1、The future of retailHow value propositions will evolve to enable relevance and successContentsExecutive summaryIntroduction:A changing world demands change in retailThree Is that will shape future value propositionsInvisibility:How retailers can be so seamless that the customer doesnt even know they

2、re thereIndispensability:How retailers shift from selling products to supporting lifestylesIntimacy:How retailers can make the act of shopping more important than the products they sellBringing it all together:How retailers can create a blended value proposition around their core values and capabili

3、ties.Conclusion:Building a future-fit retail organization0406142026323844Retailers face widespread change from disruptive trends that are creating tensions in how their existing value propositions can deliver to consumer needs.Retail business models have traditionally taken a product or store-centri

4、c approach founded on scale,scope and efficiency.However,as consumer expectations continue to grow,reflecting emerging and sometimes competing needs,retailers are under more pressure than ever to deliver authentic customer-centric value propositions.The shift online is creating new engagement opport

5、unities and the business landscape is broadening with challenges and opportunities coming from adjacent areas such as technology,media,services and health care.Direct to consumer(D2C)is driving brands to increasingly operate as retailers,while the private label is opening doors for retailers to incr

6、easingly behave like brands.Executive summary The proliferation of physical and digital retail spaces and globalized supply chains have driven an exponential growth in choice,transparency and availability.Where once consumer choice was limited to a handful of brands in a handful of stores,they now h

7、ave an array of purchasing choices spanning products and channels.Consumer expectations of seamless and ultraconvenient shopping solutions contrast with parallel needs for retailers to deliver solutions that serve holistic areas of consumer lifestyles and demands for personalized and immersive exper

8、iences that reflect the values and aspirations of individual customers.This report explores how retail must evolve and what the implications are for the value propositions that will emerge to maintain relevance in the future.Failing to create the right balance of invisibility,intimacy and indispensa

9、bility will result in irrelevance,and so is critical for retailers to get right.The three guiding principles driving the evolution of retail value propositions:The need to be invisible Delivering frictionless retail to the consumer at the point of need.The need to be intimate Delivering fantastic ex

10、periences and personalized services that drive advocacy and loyalty among a like-minded“tribe”of consumers.The need to be indispensable Bundling products and services through an ecosystem of partners so that consumers rely on the retailer to solve their holistic lifestyle-led priorities.Thomas Harms

11、 EY Global Retail Leader Purnima Samboo Mungur EY Global Consumer Strategy and Sustainability Leader Jon Copestake EY Global Consumer Senior Analyst Kristina Rogers EY Global Consumer Leader 1234 The Future of RetailThe Future of Retail 5Introduction:A changing world demands change in retailTo say t

12、hat retailers are operating in unprecedented times feels like an understatement.Even before the COVID-19 pandemic,retailers were struggling with a shift toward digital channels that threatened to disintermediate their traditional store-based strategies.The emergence of powerful retail platforms and

13、a proliferation of routes to market through new logistics providers and digital channels had already opened the door for brands and start-ups to take their products and services directly to consumers,threatening to marginalize traditional retailers as the gatekeepers between consumers and the produc

14、ts they buy.This has exponentially increased the choices available to consumers,driving a transition from product or store-centricity toward customer-centricity.The COVID-19 pandemic accelerated some of these trends,but also reversed others.Retailers that were able to provide essential goods and inv

15、est in their digital capabilities benefited from a halo effect.Those that could not struggled with a lack of access to their customers.But unprecedented times are not unprecedented.Retail has emerged leaner and meaner from unprecedented times before.During the last century which saw the great depres

16、sion,global conflict,the partition and reunification of Europe interspersed with multiple economic crises many retailers continued to thrive and grow using an approach that has served retail for millennia.Despite the much publicized“retail apocalypse”following the great recession of 200709,which for

17、ced the closure of tens of thousands of stores,incumbents have continued to weather disruption and improve their business.Walmart,the worlds largest physical retailer,saw net sales grow by 40%between 2010 and 2022,despite the market challenges it faced.*of consumers are thinking about what will be i

18、mportant for them in the future.66%EY Future Consumer Index*Source:M,Walmart Revenue 2010-2023The Future of Retail 76 The Future of RetailDisruptive forces creating new challenges and opportunities for retailersIncreasing tax and regulatory complexitySector convergenceDemographic shifts in consumpti

