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AGILE RETAIL
PLEASE JOIN THE CONVERSATION:
#nrfbigshow2016
#FITCHAgileRetail
@FITCHdesign
@cdaviesFITCH
www.slideshare.net/FITCH_design/presentations
OUR AGENDA:
1: What we mean by AGILE (and what we don’t)2: Why it matters today3: From then, to now, to next4: Who is taking the first AGILE steps?5: How do the rest of us get there?
1: WHAT WE MEAN BY AGILE (AND WHAT WE DON’T)
If the past few years have been all about experience, we see the next few as being all about agility.
AGILE is this year’s retail “it” word
taking these experiences we create at retail, and making them more adaptable, more responsive and more nimble
AGILE is all about
Trey Ratcliffe
get used to seeing AGILE bolted to anything that moves, and hearing that agility as a concept is a kind of panacea for all manner of ills
Like all “it” words
it’s important to clarify our intent around how we are using the term, and specifically in the context of retail
In the face of this AGILE epidemic
Although adopting AGILE thinking may well make a retailer faster, and indeed more fashionable
AGILE RETAIL ISN’T JUST FAST FASHION
Our definition of AGILE focuses on the “means” and not just the “end” • process• approach• methodology• tools
And the influence working in an AGILE way will have on the design, evolution and development of a new generation of physical stores
This idea…of an AGILE methodology was born in the digital world, and now represents that industry’s standard
characterized by short, intense phases of work, frequent reassessment and adaptation - version after version, constantly in beta
A way of working…
Buschap
that applying this AGILE way of thinking and working, will lead us to a new dawn of physical retail
It is our belief
A truly quantifiable measure of a retail concept’s potential for success and its long term health as a business proposition
That AGILITY will become a benchmark
David Trauwin
where physical stores finally move from trying to chase digital…to (re)taking their rightful place at the center of a continuous retail ecosystem
And that this will lead us to a future…
2: WHY AGILE TODAY
We’ve discussed why AGILE thinking is important, but what makes it such a pressing issue today?
Why now?
Like most of the changes in our world, the need for AGILE is being driven by emerging and shifting behaviors of next Gen Shoppers
Simply put, the audience is demanding it
Glenn Brown
that Generations Y & Z are underwhelmed with old school retail (cue sudden rush of underutilized selfie walls)
We’ve known for a while…
Despite their spending $600 billion per year in the US, retail today is “under-delivering against millennials’ expectations…the capabilities and enriched services that help make the overall shopping experience better, faster and more memorable—remain works in progress.”Source: Accenture Millennial Outlook
Source: Forbes, What Brands needs to know about the Millennial Shopping Journey, August 2015
GenY has been raising Red Flags for years
“Millennials are incredibly fast in their shopping journey, any brand wishing to attract millennial buyers and influence their purchases needs to keep pace.”
Source: Things Millennials Love & Hate, Business Insider, October 2015 “Traditional retail simply doesn’t play to how Millennials want to buy”
GenY has been raising Red Flags for years
Source: Retention Science, March, 2015
“The biggest problem traditional retailers face today is Millennials”
Loosely defined as today’s 12-18 year olds, a group FITCH describes as “Shopping in a constant state of partial attention”
And right behind GenY is GenZ
Source: FITCH GenZ report, 2014
Because they live their lives at an increasingly frenetic pace, driven by nothing short of a new definition of time - mobile time
The biggest reason for AGILE and Y & Z?
for every year physical retail takes to do something new, mobile has already reinvented itself 7 times over (at the very least)
Which is like dog years vs human years
9 out of 10 Zs multi-task while watching TV (and only 1% are influenced by ads)Source: Forrester’s Technographics®, How To Build Your Brand with Generation Z, 2013
Source: Pew Research, Generation Z study, 2015
What’s life like in mobile time?
Almost two thirds would rather their wallet was stolen than their phoneSource: FITCH GenZ study, 2015
88% have a phone, 73% have phones that are smart
Screens and connections are a natural extension of their being, unrestrained by the boundaries of time91% of Zs take devices to bed And they are comfortable toggling across up to 5 screens, always connected across their netweave of collaborators
Attention span of only 8 secondsSource: National Center for Biotechnology, US National Library of Medicine, The Associated Press, 2015
What’s life like in mobile time?
