The journey of UCL Launch Box at Boxpark Shoreditch has been one of great successes!
We would love to share the story with you one last time and bid farewell to the incredible innovations that have sped through the pop up shop over the past 6 months. Please join us on the evening of Thursday, November 14th!
RSVP here for a spot: https://lauchboxclosingparty.eventbrite.co.uk/
Dr Alastair talks “retail futures” at the Digital Shoreditch festival (#ds13) and discusses how some of the changes we are living through might affect the retail landscape.
“This is going to be a 7 minute deluge of ideas. Hold tight.
Firstly, I’d like to say how amazing We Are Pop Up is.
We Are Pop Up is a platform for finding and transacting short-term commercial space – pop ups! And my talk is about why short-term use of space will play an increasingly important role in our retail landscape.
But I’ll start with what I’m not going to talk about. I not going to talk about mobile or e-commerce. Although both currently see double digit growth and are very important for a changing retail landscape.
There was an excellent talk from Roger Wade the founder of Boxpark (and client of We Are Pop Up) yesterday about the importance of customer experience and the shifting pattern of interactions that these e/m technologies facilitate. But I’m not going to talk about multi-channel or omni-channel or any other trendy retail philosophy.
I’m going to start by talking about information. (Channel theory itself having its origins in Information theory). If we want to think about retail futures we have to start with information in social and economic activities.
We’re currently sitting somewhere in the middle of two important revolutions.
Its quite difficult to categories revolutions when you’re experiencing them, as the boundaries of when something started or stopped seem clearer with the perspective of history – and then only sometimes – so I’ll be deliberately woolly on the dates.
However, we can think of the ‘information revolution’ as starting post-war maybe even sometime in the 60s, with packet switching for instance, and lasting up to the mid-00’s post the ‘internet’ bubble. This is when we worked out a whole load of technologies and protocols for moving information around – the plumbing and pipes, so to speak, of moving data around the modern world.
Overlapping this we started to see, say late 80’s to the present, the beginning of the ‘inference’ revolution. The pattern matching, the AI, the machine learning that starts with data and information and begins to turn it into usable knowledge – by ‘inferring’ things.
This revolution will, in our life times, do for the ‘white collar worker’ what the Industrial Revolution did for the ‘blue collar worker’ – ie. slowly replace them. The inference revolution means that things you largely assumed to be the preserve of human level reasoning are automated. Now we probably have 20+ years still to go but we already take a considerable amount of its output for granted, whether that’s product recommendations on our loyalty cards to the response to our limb actions from a device like the Kinect on a shop manikin.
So the first revolution is ‘inference’. And at this point I’d like to remind you that We Are Pop Up is an amazing tool for helping find short term space – a bit like a search engine it can help recommend potential tenants to landlords.
The second revolution is about the means of production – 3D printing if you want.
Again this started some time in the 80’s – first reported account 81 – but additive layer manufacturing is a technology that has only really begun to be commoditized in the last few years.
To think how transformative this will be, consider ‘modern’ 2D printing.
If you imagine the transformation of the Dot Matrix printer from the 70s to the full colour photo-realistic printers of the late 00s it took less than 30 years for the commoditized product to go from something amazing, but quite primitive, to nearly professional grade processing for the lightly skilled amateur in their bedroom.
Extrapolate this a little bit and in less than 15 years a new digital manufacturing revolution now opens up the possibility of everyone being their own manufacturer. Multiple materials, fully functioning products, embedded electronics, smart materials, all at the click of the print button in a bedroom.
What has all this got to do with retail futures? Is We Are Pop up going to do for the commercial real-estate industry what 3D printers will do for manufacturing. Maybe.
Let’s put this discussion about information in context by going back a decade or so and looking at the music industry.
The music industry was arguably the first industry to be totally transformed by the means of digital production and dissemination. It’s founded on a 1D signal with a comparatively small byte size so the techniques for creating, copying, distributing and selling (or not as the case may be) came along first.
And how it has been transformed. Free downloads, to file sharing, to paid streaming and the resulting P&Ls from red back to black in a little over a decade. No more albums, no more super groups, but more live music, more socialized music, more REAL music and a landscape that now spans X-factor entertainment to solo careers launched by Kickstarter campaigns. The lesson here is that what we do in our digital worlds has a profound effect on what we do in our real worlds.