19、onGeopolitical and economic uncertaintyAccelerating interest in sustainabilityRapid technological change Evolving digital channelsDigital goods/services and metaverseTech infrastructure:5G/IoT/cloud/edge New taxes:carbon border,plastic packaging,ingredientsMinimum wagesLabeling requirementsLabor law

20、s Data protection E2E supply chain transparency/traceabilityDecarbonizationPackaging and circularityFood waste New consumption trends-Generation MConscious consumptionReselling/second handHealthy,plant-based Conflicts in Russia/UkraineEU and Brexit trade tensionsInflationSupply chain disruption Prod

21、uct to serviceRetail-tainmentBundled solutionsSelf-health careGamificationMonetizing dataDisruptive forces Integrating physical and digital channels Hyper personalization of retail experiences Leveraging data and analytics Investment in 5G infrastructure Increased value chain agility and transparenc

22、yRetailer imperativesRetailer imperatives Cost exposure to minimum.wage and taxes Accountability for supplier and product transparency Balance global and local requirements Manage data between different legal authorities Meeting regulatory requirements and carbon commitments Leveraging data and tech

23、 to track ESG performance Recycling and waste management schemes Innovating to drive circularity in products Educating and curating sustainable consumption Extend offering with ecosystem partners Shift from product to service/lifestyle curation Diversify into media,tech or health sectors Leverage as

24、sets for alternative models Repurpose retail space for new revenue streams Diversifying and securing resilient supply chains Building local supplier networks to offset risk Hedging for substitutes in assortments Fragmenting operations and severing partnerships Managing cost spikes Invest in circular

25、 business models repair and maintain Shift assortments to health and sustainability Explore new service-led business models Develop propositions for emerging segments Innovate offerings to ensure relevancyAs retailers look to the future,there are two fundamental differences in their operating enviro

26、nment that will erode their ability to rely on tried and tested strategies.The first difference is that the disruptive forces shaping the industry are no longer framed by distinct events but are forming a constant backdrop that continually tests their resilience and agility.Retailers enjoyed a decad

27、e of relative economic stability between the great recession and the outbreak of COVID-19.Today,the impact of COVID-19 is being compounded by supply chain shocks,accelerating inflation,the war in Ukraine and wider geopolitical tensions that are collectively undermining the era of globalization and t

28、he relative prosperity that businesses have thrived in for decades.Against this backdrop,the need for customer-centricity is not retreating,but accelerating as consumer expectations evolve,enabled by other factors such as increased transparency and choice,rapid technological shifts,especially in dig

29、ital environments,mounting concerns and commitments around sustainability,and convergence between different sectors as companies explore new ways to unlock value.These drivers are collectively reshaping the retail operating environment.When Justin Trudeau,the Canadian Prime Minister said in 2018 tha

30、t“The pace of change has never been this fast and yet,it will never be this slow again,”*he could not have known how prophetic his words would be.From unprecedented to normalof consumers believe their values and the way that they live their life has changed.EY Future Consumer Index54%*Source:Justin

31、Trudeau,Canadian Prime Minister speech at World Economic Forum,Davos,2018.8 The Future of RetailThe Future of Retail 9The second difference is the change taking place in the relationship that retail has with consumers,where the long-held principle of customer-centricity is likely to no longer be eno

32、ugh to confer loyalty.Customer-centricity has been a byword for retail excellence since 1954 when management consultant Peter Drucker wrote that“It is the customer who determines what a business is,what it produces,and whether it will prosper.”*But the truth is that retail has failed to consistently

33、 embrace this mantra over the decades.Instead,retailers have often used their focus on scale,scope and efficiency to take the customer out of the equation and drive a value proposition that puts other business needs first.The ordeal of traveling to a store,trudging through aisle after aisle listenin

34、g to piped generic music in a generic stock-heavy environment,trawling through a vast range of products to get to what you want at a price you cannot negotiate,carrying them to the checkout,queuing to pay and taking the products home yourself hardly constitutes a customer-centric experience.It could

35、 be argued that retailers have grown for decades by making their customers do much of the work,by making them part of a process that optimized itself around the stores and products retailers sell.This is changing rapidly as consumers become more central in defining the activities of retailers.The in

