Article | Future Cities
What the future of retail looks like
From cutting-edge immersive retail spaces to sustainable spending, we take a closer look at tomorrow’s consumer trends and solutions.
March 15, 2023
- Shopping centres will evolve to become the new high streets, fostering community and social interaction
- Augmented Reality will become central to the consumer experience while the most successful retailers are experiential
- Future consumers will prioritise environmental protection, sustainable products and services at the forefront of their purchasing power
- Landlords will create curated centres to maintain foot traffic
- Consumers will increasingly seek out personalisation in the retail space
While these key findings are intriguing in theory, a recent live panel discussion hosted by CBRE which delved into retail’s future and the proliferation of immersive experiences confirmed that the next evolution in retail is already happening today.
The talk provided expert insights from Gordon Renouf, CEO and Founder of the world's leading sustainability ratings site for fashion brands Good on You, Simone Barker, Co-founder and Head of Production at creative and immersive technology firm Zebrar, and Rosemary Condron-Calic, the National Portfolio Manager, Retail Services at ISPT.
What progressive shopping centres are doing
Countries in Asia and the Middle East have long utilised shopping centre real estate as dedicated dining precincts designed to attract crowds. That’s according to Rosemary Condron-Calic, who believes that more people need to change their perception of traditional shopping centres.
“You see it in Asia – there's an amazing dining scene but God forbid if you ever go to a shopping centre if you’re dining out [here].
It’s such an embedded part of retail in Asia. You also see it in the US and you’re starting to see it here now with some amazing dining precincts like one in Brisbane which has 30 dining establishments.
“They are actually for many communities, their third place – there's home, the workplace and the shopping centre.
In some pockets of Sydney, shopping centres with larger ethnic demographics are already being leveraged as part of the community’s social infrastructure. A perfect example is where students can be found being tutored in food courts.
So how are shopping centres being turned into new high streets that foster a deeper connection with their communities?
“Augmented reality and technology can create these new centres of community, engagement, entertainment and social interaction. And they can do it via engagement with customers and customer experience,” explains Simone Barker.
Cultivating community through technology
Augmented Reality is an interactive experience which combines the real world with computer-generated content. Creators of AR can take an empty shop or hoarding to create a digital arcade where people can come together collectively to play games such as bowling or an array of similarly interactive games.
“I can create an AR wildlife escape where people can explore in full 3D the photo-realistic endangered animals of the Amazon,” says Barker.
“From AR, people can find out and understand why species are endangered, plant a digital tree, subscribe to the wildlife fund and actually make a difference - all from the shopping centre. You can explore and learn at the same time.”
It’s not just all educational fun and games though. The technology is also opening up exciting doors to the new frontier of commercial prospecting in the digital era.
“There’s also AR as windows into shop fronts. We can do virtual try on rooms; I can do an event there and see their collection comes to life on the catwalk.
“In the travel space, I can browse through a portal rather than a brochure to choose my next vacation. I can feel what it will be like to be on a ship, be in the Pyramids, or be on the Carribean. All of this is experiencing and creating an engagement and relationship between the shopping centre, the brand, the store and the customer.”
Barker is someone who has built a 35-year career from creating class leading visual effects for film and immersive experiences for global brands. She also has first-hand experience in how digital solutions like AR can be used to take on some of today’s biggest commercial challenges.
"World Square Shopping Centre in Sydney was a pioneer in immersive technology and in 2018 we had the challenge of solving their brief.
“There was a lot of thoroughfare going through the ground level. For Lunar New Year they wanted to move people from the ground level to other parts around the centre like the lower ground and up to the first floor. This of course would be accompanied with the usual goal of increased sales.”
What Barker and her team did was create a three-piece integrated campaign with a big AR screen where shoppers could take a photo with a computer-generated dragon and then post it onto their own socials. This was complemented with a giant AR dragon which would move around the shopping centre for shoppers to chase.
“It was a digital asset that was cognisant of the physical space, which was a world first at that time,” says Barker.
“They were the cool parts. The most important part of it was the AR scavenger hunt. We needed people to move through the centre without them realising that we were orchestrating what we needed them to do.”
The solution was to add a marker to the front window of every retail store across all three levels. Shoppers could scan the marker and an animation would appear along with a digital voucher or coupon that could be used in that store. Barker calls this the “increasing of sales by redemption” strategy. Once shoppers scanned enough markers from the retail stores, they’d unlock a massive AR showcase on level one which included hundreds of digital lanterns being released into the sky. Shoppers were encouraged to make a wish and take a selfie.
