The Future of Retail

FountainBlue’s June 3 VIP roundtable was on the Future of Retail. Please join us in thanking our gracious hosts at Newmark Carey and our execs who participated in the conversation. Below are notes from the conversation.

Over the past three decades, the Silicon Valley has evolved from a privately held, institutional, relationship-based business economy to a more inter-connected, international, venture-funded, tech-driven economy, where relationships are equally important.

We have evolved from a period where large retail centers dominated, to an era where mixed use is common and restaurants are more plentiful. International investors are investigating in real estate in the valley, a more solid investment opportunity than those which present themselves at home. 

As it becomes increasingly easier for consumers to choose online ordering options, we must look closely at how much retail space we have – 45 sq ft per person in US, much more than the second highest ratios in UK and Australia who are tied at 25 sq ft per person – and how we can make best use of that space. Ideas for doing so are listed below.

• Leverage technology to efficient deliver customized solutions for demanding customers. Ideas include entering precise measurements for shoe and clothing, using virtual reality try before you buy options (which have failed in the past, but perhaps time might be more ripe now), using the web for comparison shopping, etc.,
• Marketplaces like Amazon and NewEgg serve their purpose with efficient purchase and distribution channels. Amazon is more for the general population, but techies might prefer the wide range of tech solutions and attractive prices at NewEgg, or they may prefer physically going into Frys for example. But organizations like Best Buy and office supply chains may be challenged to find that edge which would bring customers into the store.
• Retail thrives when populations are dense, and the experience is good – with great selections.
• In today’s economy, there’s the barbell effect where retailers selling to the lower income and to the higher income are doing well, but those appealing to the mid markets aren’t doing quite as well.
• Retailers with access to mass transit like CalTran are doing better.
• Older, free standing tilt-up R&D buildings in Silicon Valley are being converted into mixed use office and retail space, and the trend is for NetZero impact with less HVAC, more ‘big ass’ fans, and more solar and natural lighting.
• Densifying of people is also a trend, with collaborative work spaces preferred over individual office spaces and isolated cubes. 

Below are some technology and business predictions offered by our attendees.

• Distressed regional malls in populous areas will continue to be converted to mixed-use office/retail and housing, with a new trend of parks on ceilings.
• Technology will continue to be efficiently leveraged to better understand and deliver to the needs of customers, even to the point of predicting what they want and need next. 
• Manufacturing and delivery processes will become ever more efficient as big data and analytics may help retailers better plan for both.
• There’s a love-hate relationship with channels such as Amazon – see article below on Amazon is not your friend – and retailers need to understand how Amazon will fit their overall distribution strategy.
• Strong communities may help build niche retail markets and channels for specialty goods that are vetted and approved by fellow members. Retailers should consider supporting or starting such communities.
• Leveraging technology to customize size and color will help drive sales and lower returns.
• Forward-thinking CIOs of retail firms are adopting sensors and apps which can track inventory and help customers on-site real-time.
• Retailers (in China) with individual air conditioning units are leverage IoT to manage large retail spaces. (This is more difficult to adopt in the US as most large retailers have central air.)
  • As an aside, utilities can use this data from these air conditioning units to manage brown-outs.
• Light-enabled technology (LiFi) may replace wifi at on-site retailers and help retailers track and manage inventory and customers to identify and find what they’re looking for on-site. (Note that light has fewer security risks than wifi, as the distance between the light of a mobile phone and a sensor or a label are generally short, and the time of emission is generally small.)

Resources:

PSFK Future of Retail 2016 Summary Report

10 Pillars Delivering the New Shopper Experience

Synchrony Financial: 10 THINGS TO KNOW: THE TOP 10 RETAIL TRENDS FOR 2016

1. Wearables
2. Retail Holidays
3. Voice Technology
4. Virtual Reality in the Shopping Experience
5. Video Streaming
6. Internet of Things
7. Mobile Payments
8. Social Network Buy Buttons
9. Increased Spending on Pets
10. Personalization

Amazon is not your friend, Caroline Fairchild’s May 17, 2016 

Amazon’s impact on both the retail and delivery spaces is not new. But their announcement earlier this week might all but makes the funding slowdown inevitable for retail startups. The e-commerce giant will reportedly soon sell private label groceries and household products exclusively to Amazon Prime members. The move is huge because Amazon already owns half of all e-commerce sales. With all the growth in retail happening online, anything Amazon does to increase their already massive share is bad news for retail startups looking to scale.

Retail, early adopter of new technologies. LiFi a very promising one of them ! Tom Van Den Bussche

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