Future of Retail

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Independent publication by 21 / 06 / 2015 # 323 raconteur.net FUTURE of RETAIL Channelling good customer experience 03 Retailers must provide a seamless shopping experience online, whether mobile or at home, and in stores Taking a bite out of Apple Pay? 06 Mobile payments, using smartphones, tablets and watches, promise great potential if more retailers adopt innovation Bricks and clicks are a thing of the future 05 Shopping in the future does not necessarily have to be a contest between online and off – indeed the two may come together Technology is the driver of retail change 07 Technical innovation has created opportunities for retailers and customers with buying and selling in constant flux It's full speed ahead for UK retailers... Recovery from the great recession, coupled with improved retail technology and relentless growth in online shopping, present both an opportunity and challenge for retailers OVERVIEW DAN MATTHEWS T he world of retail is a changeable place. Customers love the regular improvements to the services they enjoy, but for the businesses de - livering these upgrades it can be a puzzling, even exhausting, experience. In many ways the UK retail sector could not be in a better place. Month after month unemployment is falling and the number of people in work hits a fresh record high with each new bulletin from the Office for National Statistics. Although wage inflation has been ominous - ly absent in recent times, the money sifting into our pockets is actually starting to in- crease in real terms meaning that some of us are actually starting to feel wealthier than we used to – a nice change. Interest rates are at their lowest level since William III, which has had a triple positive impact on con - sumer spending. It has encouraged house prices to soar, making home- owners feel better off, while borrowing is cheap- er and saving is pointless; so for goodness sake go out and spend. For the time being, inflation is history too with prices dropping in many parts of the economy. The most obvious sign is the recently halved price of crude oil, which translates to cheaper petrol, utilities and, through the supply chain, cut-price prod - ucts and services. Businesses see this as a brilliant time to invest meaning even more employment, and more purchases of bits and pieces from the nation's shopkeepers. Meanwhile the Euro - pean Union is strengthening with "problem members", such as Spain and Italy, dragging themselves back into the black. Greece, of course, remains a worry. Technology is playing a role in all this hap- piness. Websites make everything easier, quicker and cheaper, putting products right under the noses of consumers and, once pur- chased, delivering them direct to their doors. The immediacy of the internet makes sponta- neous purchases all the more so. Completing this perfect picture, curious new ceremonies, such as Black Friday, Cyber Monday and Small Business Saturday, have conjoined to put a rocket under sales just as the Christmas period gets into full swing. There is a host of other events dotted throughout the year, from Valentine's Day to Father's Day, which while providing less of a stimulus than Christmas, nevertheless remind us all to put our hands in our pockets for periodic gifts, treats and stays. In general, things look very rosy indeed. Yet shop bosses reading this would be forgiven for screwing up their faces. They'd agree that the economy is OK and, bar - ring any major hiccups, demand should remain high, but turning these factors into a profit is a convoluted process. Low inflation means downward pressure on margins. High employment sounds good, but it needs consistent wage growth to make a real difference. Technology has invited new competition and is at worst a distrac - tion, while the new shopping "events" have made it nearly impossible to balance supply with demand. For food retailers, the invasion of mega-dis - counters Aldi and Lidl from Europe has blown their sector to pieces, and only a complete rebuild along entirely new pricing metrics will save operators who focus on price-aware shoppers. The growth of online is a blessing and a curse. It has shed light on consumers like never before, giving retailers who crunch their numbers the chance to segment and target different demographics within their customer base. But, put simply, it can be hard to keep up with all the innovation. "UK retailing is still recovering from the 'great recession' at the same time as it is ad - justing to substantial structural reforms," says David Stoddart, an analyst at Edison In- vestment Research. "The major grocers face increased competi- tion from the continental discounters that is resetting their margins and returns on capi- tal. In addition, they are absorbing the addi- tional costs of serving the online channel. "Growth of online is also a game-changer