“We were literally watching people moving around the shopping centre exactly as we wanted them to,” explains Barker.
“There were double digit increases in foot traffic and high single digit increases in sales, so that performed based on metrics. We used engagement to solve the KPIs given to us.”
Social and environmental impact of digital retail
Pushing the boundaries of retail in the new age may be one goal that’s being ticked, but there are also people like Gordon Renouf who have dedicated their lives to making sure that the path to commercial success doesn’t come at the cost of the environment or society.
Renouf’s website, Good On You, is a beacon for this ideal in the fashion industry and he’s proud to align it with the UN’s current goals around sustainable consumption and production.
“It’s a guiding light for us and it’s essential that we find systems of living, systems of business and retail that are sustainable and respect our planetary boundaries,” he explains.
“And it’s desirable that we do it in a way that’s fair to all communities around the world.”
Ordering the incorrect item from an online retailer is one of the most common practices driving waste in the fashion industry. When returning an item bought online, most believe that the item will be repackaged and sold to someone else. This isn’t always the case.
“It’s hard because the supply chains don’t match as the returns centre isn’t the same place that was sending out the product, so not all items returned end up being resold - even if it’s in perfect condition.
“They end up in landfill, so choose wisely. Physical retail isn’t immune from huge amounts of waste.”
Beyond the environmental impact is the lesser highlighted social impact of digital retail. While e-commerce experienced a notable rally during the pandemic period, it still accounts for an average of about 20 percent of the total retail market and growing. Renouf doesn’t think it will wipe out physical retail anytime soon. Where his concern does lie is in the current state of global economic uncertainty.
“There’s a lot of cancelling of orders. Most of the people working are in developing countries and when brands say ‘We can’t sell this stuff and we have to cancel these orders,’ that has a serious impact in factories in Vietnam and China.
“There’s definitely a call for brands not to do that; to maintain or at least pay for orders they’ve committed to.”
One positive societal trend that’s come out of digital retail is the continued support for sustainability amongst consumers which has carried on from 2020.
“People sort of got concerned for one another, but I think the other thing is people always have strong values for people and the environment, but it was always too hard to act on.
“I think information is becoming more and more available so it’s something to talk about more easily which makes it easier to act on. Young people in any generation have less formed habits so they’re more open to new choices and new habits,” says Renouf.
Is there still money to be made?
The short answer is yes, but brands, retailers and shopping centres alike need to be transparent with their customers to reap the financial rewards of sound ESG practice.
“Brands have to be genuinely authentic,” says Renouf. “There’s a lot of concerns about greenwashing with some major brands needing to withdraw claims and pay fines. You need to be authentic in what you’re saying and use a credible system to demonstrate which brands are sustainable and which brands are not.”
In reality, there are many brands and retailers that are already championing credible systems to showcase their sustainability credentials. Patagonia, Nudie Jeans and Allbirds are the bigger names while Australian-specific names include Outland Denim and A.BCH.
Luxury online retailer Farfetch meanwhile has stepped up as a worthy contender in the sustainability stakes with a data tool which indicates to customers which brands are leading in their Positively Conscious collection.
“The product in that collection, four percent of their total sales, grew nearly double the rate in sales over the year compared to the total retail. So there’s definitely a way for brands and retailers to benefit from consumer interest in sustainability.”
What customers actually want
The world is a much smaller place these days and savvy customers can find whatever they’re after online if they can’t source it in physical stores. So what can retailers do to remain relevant and seize opportunities as consumers move towards digital?
“Personalisation and engagement is key,” stresses Barker.
“Studies show that if you engage with the product, you are more likely to purchase it. In luxury retail, there’s something about luxury brands. In their physical stores, it’s a personalised luxury service that cannot be replicated online. So how do we take that feeling of luxury and personalisation to a $20 online purchase at sporting goods store?
“In the future we’ll probably see AI powered digital concierges. Walking into an online store, they’ll know my likes, dislikes, sizes and recommend items for me. If I’m buying a bike, a Tour De France winner could be explaining the benefits to me in AR. There’s that small feeling of being special and I’m more likely to buy it.
“Online shopping is not getting rid of physical retail anytime soon, but they’re upping their game. I think when we combine digital and physical, we create this incredible bond that is a connection that can’t be found in either physical or digital – you need them both and I think this is where we’ll see the experiential future.”