Do you remember the scene from Minority Report when John Anderton, Tom Cruise’s character, is walking in a futuristic mall getting bombarded by brands like Lexus and Guinness with uber personalized messages that said, “Hi John Anderton, you could use a Guinness!”? Well, that movie took place in the year 2054, exactly 40 years from now. But a lot of the things happening in that scene around technology, personalization, and integration are actually taking place now in 2014.
And in part, what’s helping to fuel all this change is the movement of “The Internet of Things,” which started to penetrate our mainstream last year. The core ethos goes like this: “Imagine a world where billions of objects can sense, communicate, and share information, all interconnected over public or private networks. These interconnected objects are regularly collected, analyzed, and used to initiate action, thereby providing a wealth of intelligence for planning, management, and decision-making. This is the world of the Internet of Things.”
As a result of this movement, we are seeing businesses shifting from pure mass-market advertising to context-aware systems that anticipate customer needs and proactively serve the most appropriate products or services. And for retail, this provides shoppers with a more customized, delightful experience that allows shopping anytime, anywhere, through any device. According to Gartner, context-aware technologies will affect $96 billion of annual consumer spending by 2015, with 15 percent of all payment card transactions being made on the back of contextual information.
As I sit in Asia, it is impossible to not notice the colossal explosion in e-commerce we’re experiencing within this region. According to eMarketer, this year the APAC region will become the largest region for e-commerce globally, with China, India, and Indonesia leading the charge. While I totally support this growth and consult with clients on how to maximize this shift, I do feel that there are important trends in the in-store retail environment we need to pay attention to, particularly as we start to connect both the digital and traditional worlds.
Below are six key trends within the intersection of retail and digital that I see taking place both globally and in Asia.
1. Retail in Any Form
It’s all about pop-up stores! Research by RetailWire says that “78 percent see pop-up retail increasing in the next five years” and that “temporary retail is estimated as an $8 billion-a-year industry.” The top cities for pop-up retail in Asia are Tokyo, and Shanghai and brands the likes of Ikea, Starbucks, Adidas, and others are all joining in. Last year Adidas in London created a giant shoebox as a pop-up store, and “teched” out the interior, allowing visitors to take 360-degree photos of themselves, which could be instantly socialized across their personalized networks. You can read more on PSFK.
2. Foot Path Tracking
According to Brickstream, 71 percent of the retailers in a recent survey of theirs said that brands use or plan to use people counting technology in their stores in 2014, while 68 percent said they are looking to introduce in-store Wi-Fi and loyalty systems. In Asia we’ve started to see more brands enter the in-store analytics space as the use of iBeacon technology has started to gain traction in this region among the likes of Canon, Uniqlo, and others. Also on the tech side, we are seeing the launch of a new wave of start-ups like Mespo, which is a Tokyo-based company that touts itself as the Google Analytics for retailers within Japan’s massive retail environment.
3. Personalized Retail
The smartphone revolution is clearly leading the retail environment’s move to personalization. Forty-six percent of U.S. consumers use their phones to check prices and reviews while shopping at a retail environment, according to The Yankee Group. And by 2016, Asia will be leading the world in mobile transactions at around $165 billion, according to Gartner. Macy’s in the U.S. recently launched an in-store app that provides “wayfinding,” which is the ability to see your precise location on the store map, as well as barcode scanning and augmented reality features that provide a richer in-store experience. And fashion brands Oscar de la Renta and J.Crew both launched their 2013 fall collections on social media before hitting traditional media, which is seen as a first in fashion. However, the issue we see is the huge gap between time spent and ad spend. Brands are still overly weighted on print and TV compared to time spent in these channels, whereas mobile time spent is massive, but heavily underrepresented in spend.
4. Digital Signage Growth
The global market for digital signage will grow from nearly $1.3 billion in 2010 to almost $4.5 billion in 2016, according to ABI Research. In Asia, Australia is leading the charge in terms of consumption of OOH, at 70 minutes per week, with China leading globally on digital OOH revenues last year at around $1.8 billion, followed by the U.S. at $1.1 billion. We are starting to see brands experiment more with unique creative applications of digital signage like what Apotek did in Amsterdam and British Airways in London.
5. Socializing the Store
Fifty-nine percent of retailers plan to invest more in social media integrated within the retail shopping environment, according to IBA Research. And in the U.S., fashion blogs are currently the top source that influences women to purchase online, followed by Facebook and then Pinterest. Because of this, brands are more actively working social into their in-store environments. An example of this is Nordstrom, which turned its most pinned items online into an in-store display across 13 locations. We all know how the “selfie” trend virtually took over the world last year. Off the back of this, Karl Lagerfeld in London installed iPads in the dressing rooms of his new London store that allows visitors to snap selfies and instantaneously share these with their social networks. And finally in China, Smart, the car owned by Mercedes, launched a promotion on Weibo, China’s largest social network, where they sold 666 cars exclusively from Weibo, which ended up in selling out in just two days.
6. Touch and Play
According to the Yankee Group, 52 percent of consumers say their retail experience would be more enjoyable if they had an interactive environment. We see brands getting more into this interactive space in a big way. An example of this is what Pizza Hut has done with its interactive table that allows customers to build their own product as shown here. In China, brands like Adidas and Nike are also making huge strides in in-store interactivity by incorporating technology like Kinect, enabling customers to have a truly rich experience.
These six trends and more are helping to reshape and digitize the in-store retail experience and in Asia we are seeing markets like Tokyo, Shanghai, Hong Kong, and Sydney starting to lead the charge.
Image via Shutterstock.
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American Apparel's chief digital officer discussed the future of retail, the importance of delivering value to the consumer, and strategies for an IoT and omnichannel world.