Backslash, the cultural intelligence division of TBWA\ -The Disruption® Company-, has released its Future of Retail report, in which the company uses the knowledge and experience of its global network of cultural “trackers” to uncover disruptive growth opportunities in the retail sector.
Accelerated by the global pandemic, the e-commerce revolution is about to erupt: Nasdaq forecasts that 95% of purchases will be made via e-commerce by 2040. In fact, a study by Astound Commerce estimates a 24% growth in e-commerce in Spain for this year 2021. However, according to ATKearney, 71% of consumers say that they still prefer to shop in physical stores, so the complete abolition of the Retailing in real life may not be the answer.
Jesus strong, Vice President of Strategy and Innovation at TBWA\Spain, emphasizes: “The truth is that nothing will ever be the same again. Post-pandemic consumption habits are different and it’s time to reset, be fast and start a new chapter in Spain. Thanks to this in-depth analysis, we have identified and unlocked 4 disruptive growth opportunities that point to new sources of demand.” “Instead of avoiding the big troubles, with this analysis we tackle them head-on and offer a strategy to move forward in line with the direction of the culture “, he adds.
New challenges to adapt to
To identify the trends and opportunities that will shape the future of retail, the TBWA\ analysis looks at the challenges currently facing the sector, largely characterized by new post-pandemic habits. They are the following:
- Consumers, increasingly aware of climate change and environmental issues, are demanding more transparency in the supply chain.
- The emergence of direct-to-consumer (D2C) brands – which sell direct to consumers through online channels such as social networks – are driving them away from big stores.
- The growing number of existing shopping platforms is making the brand-consumer relationship more and more difficult.
- The growing demand for products via online sales is forcing retailers to undergo digital transformation.
Based on these challenges, four possibilities for disruptive growth in retail are shown and concrete options for action by brands are described. Each of these four trends and opportunities answers four questions that arise in order to meet these challenges.
The shift to e-commerce is redefining the role of stores
A new era of retail requires physical spaces that aren’t just for shopping. The stores of the future will revitalize cities, strengthen local communities and encourage circularity as the days of the fast food model are numbered in this new context.
Some examples of brands that are already offering consumers unusual in-room experiences include the pop up store seasonal ones that carry luxury brands in places of exclusive tourism such as Ibiza or Marbella; commercial “anti-centres” that offer unusual experiences in their spaces, such as X-Madrid; or spaces that are decoration shops, restaurants and gardens like Salvador Bachiller.
In addition to these experiential shops, it will be important for the physical shop of the future to be part of the solution to the environmental problem. As throwaway culture comes to an end, physical spaces will transform into hubs of sustainability. Outside the Spanish market, brands such as Adidas are already bringing this model to life with vending machines that accept old plastic bottles for discounts; or H&M, which developed the Looop machine, the world’s first in-store recycling system that turns old clothes into new ones.
Technology as part of the shopping experience
The pandemic has accelerated digital media adoption, leading to up to 45% more people buying online than before (according to Google and Deloitte articles). Consumers choose this type of purchase to avoid visiting physical establishments and because they enjoy browsing the web more. According to the report, however, the adoption of technology in retail can be applied in a variety of ways to deliver a smooth and seamless shopping experience.
Examples of this in Spain include BitcoinPyme, a startup that allows cars to be bought with cryptocurrencies; Ghop’s smart supermarkets without staff, soon to arrive in Spain; or the implementation of augmented reality in large stores like Ikea – where the end result of the products can be seen in a specific space – or Sephora, which also has applications where products can be tried on virtually in real time.
How to use and utilize e-commerce?
To survive in an increasingly participatory and community-based commerce, brands must make all members of their network protagonists and consider the purchasing preferences of their increasingly socialized consumers.
In this sense, one of the most important trends shows that the largest and most convenient retailers are no longer the most obvious option in favor of the uniqueness offered by sites like Vinted, Wallapop or Instagram Shopping. Therefore, staying connected with consumers through social commerce is more important than ever, as 45% of Spanish users recognize that social networks have influenced them when purchasing a product or service, which is another purchase channel for 21% of them .
Likewise, the TBWA\ analysis shows that the post-influence era is beginning to be felt in society as a different breed of “influencers” gain traction: influencers who are opinion leaders and experts in their fields. Brands should consider these new educational influencers to promote their brand to an audience that wants to know more and better.
Factors that will define the new luxury
The new luxury is based on the trends of sustainability and awareness, which focus on the life cycles of products. Looking to the future, premium eco materials, authenticity trackers, products handmade that combine fashion and craftsmanship (a very popular concept in Spain) and functionality combined with durability will define the new Premium.
According to a study by OCU and NESI, 73% of Spaniards already attach importance to ethical and sustainability-related aspects when making their purchasing decisions. There is an urgent need to adapt to this trend, since 50% of Spaniards admit that they have abandoned or boycotted a brand after a scandal or a spate of negative news, of which 41% confirm that these are definitive breaks.
There are already several brands in Spain that have adopted this new concept of “luxury”, such as Adolfo Domínguez, who, under the slogan “Be Older”, reaffirms its commitment to the quality of the enduring as opposed to the ephemeral fast fashion.