By: Alex Bradley
It’s that time of year, following the holiday excess many of our waistlines are looking a little fuller and our email inboxes are full of newsletters, including 2018 predictions and the key trends to consider.
I love it; it’s full of hope for the year ahead and the promise of new experiences. But how many of these predictions and trends are truly new? I would argue that they are (at times) nauseating names that are actually enduring themes that have been driving change for years and are infinitely more influential for the foreseeable future (not just 2018). If I hear ‘phygital’ again I might throw up. Instead, let’s focus on these long wave drivers of change and consider how they can drive change within a retail experience context, so we can look at trends in a more useful light and consider their influence on future retail experiences beyond 2018.
With that in mind, here’s a retail experience framework that relates key drivers of change to an experiential and tactical context. This not only outlines some socio-cultural, technological and economic drivers of change, but also relates them tactically to your customers, brand and business – proposing some considerations for 2018 and beyond.
The drivers of change I’ve outlined are far from exhaustive, but provide some food for thought or as an ex-colleague more appetizingly put it, ‘brain food for innovation’. Still hungry? Let’s dig in.
1. People’s Experiences (Target Customer)
People have experiences; brands define touchpoints. Brands can influence a person’s experience with touch points, but cannot ‘design an experience’ as it’s an individual’s perception, and everyone’s perception is beautifully different, thankfully. These experiences are a conscious and subconscious flow of perceptions over time, influenced by many factors such as their belief system, generation, geography, life events and socio-lifestyle context. Considering the latter, here are couple of enduring socio-lifestyle themes that are consistently driving change.
1.1. The search for authenticity
In an era of fake news and a never ending stream of corporate scandals, our search for authenticity is stronger than ever. This has existed since people have written signatures and added burn marks to cattle. Today there are many flavors of authenticity, from heritage (Swiss Watches), technical superiority (Leica Cameras) and production (Ethical products). The latter is on the rise, with UK households spending an average of £1,263 on ethical goods last year. Contributing to the £81.3bn market for ethical products and services. This extends to other sectors, with L’Oréal announcing their first vegan haircare product next month. In short, more customers are demanding transparent actions, not just words.
1.2. Data security awareness
The need for transparency is also extending to the digital sphere, with customers being more conscious of their data and how it is used by brands. This is nothing new, IT security issues are as old as IT itself. However, record 2017 breaches with more data stolen in the first six months than the whole of 2016, has more than moved the needle for customer’s perceptions. Now 70% of consumers believe companies protect their data.
Everyone wants to understand their customer and to be customer-centric. I did not meet a client in 2017 that thought otherwise and many segmentations do a wonderful job of capturing much of this context from a rearview mirror perspective. But we also need to understand the bigger socio-lifestyle context that influences our target customers, to have a more future focused perspective so we can recalibrate and create brand touchpoints appropriately (more on the latter in section two).
In 2018 consider:
- How could we as a business demonstrate our beliefs beyond words?
- How could we bake ethical practices into our core offer?
- How could we meaningfully alleviate customer’s data concerns?
2. Brand Experience (Touchpoint Ecosystem)
As heavily documented, brands can influence a person’s perception by designing touch points, including (but not exclusively) products, services, spaces and communications. To borrow from Don Norman, who joined Apple in 1993 as a User Experience Architect – the first use of the phrase “User Experience” in a job title – describes Brand and User Experience as a more holistic activity that considers all the interactions a customer has with a brand. Essentially crafting brand touchpoints such as a space, App, AI Bot or new touch point that has yet to be invented. So what stands out in the tech tool kit to recalibrate or create new touchpoints in 2018?
2.1. Virtual Reality (VR)
Morton Heilig wrote in the 1950s of an ‘Experience Theatre’ that could encompass all the senses in an effective manner, to draw the viewer into the onscreen activity. Virtual Reality Modeling Language (VRML), first introduced in 1994, was intended for the development of “virtual worlds” without dependency on headsets. In 2017 the VR hype cycle certainly reached a new high, but is far from over, with mobility set to be more of a headline for 2018, with the first standalone devices. Which will bring us back neatly to more of a mini Experience Theatre that Morton Heilig envisioned nearly seventy years ago.
