London, United Kingdom
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New York, New York
As the sector that has always led the way when it comes to cultural innovation, retail shows no signs of slowing down. During the pandemic we have seen the tremendous growth of e-commerce alongside of an increased focus on hyper local retail that curates personalized experiences drawing on local talent and catering to local audiences. Retailers who have emerged out of the pandemic are placing a heavier
emphasis on experimentation and experience. There’s a recognition that customers value certain experiences that cannot happen from the couch, and after two years spent in isolation there is a renewed interest in community, convenience, and discovery which retail can so richly provide. In this insights piece we explore four of the retail trends we are seeing across the globe.
Like other trends hyper localism has been around for a while but the pandemic increased its importance as many consumers reduced their mobility and adopted more local lifestyles. And even as lockdown restrictions have begun to lift a growing proportion of workers have expressed a preference for hybrid working that will see them spending more time closer to home. As this inclination sets in more businesses are responding with the acceptance of hybrid as a new norm that is likely to outlast the pandemic.
And while the high street was adversely impacted by the pandemic a consumer confidence research report by Barclaycard’s saw an overall uplift of:
This has been accompanied by a growth in hyperlocal marketing which targets potential customers present in a specific and limited geographical area. This allows companies to sell their services and products to the people who are searching for local service providers. The mutual growth of both these trends could bode well for hyper localism in the years to come and could create opportunities for retailers in central business districts to create more exceptional and unique retail experiences which cannot be delivered by the hyper local concept.
The Edelman Trust Barometer reveals how an epidemic of misinformation and widespread mistrust of societal institutions and leaders around the world is affecting consumer confidence and trust. According to the Edelman study governments fared worse than NGOs and businesses. Within the context of this overall decline in trust brands must focus their efforts on
rebuilding trust between themselves and their consumers. There’s an opportunity for brands to lead by example and demonstrate their empathy for consumers by addressing some of the major challenges of our time: trust, wellbeing, and safety. Retail has typically been at the forefront of cultural innovation and here’s an opportunity for them to lead again.
In the hybrid future of retail both physical and digital experiences need to be considered in the design process. The average consumer doesn’t distinguish between channels and is focused on the overall quality of their brand experience. Retailers who embrace this new norm will succeed in this new reality. And while traditional retailers have closed stores at unprecedented rates in the UK and the US over the past few years, with 3000 closures in the US in 2021, there is some optimism within real estate that new online retailers will take the place of traditional retail.
The pandemic has exacerbated the pain that the retail real estate sector was starting to experience in the 2000’s. And in this new retail environment digitally led brands will expect the real estate sector to make some fundamental changes to how it charges rent and to justify the economics to digital-first brands. With the greater adoption of e-commerce, the real estate sector needs to reposition itself as another consumer channel and rethink its relationship to retail tenants if it hopes to slow down the disappearance of retail in previously coveted locations.
The retail real estate sector also needs to catch up with the integration of technology and data to better understand their consumer demographics, shopping habits, and to monitor the value of rent per square foot.
This has been slow to happen but increasingly retailers will be looking to both their digital and physical assets for marketing and monetization opportunities.
As we look to the future of retail beyond the store, we also need to consider the broader context of the twin climate and equity crisis and the ways in which these challenges are affecting the consumer psyche.
A recent report by Depop and Bain & Company, Futureproof: How Gen Z’s empathy, awareness and fluidity are transforming business as usual, outlines how Gen Z’s mindset is focused on empathy, self-expression, and exchange and what this means for brands.
As a generation that has accepted the fluidity between their digital and physical lives, they are easily able to track the brands which follow through on their commitments and which brands fall short. These younger and influential consumers will increasingly turn to pioneering, purpose-driven brands that are leading the path to more conscientious forms of consumption.
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