TBWA Backslash’s Cecelia Girr and Skyler Hubler layout their surprising predictions for the future of retail with LBB’s Laura Swinton
Of all the sectors that’s been turned around by the Covid-19, retail might have been the one to undergo the most dizzying array of pivots, spins, twists and resets. In the short term, retailers have shut up shop, shifted online and many major and independent stores have succumbed to the pressure of lockdown. The pandemic has been described as a great accelerant for existing trends, and it looks, on surface level like the perennially-headline-grabbing ‘death of the high street’ might be one of those trends.
But a recent study, though, reckons reports of the high street's death are greatly exaggerated. ‘Future of Retail’ from TBWA’s intelligence unit Backslash
has a far more exciting tomorrow awaits. One that may see abandoned malls rewilded, and retail areas transformed into community experiences, and brands treating their physical presence as a place to provide useful services or delightful experiences. Cecelia Girr, director of cultural strategy, and Skyler Hubler, cultural strategist, aren’t in the business of crystal ball gazing, but what they are rather good at is sniffing out opportunities and avenues to explore.
Flex for the Future
In the UK, headlines bewail the ‘death of the High Street’ – in the US the equivalent is ‘the death of Main Street’. As retailers shrink back their bricks and mortar footprint, in many towns, small cities and suburbs, the central shopping streets are seeing empty lots and charity stores increase. This isn’t a new trend – though the Covid-triggered acceleration of e-commerce and prolonged lockdowns haven’t helped. In 2020, 200 department stores closed in the US. By 2040, it’s estimated that 95% of purchases will be done through e-commerce.
All is not lost, however. According to the report, the high street (or main street, or suburban mall…) may be due an unexpected rebirth. In a trend the team calls ‘Flex Retail’, these retail hubs will become more flexible, more geared towards community and connection – with a little bit of brand experience sprinkled in.
It’s a trend that pulls together several threads. As remote or hybrid working becomes more common, people expect that brands will adapt to their locality. Over the years as retailers have opted for efficiency over experience, every street in every town has become a rather drab copy-and-paste facsimile. When things are so samey and boring, what’s the point of leaving the house? Where’s the pull?
“We've done a lot of research around urban planning,” says Cecelia. “I think this is a big question that urban planners are asking themselves too, 'how do I make a community desirable for someone to come to?' and I think retailers are a big part of that equation. 'What kind of places are am I attracting people in with?' I think that forward thinkers are going to start getting on this problem now because it's a big one.”
Cecelia and the team say that experience and flexibility will be key. Pop-up shops and temporary stores keep high streets interesting and fresh, for example. The report notes that nearly 40% of retailers are claiming to expand their in-store experiences – and highlights the Uniqlo Park in Yokohama, with a park, rooftop garden, playground and sea views, a brand location that encourages people to socialise, stay and potentially shop. And as cities try to become greener and healthier, retailers may also find a role to play in rewilding cities while demonstrating green values. It might sound wild, but there are already examples – farming lessons in the rooftop farm at an Australian mall at Burwood Brickworks or a Tokyo Starbucks inside a verdant greenhouse. By following the example of Singapore and growing plant life over their buildings, brands can even help turn cities in gardens and parks.
Similarly, the trend towards finding new, more sustainable business models means that brands might see their physical locations not as spaces to sell but to upcycle and repair.
Skyler notes that for physical retail to work in this flex age, they need to be more mature in balancing their focus on making sales with being useful, enjoyable and un-pushy.
“We had that conversation with some of our spotters too, they were caught between the anti-consumerist mindset and the entire business model of our clients, which is based on pushing sales and making profits? What’s the fine line between those and how do you tackle both?” says Skyler. Options include cyclical centres where people can buy unique pieces not available online, or re-fill centres where people can easily re-fill goods bought online.
Exciting experiences may well be an important part of the retail game plan moving forward, but retailers will need to be careful about becoming too slap-dash and carelessly excited about technology. Planning for the post-Covid era, brands are embracing tech and racing to compensate for overdue digital transformation.
But are shoppers on the same racetrack? The pandemic, with its tracking apps and intensely online existence, has left many wishing that overly intrusive brands would take a step back. Whether it’s concerns about data privacy or a need to get a break from screens, and ‘touch grass’, as the kids say, it’s a sentiment brands can’t ignore. A Google study across six countries found that 25% of people had already taken greater control of their tech to nurture their digital wellbeing – turning off notifications, monitoring screen time and deleting apps.
That doesn’t mean that retailers should go full luddite and eschew technology, but that technology needs to work behind the scenes to create intuitive experiences.
“The real interesting and meaningful uses of technology are actually happening behind the scenes and so it's not a question of technology or not, it's more about what's, what's the right way of using it,” says Cecelia.
The report suggests walking the ‘tech tightrope’ could be achieved in a few different ways. In some cases, it’s as simple as being clear and honest with visitors to your store, not collecting data ‘for the sake of it’, but for good reason.
“I think the main thing we saw around that is people just want transparency so if there's biometric technology in stores or if there's automation or if there's facial recognition, they just want to know and they want to know what it's being used for and how it's benefiting them,” says Skyler. Trust and willingness to share data does seem to vary according to local trust in government and business.
One example the pair share of a business that fell off the tech tightrope was a supermarket that placed biometric sensors on shopping trolley handles. The store was able to detect stress in customers as they moved through the store – alerting staff to go and offer assistance. That’s the sort of data collection and intervention that is likely to increase stress levels and make people uncomfortable.