Is We Are Pop Up going to do for the commercial real-estate industry what Kickstarter has done in spawning and supporting creative projects? Probably.
Now, if you’re in an industry that also sells slightly more complicated digital signals, say the film industry, you obviously really sit up and take note! But the transformation of the music industry should be a salient lesson for all.
At the point where the current inference and manufacturing revolutions intersect most industries on the planet are packaging up, swapping, distributing, pricing and selling different digital signals – except what? Commodities companies?- the real stuff that things are made of. Or the property industry? – the real space where things exist in.
Surely REAL-estate is as REAL an asset class as you’re going to come across. What have these technology revolutions got to do with transacting space?
Well there is some obvious stuff – the sort of digital tools that support logistics, scheduling, portfolio management – digital tools that do some of the ‘inference’ about assets, the sort of tools that have already proliferated in industries like finance.
There is also the white elephant in the room, that, even in the absence of a universal 3D printer, more of our products will be bought and distributed using online models so that the real space in a ‘shop’ is less to do with shelves of stocked products and more about a space in which in which to experience a brand. And, when a retailer like Amazon is paying £4 a sq ft for warehouse space there is obviously lots of room for government to look at how tax and business rate mechanisms could be made fairer in this emerging landscape.
But there is also the tangible influence of the digital world on our expectations of the real world. Our online worlds are changing at an increasing pace, more social, more personalized, more on demand, more ‘everything as a service’ and we will inevitably demand more of these qualities of our offline worlds too.
So I lied slightly – I am going to talk about e/m commerce – because I’m going to talk about commerce. Increasingly the currency of commerce is (wait for it) information – Facebook’s famous “if you’re not paying then you are the product”.
Is We Are Pop Up going enhance engagement and connectivity in the real world in a way that Facebook did for the online world? Hopefully.
You now have a myriad of possible engagement models from free, to freemium, to premium, to subscription, to paid – and increasingly you ‘log-in’ to get a set of services from the walled gardens of the software platform giants – Google, Apple, Microsoft – or the upstarts Facebook, LinkedIn, Instagram, Spotify… name your favorite.
Everyone wants to be a platform! After all logging-in captures information – and value.
To keep ahead in the engagement arms race, fueled by our online interactions, we will need the real world to be consumed in similar ways – freemium, subscription, on demand – 1 day, 2 days, 1 week, 1 month, 3 months. Whatever ever is required – at the right time, in the right location, for the right price. And to capture this value we need to be able to log-in to real space.
The new retail is longer than an event but shorter than a lease – and We Are Pop Up is here to help make that a reality.
Thank you.”
Read more about how commerce is changing in our Future of Retail series: Part 3 or The Rise of the Mobile Audience
Dr. Alastair Moore was invited to Downing Street this week for the launch of Lord Young’s second report on supporting small firms in the UK.
Here at WAPU we (obviously) think that new “pop-up” models of retail – longer than an event and shorter than a lease – play a very important role in regenerating the UK High-Street. It was greatly encouraging to see our contribution recognised in the report, along with partners Pop Up Britain and Popupspace.
“For online businesses, a pop-up offers them retail experience to raise their brand profile, test products and prices and have direct contact with customers, all with minimum financial commitment.”
The report goes on to describe the “early pioneers” striving to improve the model and enhance the experience for others. For example, wonderful new brands like NANUKK. Sarah McLeod said, “when you work alone and online, you never get the feedback – it was wonderful to hear that what I was doing on my own wasn’t crazy and that people actually liked my product and were prepared to buy it”
We are looking forward supporting many great new brands in the future! You can read more here.
