The new psychology of space

The new psychology of space: longer than a day, shorter than a year

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