‘Phantom tech’ might see retailers use data to better inform sales associates, creating smarter experiences but keeping the human touch. Tech and data can also help reduce wastage and excess by helping with intelligent ordering or reducing the number of items returned to store. 25% of online purchases are returned, compared with 8% in-store. Using scanners in-store to give consumers more accurate body measurements or even creating bespoke items in-store.
Not all tech has to be completely invisible. It just needs to be there for a reason. Delightful, sensory experiences will likely be a key draw for consumers. ‘What if… going to the store was as fun as going to the movies?’
One of the biggest perceived threats worrying traditional retailers is the bustling and sprawling networks of peer-to-peer and direct-to-consumer sellers.
“This one was born from us thinking about how all these new players and that retailers finally have to consider that they may have not considered before,” explains Cecelia.
Buyers are looking for uniqueness and alternatives to the behemoths – and secondhand goods have come out of the thrift store and onto platforms like Facebook Marketplace and Shpock. Every Billy bookcase or designer handbag sold second hand could be seen as lost revenue for retailers selling first-hand goods.
But if you can’t beat ‘em… the report suggests that retailers consider joining ‘em. “All of the research that was coming in the relationship is no longer brand-to-buyer it's brand-influencer-buyer it's brand-new-buyer and a second-hand buyer,” says Cecelia. “We wanted to think about how retailers could actually leverage these relationships in these new players as an ally rather than being afraid of them and viewing them as a threat, which I think a lot of them do right now.”
Retailers need to learn from the pro-active and responsive DTC brands and engage in direct dialogue. A study by social sprout found 70% of consumers feel more connected to brands whose CEOs are active on social media. Real people engaging online is incredibly powerful – the report cites Taobao’s Taobao Live streaming platform is experiencing a 400% year-on-year increase in sales. The old QVC approach for the social age.
Brands may be tempted to up their influencer marketing, recruiting armies of them to flood the social platforms with their brand. But that’s not really engaging with networked commerce in a meaningful or substantial way. Young people, who have grown up with influencers are turning their back on them – student website The Tab found that 85% of young people unfollowed influencers during the pandemic. For politically engaged and socially aware Gen-Z, shows of wealth and unattainable lifestyles have lost their appeal.
“A big thing we saw during COVID was these takedowns of celebrities who were coming across as out of touch or flaunting their wealth in a time when everyone else was struggling,” says Skyler. “And on the retail front same thing we're seeing a lot of these influencers that promote fast fashion and they're creating a tonne of packaging waste there may be wearing the product once or twice for a photo, and they're kind of furthering the idea that you know you can only be photographed and each thing once and you need to have the newest, latest everything.”
That doesn’t mean that it’s game over for online personalities. The report suggests brands switch to educators and advocates sharing useful information or DIY inspiration. As an example, adidas has been working with Depop sellers to customise and upcycle Stan Smiths – feeding into a desire for unique products but also sharing ideas for creative, expressive young people to do themselves.
It’s a space that the younger startups and DTC brands have come to naturally – for more established retailers it’s more of a learning curve. “In the past the small brands were trying to be big right whereas now all the big brands are trying to figure out how to act small because that's what people want,” comments Skyler. “They want to feel like they know who they're supporting and like they're, they're keeping the fabric of the community strong so it's a really interesting shift.”
With wastefulness and wealth inequality under intense scrutiny, the luxury sector is under particular pressure to revamp its business models and retail practices. Showy purchases induce guilt, so the report suggests that luxury brands double down on quality products and enduring designs that transcend the fast-fashion trend nano-cycles (are we still on Dark Academia or is it Goblincore now? One loses track…). So, we may see a shift to a more functional approach to luxury – well-made hiking boots and premium parkas.
Refillable packaging for luxury makeup or premium eco-friendly products are strong prospects. Across the world, luxury consumers are keen to pay more for eco-friendly products – and in MEA, APAC and Latin America the desire is highest. Patagonia has long pioneered sustainability but even high fashion houses like Gucci are investing in sustainable and regenerative farming.
“Luxury brands are setting the aspiration right and people want to feel like they're on the cutting edge of something new and like they're buying into what's next,” says Skyler. “And that's what's interesting about the materials front is visually it's signalling this very visual shift away from the leathers and furs towards these greener materials, that people take pride in it. That's especially what the younger people want is to feel like they're supporting; something that's ethical and sustainable.”
In the luxury context, eco needs to look fresh, directional and exclusive, which makes it the perfect playground for innovative new eco materials. Lululemon, for example, is supporting the development of algae-based fabric Biogarmentry for mainstream use. Other retailers are experimenting with biodegradable packaging made from mushroom or avocado or wood pulp. The global market for eco fibre is predicted to grow to $58.29bn by 2027.
“It's not necessarily right now but the innovations are happening,” says Cecelia. “I think it's only a matter of time before brands kind of jump on the bandwagon and start using these things and innovating around them.”
And with a growing appetite for pre-loved luxury design classics, tech may also be a key component. Tracking designer items and proving their provenance is an ideal use case for blockchain. It helps reassure consumers, but it also potentially solves a problem for luxury brands. In 2018, Burberry destroyed £26.8m of products to prevent them being resold cheaply. Blockchain may be a way for luxury brands to be involved in and benefit from resale, encouraging them to engage positively rather than wastefully.
None of the pathways for retailers identified in the report are likely to manifest fully formed or immediately, rather, like the re-wilding cities, these are phenomena that may take root and emerge organically. But, after the gloom of the stagnating high streets and ghost malls, these ideas are offering some seeds of hope for the retail sector.