Brand Strategy Retail Marketing

How the retail sector has been transformed in the last decade – and where it’s headed next

By Emma Chiu and Marie Stafford, global directors

May 31, 2024 | 13 min read

For the last decade, VML has been revealing the trends that will change the world in its annual report, The Future 100. As part of The Drum’s Retail focus, Emma Chiu and Marie Stafford draw on this year’s edition and the archive to chart the sector’s drastic recent transformation.

Gentle Monster store Singapore

The typically avant-garde Gentle Monster store, Singapore / Adobe Stock

Everything is retail, and retail is everything. Over the past 10 years, VML’s Future 100 has traced the evolution of this fast-moving category, driven by shifting consumer behaviors and rapid advances in technology.

The shift to digital channels continues, with online shopping now accounting for just over 20% of global retail sales in 2024. Looking back, it’s clear the path was cleared by the platform giants (Alibaba and Amazon swap territories, 2015, Amazon everything, 2018) and nudged along by innovations in payments (Consolidation apps, 2015) and convenient services like click-and-collect (Drive-up grocery wars, 2017) and ever-speedier deliveries (Shipping wars, 2018).

Omnichannel experiences are now the goal, as consumers expect to flit friction-free across channels. Over the years, VML Intelligence has charted the proliferation of new shopping channels, from the earliest days of mobile and social commerce (S-commerce, Text commerce, 2019, Uninterrupted commerce, 2020) through to games, virtual worlds and even new realities (Virtual reality retail, 2016, A(R)etail, New shopping worlds, 2020, Virtual flagships, 2022).

These digital channels unlocked vast pools of data, powering deeper insights into consumer preferences and enabling more personalized experiences (Celebrating serendipity, 2015; Hyper-personalized products, 2018). As we go deeper into an AI-centric age, operators face the challenge of leveraging the opportunity to level up operations, and the customer experience.

Social commerce is now a potent force, as personality-led storefronts offer an authentic and personal alternative. In The influencer economy evolves and The age of the hyper influencer in 2019, VML Intelligence forecast the evolution of influencers (even Virtual Influencers, 2019), noting their ability to mold shoppers’ tastes and offer a personality-led gateway for brands (Influencers become the store, 2020). Today shoppers can buy direct from creators, who are building out their own curated storefronts and taking a cut on sales (Creator-to-consumer, 2024).

The transition to digital has presented an obvious challenge to brick-and-mortar retail, but physical stores have been battling other headwinds, from rising operational costs to labor shortages. Operators have had to innovate to survive, whether testing staffless concepts (Retail’s unemployment crisis, 2018) or shopperless outlets (Dark stores, 2021), tweaking their offer (Department stores reformatted, 2020) or diversifying into new markets (Retail shapeshifters, 2022).

Amazon delivery

Yet rumors of a “retail apocalypse” seem overcooked: the physical store remains important to shoppers, a source of sensory experience, inspiration, and perhaps, even connection (Community-centric retail, 2024).

Today, the sector is polarized, with cash-strapped consumers navigating a prolonged cost of living crisis at one end of the scale (Crisis Retail, 2023, Thrift Economy 2024), and a rarefied group of the hyper affluent at the other (Retail guilds, Clandestine retail, 2024). Catering to these divergent needs, behaviors and expectations will continue to challenge.

The experiential era

By the mid-2010s, as spending moved online, brands were seeking innovative ways to drive footfall in physical stores and counter the convenience of e-commerce. Luxury brands led the charge, designing flagships that leaned into drama (Eyewear temples, 2015). Korean eyewear retailer Gentle Monster was a pioneer, famed for its avant-garde store designs that disrupted expectations of what a store should be.

Soon experiences were commanding a growing share of retail space, with some reimagining flagships as brand showcases and immersive shopper playgrounds where they didn’t necessarily sell anything at all. The Samsung 837 store in Manhattan was one of the first Productless flagships (2017), offering cultural programming and events, all powered by technology. Test drive culinary retail (also 2017) exemplified this new breed of stores, which leaned into their physical advantage by letting shoppers get hands-on with products. The sensory thrills even lured in e-commerce brands, keen to craft their own in-person experiences and offer Instagrammable backdrops. (URL goes IRL, 2018).

