea virtual reality app 30

Figure 18: Target in-store app 31

Figure 19: Ralph Lauren holographic fashion show, 2015 32

Figure 20: Macy’s On Call AI 33

Figure 21: Samsung interactive mirror 34

Figure 22: UK Household debt (£bn) 2000-2016 36

Figure 23: UK over-65-year-old population (millions) 37

Figure 24: Recent internet use in 2011 and 2017 by age group, UK 38

Figure 25: Lack of seating deters older shoppers 39

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