Source: Sparks & Honey, Generation Z 2025 - The Final Generation
is less than the attention span of this guyWhich bizarrely enough…
is a shopper that is literally “addicted to distraction”
A group for whom the thrill of the new and the next are the only things that matter
Consumers who are rewriting the rules of demand
And therefore, by proxy, the rules of supply
Retail’s new reality
Source: New York Times, November, 2015
TheRealMStiles
to a MARKET BASED ON SPEED - on responsiveness, on the ability to pivot
From an idea like “speed to market”
TheRealMStiles
GOOD ENOUGH, NEW, NOW. THIS is the pace the new shopper is used to, it’s what they expect. And this is a key shift which retail will have to embrace
of perfectly planned in-store campaigns, brainstormed months in advance and flawlessly executed
Gone are the days
and embrace a culture of trying hard, failing fast, picking ourselves up if it doesn’t work and then doing it all over again
We need to move up a gear…
Wieden&Kennedy
LAUNCH, IMPROVE, REPEAT. A cycle of continuous improvement, and don’t forget…
LAUNCH,
IMPROVE, REPEAT.
INVOLVE,
is the inability to grasp this shift. And it’s potentially fueling an even bigger threat just around the corner…
One of the biggest threats to retail today
a perfect storm of change, sparked by circumstances out of your control and lurking on the horizon
Wholesale disruption of retail as we know it
Automated ServiceSelf Service
is already reinventing retail, and we are just getting started.Widespread category disruption
WHY ARE DISRUPTIVE BRANDS SO SCARY? Because they don’t play by existing rules
Uber world’s largest taxi company, owns no vehicles Facebook world’s most popular media owner, creates no content Alibaba most valuable retailer, has no inventory Airbnb world’s largest accommodation provider, owns no real estate Source: Tom Goodwin
RedBull Google Alibaba Snapchat CVS Facebook SoulCycle Chipotle Instagram Apple 72andSunny Houzz Taylor Swift Uber Waze Rent the Runway Airbnb Netflix Warby Parker Under Armour
Source: Forbes top 20 disruptive brands of 2015
How many of these began their lives through traditional bricks and mortar retail?
RedBull Google Alibaba Snapchat CVS Facebook SoulCycle Chipotle Instagram Apple 72andSunny Houzz Taylor Swift Uber Waze Rent the Runway Airbnb Netflix Warby Parker Under Armour
Source: Forbes top 20 disruptive brands of 2015
How many of these are turning traditional retail on its head today?
RedBull Google Alibaba Snapchat CVS Facebook SoulCycle Chipotle Instagram Apple 72andSunny Houzz Taylor Swift Uber Waze Rent the Runway Airbnb Netflix Warby Parker Under Armour
Source: Forbes top 20 disruptive brands of 2015
AGILE THINKING IS PROTECTION AGAINST DISRUPTION
the simple reality of today, is that we can’t afford not to
We used to say we can’t afford to work like that…
3: FROM THEN, TO NOW, TO NEXT.
let’s consider the lifecycle of traditional retail, which has been in place pretty much since the birth of retail design…
Against our new reality
Jeremy Schultz
which we built out of things called bricks and a thing called mortar and which we repeated about every 3-7 years
That lifecycle centered on stores
The cadence of this cycle was driven by…
• the type of retailer we were• the category of retail we operated in• whether someone else like us came along with something new and
bright and shiny which scared the pants off us and forced us to act
We began work on something called a new prototype. When we were happy with it, we built it. Then kicked the tires. Then value engineered it.
Once we decided to make a move
Would we roll the prototype out. A process which would take years to acomplish. And in the interim, we pretty much left the concept alone.
Then. And only then.
