The first thing that Retail Futurist Howard Saunders will tell you is that he is not the B2B guy who is going to solve your shelving space issues. We chat with the delightful ‘Gordon Ramsey of Retail’ and delve into the mysteries and wonders of consumer behaviour, cynicism and what’s on trend in the fashion capital of the world, New York City.
Let’s mince some digits. The global retail sector is big business, racking up an astonishing AUD29.8 billion in 2015, with an average growth rate of 3.8 percent since 2008 – representing 31 percent of the world’s GDP, (Falke Information Report, April 2016).
The geographical concentration of spend combining North America and Europe holds around 83 percent of revenues and over 71 percent of stores in 2015, (Deloitte Global Powers of Retailing, 2016). Little wonder then that vying for market share, brand loyalty and consumer eyeballs is a craft for the crafty – which is where Retail Futurist Howard Saunders comes in.
Cutting his teeth with retail design pioneer, London based Rodney Fitch in the late 1980s and early 90s, Saunders has studied retail for more than twenty-five years. Over the past decade he’s been in global demand as a trend consultant, now based in Manhattan, NYC.
Over the past three decades – and since the conception of retail design as a discipline in its own right, Saunders is well-placed to understand what drives the consumer to part with their hard-earned cashola.
“Rodney was my mentor for sure. Before he came along, stores were designed by architects and Fitch turned it into an industry. Whenever we would brainstorm a new project, Rodney would point down from the boardroom window and say, ‘what does it mean for her?’ I still ask myself this question when positioning brands,” says Saunders.
According to Saunders, on a macro-view – or as he likes to say, “the thirty thousand feet view” human-beings – those who live in western democracies that is – tend to gravitate and replicate the same trends.
“Once upon a time, we were fed a syllabus of consumerism. We were told, here are the twenty records you can listen to, here’s the TV you must watch, here is the news. It was so limited. The digital age, social media and the democratisation of consumption has broken this down forever. We know we’re in charge now. We pick and publicise what we like or don’t on-line; we even write our own news.” says Saunders.
The golden goose – based on the biggest portion of spend is undoubtedly millennials – who are often referred to as ‘digital natives’ – are the predominant drivers of social media engagement and on-line spend. Out of all market segments, 58 percent of millennials buy on-line, (Nielsen, 2016). Now that near to half of the world’s population has internet access – with internet users forecast to hit three billion by the end of 2016, e-commerce is growing at a steady pace. On the subject of millennials, Saunders is reflective about the sophistication of shoppers.
“We are all millennials now. The first thing we reach for in the morning is not our partner, it’s the phone. My 80-year-old father uses Siri for everything. We’re all streaming content and googling the actor on our phone at the same time and then texting on the toilet. We’re bored with the high street, with cookie-cutter Hollywood films, we’ve become more self-important and with far greater expectations, so when retail experiences go bad, it matters much more. Whether it’s online or offline we’re all desperate to connect. We check our phones at the traffic lights or as we wait for the train doors to open. This way, even micro-second delays become ours, become useful to us in some small way. We are a very demanding lot!” says Saunders.
He has a point. According to a recent survey by Motorola, Smartphones accompany consumers literally everywhere. Motorola found that sleeping with your phone and taking it with you when you shower is commonplace. The Overview & Evolution of the Global Retail Industry Report (Falke Information, April 2016), asserts that market trends on consumer behaviour – such as over-connectivity and the pursuit of healthier lifestyles are expected to shape the market in coming years – which has seen a growing shift in what’s been dubbed ‘an analogue existence’. And Saunders whole-heartedly agrees.
“It’s really very binary. If you want ‘stuff’ then you can get it online. The future of the high street is ‘social only’. We want to connect online and offline – this means we want bigger events in the real space because online is now pedestrian, perfunctory. Food festivals are blossoming; people will fly thousands of miles just to eat a specialty sausage or braised brisket at a BBQ festival. Big social events are becoming the counter-lever to our on-line lives.” says Saunders.
In a catch-phrase, Saunders asserts that ‘stores are dead and clubs are the future’. He argues that today’s consumer is not interested in walking up and down aisles in a supermarket or even in a Gap where things are neatly ‘stored’ in rows on shelves. Rather, Saunders says the brands that do well understand that consumers want communal spaces that embrace them. The brands that are thriving at the moment are those that engage us, drag us in, give us things to play with and time to hang out. That way, there’s a chance we can connect…fall in love with them a little.
“The future is that most consumables will be delivered from an internet purchase. But if you want social contact, and we all do, then you head for the markets, the festivals and the shops you have an emotional connection with. It’s that simple. It’s not nuanced. Not complicated and it’s not category specific,” says Saunders.
In the US, supermarket patronage is in decline. Department stores are in decline. Macy’s announced in Q3 2016 it’s closing one hundred stores. Tesco is closing stores that are not profitable, and shifting its energy updating existing stores, even removing mezzanines it built in the 90s. In the meantime, by contrast, the growth of markets is rising. At the time of the 2008 GFC crash, there were fewer than 10,000 markets in the US and within 8 years, there are more than 30,000…
“The old supermarket model is suffering but the so called Hipster food markets are burgeoning, right across the planet. People want social contact and products with a trusted provenance, preferably local. The self-service model stripped away much of the social aspect and so now we seek out retail spaces that celebrate community. Retailers often get over excited about technology, but we are human-beings who look for social contact and meaning. Technology is only useful as long as it satisfies this core need,” says Saunders.
A part of Saunders’ role is partnering with brands who understand that cultural and contemporary relevance is central to survival – and the impact of not understanding trends – or understanding them and not mobilising quickly can be the death knell for even the most established of brands.