Samsung 873

Brands crafted evermore immersive and theatrical experiences to lure in shoppers. Outdoor Immersion Stores (2019) offered climatized concept spaces like cold rooms or rainy greenhouses for trying on clothing. Shoptainment’s latest wave (2019) tracked department stores curating spectacular events and entertainment to stand out. New York’s Showfields store even hired actors to create in-store narratives in a blend of art, theater and commerce.

Hip experiential stores (2019) reframed the experiential concept for a younger audience who preferred a more social approach over artsy spaces. These were places for hanging out, watching live performances or interacting with in-store installations. New beauty playgrounds (#66, 2020) and Next gen retail spaces (#69, 2020) crafted social destinations full of play, fun and experimentation, not to mention the chance to briefly disconnect from digital lives.

A pandemic hiatus saw attention pivot to virtual and digital spaces, yet as restrictions lifted the experiential trend has proven resilient. Today, consumers crave emotion and sensory stimulation: 77% say they “just want to feel something, to feel alive.” Groundbreaking retail spaces, like China’s SKP malls or Louis Vuitton’s flagship stores, are dialing up emotion to transport people and take them on an adventure, whether it’s sparking a sense of joy (Euphoric retail, # 2024), stimulating curiosity, channeling the surreal or the absurd, or invoking a sense of wonder (Imagination stores, Sensory techtopias, 2024).

Experience looks set to remain a bankable strategy; when asked what the future role of the physical store should be in our survey, respondents chose as their top three: a place where you can touch and feel products, an interactive space where you can get hands-on with products, and a place that offers an experience worth having.

louis vuitton

Purpose purchases

The expectation for brands to do better is more pronounced: 79% of people globally agree that the role of a brand has changed over the past five years, according to VML Intelligence’s latest survey. The top answer for what people expect the role of a brand to be is to ‘make the world a better place.’

Purpose purchases are on the rise, as 85% of people say they want their money to go to a brand that aligns with their values, and 69% agree that brands without a genuine purpose will become irrelevant. As far back as 2015, The Future 100 reported 1-for-1: Third way commerce — a business model combining social good with sales and marketing. Popular among millennials, this propelled the likes of Warby Parker to the fore with its donation model alongside eyewear sales.

CEO Marco Bizzarri said in a 2019 statement, “We are entering a new decade of corporate accountability,” and in 2020, Climate-positive brands were making sustainability a business priority. Luxury brands started to promote Cause luxury (2018) by baking purpose into their mission. Material innovation gave birth to Vegan luxury (2019) and brands got on board by banning furs and leathers. In addition, luxury marketplaces started curating collections allowing people to easily shop for Ethical edits (2020). The same year saw the rise of a more conscientious type of consumerism driven by younger generations, who started buying less and more mindfully in Anti-excess consumerism.

The circular business model, particularly in fashion, was made cool by Gen Zers (Reuse retail, 2016). Luxury brands swiftly followed by tapping into authentication technology as marketplaces, including Vestiaire Collective, gained big rounds of investment (Reuse rebranded, 2018.) The resale market grew 25 times faster than the overall retail market in 2019, leading to more brands to join the reuse market in Big brands go circular (2021). Taking a leaf from brands such as Patagonia, high-street brands offered in-store repairs to the mass market; the offer extended beyond fashion with Apple rolling out its self-repair service in Europe (Mending goes mainstream, 2023.)

Inclusivity and accessibility became a bigger focus, too. In 2017, retailers catering for plus size collections put it through a new wave feminism lens, offering sophisticated options, chic photography and incorporating more diverse models in Plus size is a plus. Technology introduced easier ways to shop with Assistive tech (2018) and Accessible commerce (2023), where brands began to incorporate voice-recognition and speech-to-text technologies to help make physical and online retail inclusive for all.

