This story was originally published in the 2023 Summer issue of strategy.

Generation Alpha. Fifteen-minute cities. AI and the metaverse. There’s no shortage of factors that will influence the retail landscape over the next decade. So, to help anticipate what’s coming, we turned to the experts to find out what they’re keeping a particularly close eye on – the issues at the top of their list. 

Of course, we took some issues as a given: Consider sustainability and the environment, for example. Or social justice. Those are market-wide, fundamental concerns every brand needs to consider. Research says that 66% of consumers actively consider a brand’s stated or perceived position on social, environmental and political issues prior to purchase. In fact, evidence suggests that today’s consumers are four to six times more likely to purchase from, protect and advocate for brands that demonstrate a clear sense of purpose. So, those are issues that retailers need to be well into considering already – not in future.

We wanted to hear about all the other things, some unprecedented, that may change the face of retail. And there were some surprises.

Laura Saunter, senior strategist, WGSN Insight

The future of loyalty 

With the cost of living at an all-time high, consumer loyalty is more fickle than ever. Brands must tap into new strategies – from inviting their consumers to become brand stakeholders to fostering new forms of ownership – to keep their customers close in an era of price over image. With fear remaining a significant driver behind consumer decisions, methods of appeasing guilt and worry around overspending and carbon footprints are quickly gaining traction, such as splitting costs and ownership with others. It will be important to explore new co-ownership and circular models to win customer loyalty in the coming years. 

Experiential e-commerce

With advanced digital tools and platforms at their disposal, many companies are investing in Web3 to achieve new levels of consumer interactivity. However, brands also have the choice to take inspiration from the metaverse’s more surreal approach to online shopping. Alongside virtual stores, AR fitting rooms and meta-commerce, online shopping experiences are increasingly exploring the boundaries of entertainment, gamification and technology to boost engagement and drive sales. These advancements present new opportunities for e-commerce, which has traditionally prioritized streamlined user experiences.

Doug Stephens, founder and CEO, Retail Prophet

AI + human creativity

From the frontlines of customer service to the murky tentacles of supply chains, AI will help retail businesses achieve extraordinary levels of efficiency. A significant percentage of the human effort that goes into day-to-day problem solving, scenario planning and decision making in many organizations will be transferred to various forms of AI across the value chain. The labour savings for most companies will be historic. 

Some companies will simply drop these savings to their bottom lines. Smart companies will reinvest them in the one thing that AI can’t yet do: imagine, conceive and develop original and innovative ideas. While AI is a wonderful tool for convergent thinking and problem solving, it can’t conceive of things that don’t currently exist. 

This matters because truly innovative companies have more than twice the future earning potential when compared with their less innovative rivals. 

The winners in the AI arms race will be those that invest early and wisely in optimizing the potential benefits of AI, while also becoming a lightning rod for the best, brightest and most creative humans.

Getting innovative

Upon opening its House of Innovation stores, Nike soon recognized that shoppers who spent time in one of these outlets and who later shopped online purchased 30 percent more than shoppers who did not have a Nike store experience. Similarly, in their smaller format Nike Local stores, a focus on local running and fitness clubs yielded club membership sign-up rates six times greater than any other Nike stores. Both of these results suggest that a focused and well executed physical store experience actually has a powerful media effect and direct influence on consumer behaviour.

Media is the store and stores are media

For centuries, media, in the form of advertising, was used as a tool to drive consumers to a point of distribution which, until more recently, was almost always a physical store. Today, this flow is reversing. Retail is atomizing into just about every form of media, be it a TikTok post, Instagram video or YouTube channel. Media is no longer just a callout to visit a store, but is literally becoming the store, as consumers become increasingly engaged with online media and are willing to buy directly from it. 

This doesn’t make physical stores redundant, but it does alter their fundamental purpose and value. Smart retailers today regard their physical stores as a powerful and engaging media channel that can be used to draw consumers into the brand ecosystem. Stores today are increasingly doubling as brand clubhouses, brand cathedrals, event stages and content studios as they vie to attract a new generation of consumers. 

Therefore, while media in every form today is becoming “the store,” visionary retailers are leveraging their physical stores as the most powerful, manageable and cost-effective media channel they own. In other words, rent is the new cost of customer acquisition.

The experience is the product

We live in the age of peak product. Amazon, for example, offers more than 500 million products, the vast majority of which can be on the consumer’s doorstep in a day or two. And Amazon is only one Goliath in a market saturated with buying options. The brutal reality today is that for most retailers, product, price and promotion are no longer stable footholds from which to compete. 

Ultimately, the only remaining distinction between one retailer and another is the customer experience. Put a different way, in the age of unmitigated consumer choice, the experience of buying the product has become the product itself. A growing number of enlightened brands, therefore, are putting every aspect of the customer’s journey under the microscope to ensure that each consumer/brand interaction is not merely acceptable but delightful, memorable and worth talking about. Retailers who fail to observe this trend do so at their peril.

Katie Baron, content director, trends, Stylus

The need for “universal brandscapes”

The next decade will make it a moral and commercial imperative for retailers to service and empower consumers of all abilities (physical, mental and sensory) within the same spaces, both physical and digital, and without silos. We call this “universal brandscapes.”

It’s a liberation missive for every part of the brand ecosystem when you consider that approximately 16% of people globally live with a disability, yet under 1% of primetime TV ads show that reality, and 43% of people with a condition have abandoned purchases online due to poor accessibility.

This response means representation from the adverts we’re served to the virtual worlds where we’ll self-represent. It’ll also mean UX – from specialist filters, overlays and coding recalibrating e-commerce in a nanosecond for conditions as diverse as dyslexia and Parkinson’s, to image-recognizing and multisensory tech retrofitting physical spaces so they can be navigated in a number of ways.

Why is this imperative long-term? As the awareness and diagnoses of neurodiversity rises, we will see a much greater consumer demand for brand initiatives that accommodate a far greater number of personal nuances. Similarly, aging populations and a focus on how retail supports older citizens or those moving through life changes will hit the top of consumers’ agendas.