2.2. Artificial Intelligence (AI)
Ok, I won’t mention Blockchain – although Blockchain in the supply chain context is a more interesting conversation for retail– but we must cover off AI. As Max Tegmark eloquently describes his recent book Life 3.0 there are many flavors of AI and some key debates that will have huge implications for us in years to come. However, Singularity and mass Artificial General Intelligence (AGI) are not on the cards for 2018, but AI is already great at very focused tasks. Amazon is of course already leveraging AI within their warehouses to great effect and Carlsberg have teamed up with Microsoft to use artificial intelligence to help develop new beers and improve quality control in the supply chain. The race to ‘control’ our homes will continue in 2018 with Apple and Samsung set to join the other AI home speaker offers from Google and Amazon launched last year, providing another commerce touchpoint within the home.
Understand existing and emerging technologies whilst considering how we can recalibrate or create touchpoints to provide more meaningful ways for people to engage with your brand. This course needs to work in concert with understanding your customers, as people’s perceptions of technology vary considerably, such as the Swedes positive and Americans negative perspectives on impact of AI
In 2018 consider:
- How could we leverage our e-commerce infrastructure to elevate in-store experiences?
- How could we more effectively blend online and offline to be in tune with customer behavior?
- How could we use VR more effectively if we thought like a publisher?
3. Experience Economy (Business Model)
Joe Pine, coiner of the concept ‘experience economy’, suggests that businesses can charge for access to an experience. Transitioning from (1) supplying goods, to (2) services and moving to (3) experiences. All of these paradigms are stronger than ever today. Take (1) paying for food produce, to a (2) meal plus service and access to a more (3) theatrical culinary theme. Netflix’s a Chef’s Table has dined out on the latter wonderfully. So what are the notable economic dynamics that are consistently driving business change?
Consider some of most notable new businesses of the last few years, such as Airbnb and Uber. These have little to do with the sharing-economy (as often touted) and more to do with a ‘share-holder-economy’. Removing intermediaries in their value chain, cutting costs, undercutting their competitors and gleaning and greater margin for the business. These parallel sector examples relate more to contemporary retail that you may think when you consider the growth of apartments as stores last year and Sonos creating mini apartments within their stores to truly experience their products. What happens if you could stay in these spaces and the products became props? MUJI are set to launch hotels in 2018.
The “age of platforms” is now firmly established, as described by Sangeet Paul Choudhry in his book, Platform Revolution. The book defines platforms as, a ‘business model that uses technology to connect people, organizations, and resources in an interactive ecosystem.’ Such as Facebook, Instagram and Ebay. More recently, in 2017 José Neves presented the Farfetch OS, an operating system for bricks and mortar retail, with ‘we are a platform business’. These tech driven plays are here to stay and it would be wise to keep an eye out in 2018 for new plays and players.
New business models and revenue streams can be created by considering these foundational themes and tracking fresher examples that are evident in pertinent parallel markets to yours.
In 2018 consider:
- How could we charge for access to our physical spaces or events and use our products as props?
- How could we reduce operational costs whilst elevating people’s experiences?
- How could we leapfrog our competitor if we thought like a tech company?
All of the drivers of change outlined above have been influential for years and will continue to influence and inspire retail experience innovation for 2018 and beyond. Often, ʻnew’ trends are simply a fresher indicator of longer wave drivers of change that have been around for a number of years. Understanding these long wave dynamics can help you to develop a more meaningful point of view on the future.
I hope you find this retail experience framework and the associated drivers of change a nourishing accompaniment to the trends reports you’ll consume in 2018 and beyond! When you read them, considering their relevance to your customer target, touchpoint ecosystem and business model context to help you define more meaningful retail experience innovations.
By Alex Bradley
About the author
Alex is fascinated by the future and what it means for businesses, brands, products, and people. As a Senior Consultant at Fahrenheit 212, Alex connects the dots between insights, opportunities, and execution. He loves to help companies understand their customers, their future context, and opportunities for innovation and has delivered innovation and product strategies, both as a consultant and client, spanning physical and digital products, geographies and sectors.
Featured image via Unsplash.