Community retail

At a time when 71% of people globally agree that loneliness is an epidemic and 66% say there is no sense of community any more, retailers are seizing the opportunity to foster togetherness. Founder of collective dance events company Daybreaker, Radha Agrawal believes, “the biggest opportunity that brands have is getting people to connect with each other – how this brand can serve a community.”

Department stores and high streets have long struggled with footfall. Community-centric retail (2024) aims to reverse that decline with initiatives that promote coming together. In Poole, Kingland Crescent shopping street was transformed by shifting away from high street brands and instead promoting independent local retailers; in doing so, they harnessed community through the curated retail outlets. Back in 2016, Community stores observed global brands opening physical stores that aimed not only to drive sales but also to benefit the surrounding community (examples include Nike’s Community Store program). The design of stores also evolved to offer a friendlier experience in Retail naturalism (2017), where tech brands including Apple, started to launch new global flagship stores they likened to a community-oriented “town square” layout. In another nod to rethinking the purpose of a store, Co-working as a retail destination took off in 2017.

Beyond inviting people to a community-centric destination, retailers are also creating connections by inviting customers to be part of their brand. In Fantail (2019), brands brought consumers into the creative process to generate excitement and loyalty. This matured in 2023, when brands created tools and marketplaces, handing over a big portion of creativity and control to consumers in Co-creative commerce. This was particularly appealing to younger generations, who tend to be more active participants than passive ones. By 2024, Co-creative futures startups were handing creative control to customers, including beauty brand Kiki, which announced that “anybody who wants to be involved in the development of our products has the option to do so.”

Tech-celeration

From biometric payments to AI-enhanced shopping, the acceleration of technology is reshaping the retail experience, and consumers are all for it. According to VML Intelligence’s recent survey, 77% of global consumers say they have tried or would be interested in automated checkouts in-store, 57% are keen on smart mirrors, and 61% would try sizing recommendation tech.

Advances in tech have made the path to purchase evermore seamless. In 2015, Physical payments predicted that “soon, our physical selves will be all we need to complete transactions.” Gesture payments (2017) experimented with paying with the nod of the head, while in 2021, Amazon launched its “just walk out” technology in the UK, with its cashier-free stores.

Online purchases also became more frictionless. In 2015, a wave of platforms created universal shopping carts, allowing shoppers to buy from multiple retailers and make one single payment (Consolidation apps). In 2019, S-commerce (social commerce) became a key shopping destination that evolved into Uninterrupted commerce (2020), making social media platforms a one-stop shop with in-app e-commerce.

Nikeland

Gaming has been a huge force in evolving the online experience. It became a new channel for brands to collaborate in (Branded virtual worlds, 2022) and partnerships with the likes of Roblox and Epic Games were on the rise. Retailers even created their own immersive virtual stores with Virtual flagships (2022), Digital Nesting (2023) and Imagination stores (2024). This stemmed from New shopping experiences (2020), where inspiration from a blend of streaming channels and games was popularized.

The pandemic opened new opportunities in digital wardrobes (Escapist retail, 2021), DTA (Direct-to-avatar, 2022) and NFT marketplaces (2022) business models. Extending this concept, Metaversal shopping (2024) allows customers to purchase physical items from stores in virtual store environments, including games, mobile apps, and AR. While AR excelled at delivering in-store experiences in A(R)etail (2020). In the early days of Transcendent retail (2018), we saw customers expect retailers to link the online and offline worlds to create a seamless, intuitive customer experience that makes buying products quicker, easier and more enjoyable. With AI-powered conversational commerce and personal shopping agents on the horizon, tech will continue to reshape the landscape for retail.

The Future 100 is VML Intelligence’s annual futures report charting 100 key trends to watch in the year ahead. This year marks the 10th anniversary of the report offering a comprehensive retrospective of each sector and its evolution over the past decade. The Future 100 is led by Emma Chiu and Marie Stafford, global directors of VML Intelligence, the in-house futures consultancy.

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