for non-food retailers, hastening the demise of marginal shopping locations and provid - ing a better means of addressing changing consumer attitudes than traditional stores ever could." The problem for many retailers is the sheer speed of advance – it's not so much a march of technology as a gallop. You used to get time to adjust to new inventions, now a year might see multiple jerks forward. Content marketing, omni-channel retail, the internet of things and contactless all have an influence on retail today, yet no one out - side of the technology industries themselves had heard of these terms five years ago. Digital is improving the customer experi- ence, transforming the how, what, when and where of their shopping. But for retailers it's enough to make your head spin. To make matters worse a bad investment in a service with no future could reverse a profit. "Retailers are struggling to keep up with rapidly changing consumer demands," says Andrew Long, head of IT strategy at Accentu - re UK. "The digital transformation has a long way to go and its impact will affect everyone and everything – businesses are going to have a major challenge keeping up with the pace." Technology is the problem, but it is also the solution. People shop online, and increasing - ly through smartphones and tablets, meaning that only technology can ensure they remain happy with the services retailers provide. "Technology is a key enabler to providing customers with the experience and service that customers now expect through every touch-point a customer has with a retailer," adds Mr Long. "It drives personalisation of the interaction, a context of the customer and any previous interaction, as well as making the interaction more efficient and effective. Leading compa - nies are seeing customers attracted and re- tained by the improved outcomes that tech- nology can deliver." The digitisation of retail might lead to sleep- less nights for some and the end of the road for others, but this is what retail looks like now – an endless reimagining of what is pos- sible and how it can fuel the customer jour- ney. Those uncomfortable with this notion should get out while they still can. Although this publication is funded through advertising and sponsorship, all editorial is without bias and sponsored features are clearly labelled. For an upcoming schedule, partnership inquiries or feedback, please call +44 (0)20 3428 5230 or e-mail info@raconteur.net Raconteur is a leading publisher of special-interest content and research. Its publications and articles cover a wide range of topics, including business, finance, sustainability, healthcare, lifestyle and technology. Raconteur special reports are published exclusively in The Times and The Sunday Times as well as online at raconteur.net The information contained in this publication has been obtained from sources the Proprietors believe to be correct. However, no legal liability can be accepted for any errors. No part of this publication may be reproduced without the prior consent of the Publisher. © Raconteur Media Distributed in Published in asssocation with STEPHEN ARMSTRONG Contributor to The Sunday Times, Monocle, Wallpaper* and GQ, he is also an occasional broad- caster on BBC Radio. DAN MATTHEWS Journalist and author of The New Rules of Business, he writes for newspapers, magazines and websites on a range of issues. DAVID BENADY Specialist writer on marketing, advertising and media, he contrib- utes to national news- papers and business publications. CHARLES ORTON-JONES Award-winning journal- ist, he was editor-at-large of LondonlovesBusiness. com and editor of Euro- Business magazine. HAZEL DAVIS Freelance business writer, she contributes to The Times, Finan- cial Times, The Daily Telegraph and The Guardian. JOSH SIMS Freelance writer, he contributes to the Financial Times, Wall- paper* and Esquire, and is editor of Viewpoint. NICK MARTINDALE Award-winning writer and editor, he contributes to national business and trade press on a wide range of issues. CONTRIBUTORS BUSINESS CULTURE FINANCE HEALTHCARE LIFESTYLE SUSTAINABILITY TECHNOLOGY INFOGRAPHICS raconteur.net/future-of-retail-2015 RACONTEUR Publishing Manager Nathan Wilson Digital Manager Rebecca McCormick Head of Production Natalia Rosek Design Alessandro Caire Vjay Lad Kellie Jerrard Managing Editor Peter Archer Source: Office for National Statistics The problem for many retailers is the sheer speed of advance – it's not so much a march of technology as a gallop Share this article on social media via raconteur.net Opening day of the Japanese-inspired Shibuya-style crossing at London's Oxford Circus Mar 2013 Mar 2014 Mar 2015 Apr Apr Apr May May May June June July July Aug Aug Sep Sep Oct 4.6 4.9 5.1 Oct Nov Nov Dec Dec Jan Jan Feb Feb 5% 4% 3% 2% 1% 0 -1% GROWTH IN UK RETAIL SALES PERCENTAGE INCREASE COMPARED WITH THE PREVIOUS YEAR

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