Bricks and Clicks: Next Generation of

Retailing
Impact of Connectivity and Convergence on
the Retail Sector

Todays Presenters

Archana Amarnath
Program Manager
Visionary Innovation
Research
Frost & Sullivan

Archana Vidyasekar
Senior Research Analyst
Visionary Innovation
Research
Frost & Sullivan

Agenda

Introduction and Definition of Retail Industry

Presentation of Top Mega Trends of the Future

Influencing Retail Industry

Bricks and Clicks: New Trends and Business

Models
More About Visionary Innovation Group

Objectives of the Briefing

Defining the concept of

consequent

dynamics

Understand the

bricks and clicks

and understanding the

within the industry

impact of Mega Trends

in driving

new

business models , innovative technological applications

in retail

Gain insight into the impact of

connectivity and convergence

on new e-retailing strategies and future shopping experiences

Looking at the

Store of the Future

integrated with scanners,

kiosks and interactive virtual stores

Trace the

Future of Online Retailing

Store Layouts and impact of Social Media

with new Retail Formats,

4

What is Bricks and Clicks?

The Retail Model Will Evolve From a Single/Multiple Channel
Model to an Integrated Hybrid Cross Channel Model

Bricks (pre-2000)

+Advent of Clicks (post-

Online Mobile Payments

Mobile Apps

Department Supermarkets
Hypermarkets
Stores

The Future - Bricks and Clicks (2015

Interactive
and
Beyond) Hyper Online
Virtual
Stores

Stores

Markets

Global Online
Retail Market

Future of Clicks in Retail Industry

Global Online Retail Sales To Reach $4.3 Trillion By
2025 Accounting for 19% of Total Retail
United
States
$0.21
Trillion

$23
Trillion

China
$1.30
Trillion
18%

25%

$11.8
Trillion
24%

$11.25
95% Trillion

5%

15%
10%

Germany
$0.09
Trillion
United
States
$1.32
Trillion

$18.7
Trillion

81%

$4.3
Trillion

19%

Japan
$0.17
Trillion

$0.55
Trillion

2011

Online Sales

Non-Online Sales

2025
7

Media and Entertainment Products to Experience

the Highest Online Sales Penetration at 82% by
2025
2011

Top Product Categories

OnlineNon-Online

2025
OnlineNon-Online

Media and Entertainment1

54%

46%

82%

18%

Electronics sales

24%

76%

60%

40%

Apparels & Accessories sales

15%

85%

38%

62%

Food & Beverages sales

5%

95%

25%

75%

Health/Wellness/Beauty sales

4%

96%

22%

78%

Home & Garden sales

7%

93%

15%

85%

Total retail

5%

95%

19%

81%

Books, Music and Videos

Total Retail Sales

Total Online Retail Sales

$11.8 Trillion
$0.55 Trillion

$23 Trillion
$4.3 Trillion

Source: Frost & Sullivan Analy

Global Mega
Trends and
Retail

Mega Trends Driving Retail Industry

1

Urbanisation

By 2025, there will

be over 50 cities
globally, 35 of which
will be Mega Cities

Connectivity
and
Convergence

By 2025, 80 billion
devices will connect
the world with each
person carrying 5
connected devices

Social Trends

By 2025, the world will

have around 2.4 billion
Gen Y individuals with
more digital shopping
habits

What does this mean for Retail?

Smaller Stores;
Stores-withinStores, and
Optimised
Supply Chain

Self-service
Retailing with more
digital
checkpoints ,
Virtual Stores, and
Interactive Stores

Collaborative
Consumption,
Hyper Niche
Marketing,
Online
Hypermarkets10

Urbanization Will Compel Retailers to Shrink Store

Sizes
Retailer Store Size to be 15-20% Less than the
Current Average Store Size by 2020
Big-Box
SmallBox

15%-20%
smaller

Examples of Small Format Stores

Best-Buy Mobile Wal-Mart Express

City Target

Tesco Fresh n Easy

11

Connectivity Will Make the Shopping Experience of

the Future More Digital and Interactive
Full-Service Retailing
Assorted-Services Retailing
Self-service Retailing

Retailer handles all

aspects of the buying
process from picking
the product for the
consumer to billing.

19th Century

Chain stores allows

customers to browse
aisles and do their
own shopping with
minimal assistance

20th Century

With Augmented
Reality, LBS, and
Mobile Payments,
complete self-service
retailing is becoming
a reality

21st Century

12

Connectivity in Retail: Emerging Technologies

Technology Converting Buyers into Multi-Channel
Shoppers
Location-based services
Foursquare

Holography
Diesel

Augmented Reality
Wal-Mart

Body Scanners
Selfridges

QR Coding
Home Depot
Motion Sensing
Tesco Store Trek

13

Social Trends: The Next Generation Shopper

Collaborative Consumption and Targeted Marketing
will Become More Common
Niche Marketing
2.4 Billion
Gen Y
Population
Every 1 of
3 workers
will be a
woman.