PMRPhotography
performing something at some point in the lifecycle we used to call a refresh…which was rarely refreshing
Except occasionally…
- the retail equivalent of a store design spit wash, and more often than not about as effective…
Or, frankly, even fresh
EXPE
RIEN
CE
YEARS 1 2 3 4 5 6 7
EXPE
RIEN
CE
YEARS 1 2 3 4 5 6 7
NEW STORE PROTOTYPE
EXPE
RIEN
CE
YEARS 1 2 3 4 5 6 7
NEW STORE PROTOTYPE
SHOPPER BOREDOM THRESHOLD
EXPE
RIEN
CE
YEARS 1 2 3 4 5 6 7
NEW STORE PROTOTYPE
SHOPPER BOREDOM THRESHOLD
SPIT WASH
There are numerous problems with this approach…
1: It’s a long tail 2: Resource intensive (and the procurement of those resources is a part of why retail is so slow) 3: Inherently unresponsive 4: Doesn’t anticipate changing shopper behaviors 5: Lack of integration with new/emerging channels
it’s also repetitive, and predictably so - the antithesis of the surprise and delight which retail was always supposed to be about…
If that wasn’t enough
With a perceived rate of change at retail that feels GLACIAL compared to the daily lives of our next generation of shoppers
Which is where we are today
1: It’s a long tail 2: Resource intensive 3: Inherently unresponsive 4: Doesn’t anticipate changing shopper behaviors 5: Lack of integration with new/emerging channels
A decade ago, none of these things seemed to matter that much…
1: It’s a long tail 2: Resource intensive 3: Inherently unresponsive 4: Doesn’t anticipate changing shopper behaviors 5: Lack of integration with new/emerging channels
Today, they are the only things that matter
the vast majority of retailers are still in some form of this cycle, and physical retail is still stuck in its own mud
And yet, despite all the pitfalls
Painted into a corner by an entire industry built around the old model
• bulk orders and mass production• production brokerage focused on lowest price over flexibility• off shore procurement and manufacturing• long-term locked contracts• change fees and delay penalties
All of which fuels an environment of rigidity - the opposite of agility - again, despite the evidence of the dangers of a bored shopper…
The results are clear… N o v / D e c F o o t Tr a f f i c
40 Bil l ion Visits
30
20
10
Source: The Wall Street Journal, 20142010 2011 2012 2013
16.7 billion
The results are clear… N o v / D e c F o o t Tr a f f i c
40 Bil l ion Visits
30
20
10
Source: The Wall Street Journal, 20152010 2011 2012 2013 2014
-9.5%
The results are clear… N o v / D e c F o o t Tr a f f i c
40 Bil l ion Visits
30
20
10
Source: The Wall Street Journal, 20162010 2011 2012 2013 2014 2015
-6.4%
Last year we blamed the inclement weather
This year we blamed the mild weather
Perhaps it’s time to face up to reality and recognize the real reasons people are staying home
to make things fun again, and to get collective bottoms off of collective sofas and back into stores…
And that it’s going to take some new thinking
4: WHO IS BEGINNING THE REVOLUTION?
A traditional retailer which adopted AGILE thinking with the advent of their new CEO Brian Cornell
Target
Which presented a sharp contrast to the pace of change able to happen in Target’s chain
Cornell was inspired by a trip to Story
New merchandise development with a faster cadence (including - rather cleverly - a capsule line with Story)
A series of initiatives
Fortune
Where the brand fast tracks testing of a host of new ideas in real time, with real customers
Living Lab Stores
Repurposing an underperforming space to introduce customers to new products and ideas they can’t find in regular stores
San Fran Tech Lab
And the Wonderland concept they opened in Chelsea Market this holiday, billed as a pop up, but also a test bed for their cutting edge thinking
Wonderland NYC
TargetCorp
but, strategically, a continued evolution for us to think about what physical shopping is like when you blur the lines between experience and digital”
“A gift to our guests,
Jeff Jones, Chief Marketing Officer, Target
But in different ways and for different things…Lowe’s for exampleOther retailers use labs
Lowe’sInnovationLabs
Imagines future store experiences and tools for customers like this Holoroom where you can preview room settings designed in store
Lowe’s Innovation Lab
Lowe’sInnovationLabs
iPad Augmented Reality with Oculus VR the create the walkthrough in store which you then upload to your smartphone
The concept combines
Lowe’sInnovationLabs
Through Google Cardboard, a great way to extend the purchase journey beyond the 4 walls, and coming to 20 Lowe’s Stores by year’s end
And take home
Lowe’sInnovationLabs
Of a host of ideas the Innovation Labs are piloting. Bringing new ways of thinking and selling into the physical environment.