“I ask my clients awkward questions, like where do they think they’ll be in ten years’ time? Sometimes it’s bad news. I have to tell the truth. I’m the court jester that’s dragged in front of the king to advise that he’s overweight and his clothes don’t fit him anymore. Companies can be so involved in their own bubble that they need an outside perspective. Ultimately, I’m a brand guy so it often comes down to how does your store talk to us?” says Saunders.
Saunders offers a few winning retailers as cases-in-point. With his office on the corner of 22nd and 5th Avenue, the Nike Running store is a few doors down the street.
“Bright and early every morning, Nike faithfuls head off, often testing brand new sneakers. You can join them, or run alone, then publish the route, speed and times on the in-store screens straight from the app. Nike understands it is not just selling shoes. They’ve done a brilliant job turning a shop into a community hub. Adidas, Club Monaco, Ikea… they get it and are doing well. You can learn a lot from observing big brands,” says Saunders.
A little further along 5th Avenue, Lululemon’s new ‘Hub Seventeen’ has a social space for yoga classes as well as art exhibitions, talks, community dinner parties and screenings of independent films.
“The new Samsung 837 store is really just a venue for events. As you enter the space, your selfie is projected onto a three-storey screen and it’s made up of everyone else’s selfie! There’s a cool coffee bar, virtual reality, personalised one-on-one product workshops, and you can’t buy a single a product – but it works. I’m an Apple guy, but Samsung is really working for me!” laughs Saunders.
The growth of the marketplace experience is here to stay. With the recent opening of a second Eataly in NYC, consumers are treated to a 45,000 square foot marketplace concept of Italian slow-food served at counters buzzing with eager customers that want to be a part of something… community. So while supermarkets are wincing, the hipster food markets, farmers’ markets, gourmet food halls and, of course, Eataly is burgeoning everywhere. Saunders recalls a recent visit to Warsaw, where the central food market, Hala Mirowska, is undergoing major renovations – the 1980s fit out is being dismantled – it had been divided into shops, and now the walls are being knocked down and it’s becoming an open, communal, grand marketplace once more. He says that the GFC taught consumers to put the heart of the community back on the table.
“This is about life. This is how our cities thrive – through retail. If you have a city with poor retail, then that city is not alive. That’s the truth of it,” says Saunders.
With the rediscovery of the importance of community and making markets the centre of town, Saunders asserts that in a post-GFC world, retailers have a better understanding because they have a global outlook. This means that brands will become more and more inter-linked with our social media and cultural lives – playing a much greater role than simply selling us stuff.
According to Saunders, the future of retail is going to be very exciting. The main trend for the global retail market is cross-channel personalisation and its increasing at a fast pace across all digital platforms, (Monetate et al, 2016). Saunders is a huge advocate for the creative use of Big Data and believes that by entrusting brands with our personal information, our retail experience will be unprecedented.
“Big data is the future. Entrusting brands with our personal information has got to be good. Take Westfield for example. It’s a major retail brand because it brings other brands together. Imagine a future where Westfield invites all your friends to a bar, books you into a salon treatment, reserves a table at your favourite restaurant, and buy you a bag that matches a coat you bought in one of their retailer stores two weeks earlier. The thing is, a lot of the time when we buy something, it’s to celebrate the moment. The object is a memory token of a pleasurable experience, and we continually try to replicate that through our purchases,” says Saunders.
While the toughest of cynics understand that wrapping one’s happiness or indeed, identity, in what is essentially a construct – is problematic, and possibly scary, Saunders argues that we all know intrinsically the mechanics of buyer behaviour and motivations but we do it anyway. If we look to the wisdom of cultural critic John Berger’s assertion in his treatise Ways of Seeing (he was kind of a corduroy superstar in 1970s academia) his critique on consumerism is sharply on point today –
“The spectator-buyer is meant to envy herself as she will become if she buys the product. She is meant to imagine herself transformed by the product into an object of envy for others, an envy which will then justify her loving herself. One could put this another way: the publicity images steals her love of herself as she is, and offers it back to her for the price of the product,” wrote Berger.
Saunders view on Berger is one of agreement, but he is nonetheless undeterred from his position. Rather, Saunders sees this as an acknowledgement of what he’s been saying all along – that consumers create connections through consumption – and the social benefits – or pay off – far outweigh anything else. The fact that buyers in western democracies live in a world where they already have everything and never need to buy another shoe or tee-shirt for as long as they live, is evidence of a kind of enduring, humanistic optimism.
“Berger is kind of right. The consumer doesn’t confirm themselves with a brand, but rather, they banish themselves with a brand. We think that the brand is an extension of our ourselves, but in reality it’s the future desired self – which doesn’t exist,” says Saunders.
To punctuate his point, Saunders gives an example of how technology can sometimes be used in a way that would hinder this dream – the application of augmented reality.
“There is a lot of buzz about the future of AR in retail and how it’s going to sell goods because we can see the dress on us or the cabinet in our homes before we buy. This couldn’t be more wrong because, quite literally, it punctures the dream. If you click on a holiday resort online and see an image of yourself lying on the beach, you won’t want to go. If our iPads can show us how a beautiful chest of drawers will actually look in our ordinary room it will devalue it. We buy things that, in a sense, don’t belong to us. We buy things that enhance who we are,” says Saunders.
While no one knows the future, and Saunders is happy to admit that, the take home message for all retailers who want to thrive in a global market place with savvy, demanding consumers is this: know your zeitgeist.
All images by Jiyang Chen | Copyright 2016.