Eric Schmidt of Google said, “If your company doesn’t have a mobile strategy, it doesn’t have a strategy.” This is a prescient observation but one that really rang true this year as London played host to the 2012 Olympic Games. Among the 430 million visits to Lonond2012.com, the 4.7 billion page views and 4.7 million social follows, the number that stands out is that 60% of this occurred from mobile devices. To visualise the growth rate of smart phone adoption and use, here’s a chart:
If charts aren’t you’re thing, here’s a summary: The US and UK have the most engaged smart phone users, which comprise between 30% – 40% of people in either given country. In real numbers, over 150 million people in America and 24 million in the UK download roughly 20 apps-per-phone today. Some reports indicate that over half of UK residents now have smart-phones, which would make that 24 million closer to 35 million. The challenges of data accuracy aside, the point is that this rise in the mobile audience undoubtedly influences our retail spending behaviour. Online sales now represent around 12% of the UK’s annual retail spend. Research by Barclays Corporate in 2011 predicts that mobile will come to represent around 5% of retail spending in the UK by 2020. Between now and 2016, they predict compound annual growth of 55% for mobile-based commerce (mCommerce) vs 8% for eCommerce (shorthand for online sales) and just 1.6% for in-store sales. But the attention of new mobile audiences is still notoriously difficult to capture.
Around 80% of branded apps get less than 1,000 downloads – and its very far from the simple case of replacing the online desktop experience. To quote Matt Biddulph @mattb, co-founder of Doppler, “mobile gives everyone superpowers!” Its always with us, and there are signals, and more signals, AND MORE SIGNALS telling us about what’s happening in the world. We can see what’s around the corner in the same feed next to what’s happening in Mumbai. And with a couple clicks we can see both points on a map, and chart a journey via bus. Mobile allows us to see, find, explore, share and transact in ways that we simply couldn’t previously: faster, with better curation and with limitless connections to like-content.
More on this later, but anecdotally, this week heralded my first time paying at an US coffee shop where the only pos system was an iPad using Square! Mobile has arrived.
LIVING IN THE AGE OF ENGAGEMENT
In 2000, £50 out of every £100 we spent went to High Street retailers. Today, it’s just £42.50. But mobile isn’t about replacing a pound for a pound, and it is one of the “channels” by which customers and retailers engage. Deloitte estimate that for every £1 of purchases made via mobile, the channel will directly influence £23 of spend. The challenge is finding the best ways to influence a mobile audience.
I was inspired by a recent talk by Alex Meisl, co-founder of Sponge at the Mobile Academy about living in the “age of engagement”. I found the following statistics particularly engaging:
– 81% of smart-phone users search for local data
– 34% of US smart phone users have cancelled planned purchase in stores due to information they got from their mobile phone;
– 25% claim to intentionally carry a smart phone when shopping to compare prices and find information (an activity commonly referred to as “showrooming”);
– 46% say research conducted on their phone led them to make a specific purchase at specific store.
Where previously a retailer would have had us captive once we crossed the threshold of a shop, now they are in constant competition for our attention – locally, nationally and globally – an observation that Simon Forster of Debenhams described in June 2012 as “effectively heralding the end of online versus in-store shopping”. It is not about which of those you are, but how soon you will be both – something that the UK’s 150k online-only retailers should take note of.
So what do people currently do on mobiles? Here is another chart. This one shows a recent breakdown of behaviours from Google:
Figure 2. User journeys from discovery to purchase. Source: thinkwithgoogle.com
Understanding this complicated journey of conversion is not only the key to understanding mobile – and channel conversion – its key to understanding the changing role of bricks-and-mortar.
Notice that 4 out of 6 journeys involve the physical store in relation to mobile. The temporal aspects of this engagement are also important, but not captured by the figure. For example, there is the immediacy of mobile, as Ashley Highfield @ashleyhi observers: “On average, the time difference between first search and purchase is one month on the web and one hour on mobile”.
However the main point is that the biggest opportunity lies in leveraging mobile AND the physical store AND online to shape the overall shopper journey.
The potential of journey and engagement was highlight at a presentation from Hellicar & Lewis that I attended recently at WhiteLable’s Future Gallery. They gave some wonderful examples of how people are willing to interact with different digital installations to enhance the emotional and social aspects of engagement. And it is the role of social advocacy and endorsement that is critical to the journey of conversion.
Unsurprisingly, Amazon research shows that 83% of us won’t buy having been exposed to critical comments. But much more interestingly, their research also found that 75% of us are unlikely to buy if there are no reviews.
Only one journey in the figure above ends in an in-store sale – but bricks-and-mortar plays a critical role in creating a platform for engagement to support discovery.