Holoroom is just one
Lowe’sInnovationLabs
SPACE10 is space launched this year to explore the future of products for the home, products IKEA will develop and then sell.
And then there’s IKEA
Is exciting because it showcases innovation in a very public way, and involved customers in shaping the future of the brand
SPACE10
IKEA
They let you test new ideas with lower risk and investment,and in theory they can pivot faster than the entire chain
Labs are a great idea in principle
IKEA
but there are still challenges
• layers of prototyping, tweaking, testing and approvals• often an inherently artificial (or limited) environment• no true metrics - certainly not in the way that agile thinking
outside of our industry defines metrics…
We believe the adoption of AGILE proposes something more ambitious than lab stores
Something bigger and bolder
RETAIL IN A STATE OF PERPETUAL BETA Never finished, never done, never static.
5: HOW DO WE LIGHT THE FIRE?
At FITCH it became apparent that in order to work in an AGILE way it wasn’t just the client that was going to need to change, it was us.
We recognized that our existing tools, processes and methodologies were not best suited for agility
DISCOVER
1DEFINE DESIGN DELIVER
2 3 4
The typical process today
Sequential, phase based, and in the digital industry, referred to as waterfall methodology
One step runs into the next
1 2 3 4DISCOVER
DEFINE DESIGN
DELIVER
Also known as a “baton pass” process
is the same, you can’t move on from one phase of work until you have completed the one prior…
And the principle
Agileway of working
With new principles and new activitiesWe recognized the need for a new process
Without giving away the farm…These are just some of the ways in which we are adapting our thinking to creating AGILE retail for our clients.
Sprint CyclesNew Measurement & AnalyticsRapid PrototypingRoad Mapping
LAUNCH, IMPROVE, REPEAT.
Adopting these principles under the umbrella approach of
New Activities: Sprint Cycles
What if instead of a single brief for a store of the future, our clients hired us for 10 mini briefs, or 20 micro briefs?
And what if, because of their size, we were able to execute these briefs in record time? Manifesting themselves in store in weeks not months or years.
Briefs which, by the way, we are increasingly authoring together
STRATEGY
1 2 3 4DESIGN
STRATEGY
1 2 3 4
MINI BRIEF
MINI BRIEF
MINI BRIEF
MINI BRIEF
MINI BRIEF
New Activities: Measurement & Analytics
Real time research live and in-store. Ongoing and iterative.
New tools to allow us to track and monitor customer behavior and respond rapidly.
New Activities: Measurement & Analytics
New Activities: Rapid Prototyping
The goal is to develop concepts that we can get into stores faster than ever before.
And to ask ourselves: “How finished does something need to be before we can begin gathering data on it?”
And, if we challenge ourselves, can we actually start to test things much, much earlier?
And finally: Road Mapping
Once concepts are identified as a “go” what would be the fastest way to bring them to market. And how could we prioritize?
TimeInvestmentROINew resources or skills
From here we develop our road map for execution
20% in 2015
6: IN CONCLUSION
that AGILE should move to the front of the conversation, that the very DNA of a brand itself should be mutable, fluid, liquid and adaptable
There are those that say…
has demonstrated our belief that AGILE is key to the future of business in our world, we don’t agree that it applies to everything
While we hope that today
become chaotic and lose their purpose. And the people that interact with them forget the reasons they ever fell in love with them in the first place
Brands in constant flux
OskarKorczak
We see the brand as a rock that our world flows around. It’s just that the river is flowing a great deal faster these days…
In stark contrast
Further down the chain from the brand?
THIS is where the true mutability needs to exist… and retail has been, is and always will be the perfect place to showcase our AGILITY
Where we lost our way was when retail became stale. Formulaic. Driven by the realities of bulk pricing and mass orders…
Retail is all about embracing trends and creating environments which can shape shift on a dime…
After all that’s where we started…
“Salesmanship, showmanship, call it what you will. Every week there must be something special, something new” Jack Cohen, founder, TESCO
“If the rate of change on the outside exceeds the rate of change on the inside, the end is near” Jack Welch
FROM SPEED TO MARKET TO A MARKET BASED ON SPEED
THANKS FOR LISTENING…
#nrfbigshow2016
#agileretail
@FITCHdesign
@cdaviesFITCH
www.slideshare.net/FITCH_design/presentations