Every 1 of
10 will be
an elder
above 65

Women focused Retailing

Silver Retailing

1.5 Million
middle
class
consumers
from India
and China

Shoestring Luxury

14

Future of Social
Media in Retail
- Social
Commerce

15

Social commerce is the use of social media

platforms to engage with the customer with usergenerated content to market and sell the product.
Social Merchandising

Subscription Commerce
Collaborative Consump

E.g. Pinterest

E.g. Birch-Box

E.g. Rent the Runway

Group Buying

Social Shops

E.g. Groupon

E.g. Facebook
16

Social Commerce Success Stories

From FMCG To Credit Card Companies Leverage
Social Media

Pampers sold
1,000
diapers on
Facebook in
just 1 hour of
launching its
Facebook
Store

American
Express
Lured
Consumers
to Spend
$12.8 Million
Through
Twitter
Campaign

Levis saw 40 times

increase in referral
traffic from
Facebook
17

Future of Brick
and Mortar

18

Future of Bricks: Smaller Interactive Stores

Sensors, Digital kiosks, And Intelligent Marketing Will Shape
Stores and Supermarkets of Tomorrow
Smaller Stores

In-store Social
Commerce

Digital
Personal
Shoppers

Digital Staf

Urban
Convenience

Interactive
Store
Marketing

In-store
Digital Kiosk

In-Store Design
(Concept
Stores)

19

Apple Stores: Store or Brand?

Apple stores reconceptualised showrooming by creating an
innovative brand experience through their stores
Innovative Aspects of the Apple Concept Store

Theatre

Studio

Highest sales per sqft

US. Twice the sales per
foot than any other
Retailer.

in the
square
US

Genius Bar

Easy Pay System

Stores sales have multiplied

100 times since it first made
its entry in 2001 with a small
store.

20

Integration of
Bricks and
Clicks

21

Examples Bricks and Clicks Models

Amalgamating the Bricks and Clicks Experience
Tesco Subway Virtual Stores
Coles Click and Collect
Amazon Online Hypermarket

Diesel Magic Mirrors

Ebay Digital Pop-Up Stores

Virtual Stores: Tesco Subway Store

The Next Generation Grocery Retail Store
Smartphone App
Registers Product of
2 Choice

Choose
grocery
item from
virtual
shelves
1

The product lands in

customers virtual
3 cart

Number 1 shopping App

in Korea, with over
900,000 downloads

The product
is delivered
to the
customer at
a time and
date of his
4
choice

Online sales increased by

130% since launch in
2011

23

Bricks and
Clicks Impact
on Key
Industries

24

Top Industries Influenced by Bricks and Clicks

Automotive, Logistics and Financial Services will find the Best
Opportunities in Retails Transition to Bricks and Clicks
Automotive

m Dealership to Flagship Stores

Financial Services

From Plastic Currency to Virtual Curre

Logistics

From Distribution Centres to Distribution Points

25

So what will the Future of Retail look like in

2025
1. Nearly 20% of retail will happen online and in some
countries such as United States and United Kingdom, online
retail will account for a quarter of total retail sales by 2025
2. Everything from the product to the in-store experience can
be customised and personalised by the shopper as retailers
increasingly ofer real-time customisation tools to their
customers
3. Multi-line retailers will reduce their store sizes by 15-20%
and revamp their large stores to become interactive
4. Manufacturer retailers will open more connected flagship
stores that are designed and created around the products
philosophy and theme. They will aim to make their stores a
destination rather than a retailing zone
5. There will be lesser gestation gap between ordering a
product and delivery as new services such as Same-day

26

Visionary Innovation Research

Top Mega Trends That
We Track
Urbanizat
ion City
as a
Customer

Smart is
the New
Green

Social
Trends

Connectiv
ity and
Converge
nce

2012 Topics

Bricks
and
Clicks

Future
Infrastruct
ure
Developme
nt

Innovati
ng to
Zero

Health,
Wellness
and Well
Being

New
Business
Models:
Value for
Many

Future of
Mobility

Beyond
BRIC:
The Next
Game
Changer
s

Bricks and Clicks: Macro to

Micro Implications of
Connectivity and
Convergence In Retail
Industry

Global Mega Trends and its

Implications to Urban
Logistics to 2020

Urbanisation and Mega Cities

and Impact on Industries and
Business
Upcoming
New Business
Models
of the
Topics
- 2013
Future

Macro to Micro Implications

of Convergence on
Industries, Products and
Technologies

3D printing and its Macro to

Micro Impact on
Manufacturing and Supply
Chain Management

Macro to Micro Implications

of Robotics and Artificial
Intelligence on Industries
27

Frost & Sullivans Visionary Innovation

Subscription
Provides Global Mega Trends Analysis, Regional Implications and a
Deep Dive into Specific Topics by Industry Verticals
B
A
C
Global Mega Trends
Analysis
Featuring global study
updates annually and
analysis of key topics like
Urbanisation, Smart is the
New Green, Health,
Wellness and Well Being

Regional Mega Trends

and Implications
Analysis of global Mega
Trends in key geographies
such as
1. Africa
2. India
3. China
4. Latin America
Identification of specific
regional trends (e.g.,
beneficiation in Africa)

Focus on Specific
Mega Trends and
Their Impact by
Industry
Focus on specific Topics e.g.
the Impact of Connectivity
and Convergence on
Healthcare Devices, Urban
Logistics .
There will be over 30 such
topics completed in next 12
months

360 Degree Perspective of Global Mega Trends and Analysis of their Impact on
Industries

28

From Macro to Micro: Taking Mega Trends from

Information to Strategy Implementation
To
Macro

Micro
Analysis of
Opportunities and
Unmet Needs

Mega Trend
Selected trends that impact
your business and markets

Sub Trend

Impact on Future
Product/ Technology

A sub-layer of trends that has

a wide ranging impact

Impact to Your
Industry
Visualising the roadmap of
these critical forces through
scenario-building and macro
economic forecasts

29

Learn More About New Mega Trends

Published Book:

New Mega Trends

Implications for our Future Lives

By Sarwant Singh

Publisher: Palgrave Macmillan

http://www.palgrave.com/products/title.aspx?
pid=577423

Join Our Mega Trend Group On

Mega Trends: Strategic Planning and
Innovation Based on Frost & Sullivan
Research
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Contact Information

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