36、ternet has provided greater knowledge,choice and transparency.Online platforms have redefined expectations of choice and convenience by showing consumers what can be achieved.Immersive digital and physical spaces have enabled new approaches to experience.Smartphones and logistics platforms have expo

37、nentially improved the way consumers can access and A new balance of power between retailers and consumersreceive products.The values that consumers have over social and environmental issues are increasingly shaping what they buy and from whom.Retailers are now in a landscape where the customer is t

38、ruly king,and just delivering customer-centricity is no longer enough to confer loyalty or advocacy.Instead,retailers must find ways to integrate themselves into the everyday lives of the consumer by delivering tangible and intangible value.Success is now defined by the ability to build a trusted lo

39、ng-term relationship;the simple act of transactionally selling products will no longer be enough.This transition will prove difficult for incumbent retailers.They have built vast and profitable businesses spanning channels,categories and continents using legacy infrastructure that will be difficult

40、to disentangle from.Efforts to change are evident,but the scale of change required is not.Key performance indicators(KPIs)built on sales per square meter will not be fit for a consumer base that increasingly blends its shopping habits between stores and online.Promotions designed to increase basket

41、sizes are less resonant with consumers who want to buy“better”products rather than“more”stuff.Generic layouts in stock-heavy stores ignore the serendipity and enjoyment that consumers cravewhen they interact with brands.These changes in expectation are accelerating and are unlikely to revert to how

42、they used to be.Instead,retailers must revisit what their value proposition means to the customer they serve.How are they making customers lives easier,better or more fulfilling?Are they delivering the right blend of convenience,service and experience to demonstrate the value that they can provide?H

43、ow do they differentiate from the multitude of other sellers that consumers can choose from?of consumers believe the way that they live their life will change further in the long term.54%EY Future Consumer IndexEfforts to change are evident,but the scale of change required is not.“*Source:Peter F.Dr

44、ucker,197310 The Future of RetailThe Future of Retail 11The principles that have guided retail for millennia must evolveIt is hard to consider the future of retail without first exploring its past to understand how much,but more importantly,how little,has changed over the last 10,000 years.Retail is

45、 often said to be almost as old as civilization,with ancient Mesopotamian tribes establishing barter systems for goods and services over 8,000 years ago.It took until 5,000 years ago for this to be codified into transactions using currencies that began as clay tokens and evolved into a coinage syste

46、m underpinned by silver and other precious metals.Sellers would convene around ziggurats,Mesopotamian temples which acted as religious,social and commercial hubs providing the footfall to support street markets.This model has persisted throughout history.From the agoras of ancient Greece to the onli

47、ne marketplaces of today,retail has followed three basic rules:The increasing complexity governing the fundamental principles of retail doesnt make them redundant.Product,place and price remain key elements guiding how a retailer should operate.However,in understanding and optimizing these principle

48、s,retailers need to examine and define their future value proposition to ensure that they can manage the complexity around the core values they want to uphold.This means that instead of using retailer-centric measurements of scope,scale and efficiency to interpret product,place and price,they should

49、 explore consumer-centric value propositions that reflect how they will remain relevant in the future.At its heart,this requires fundamentally differentiating on the way they position product,place and price to reflect the priorities and needs of the customers they serve in a way that differentiates

50、 them from their competitors.Consumers now find themselves with an abundance of choice.Retailers and the products they sell have proliferated over the centuries.Knowing what a customer might want or need has shifted from providing basic goods hundreds of years ago,to managing vast engagement algorit

51、hms that seek to identify consumer needs down to a segment of one.A Mesopotamian trader might have sold a handful of products.By contrast,a modern supermarket will hold tens of thousands of SKUs and an online marketplace may stock many millions.These will be designed to cater to every eventuality fo

52、r a consumer who may not even know what they want,but who is unlikely to want all of it.Faced with this abundance,consumer needs have also become far more complex with an increasing focus on consuming“better”rather than more.These days every product or service needs a context,story or set of values

53、to match the needs of the customer.Is it healthy?Is it sustainable?Is it locally made?Does it match their expectations of quality or style?1.ProductWhat do customers really want or need?The evolution of retail channels and locations can be linked to the evolution of transport infrastructure.In ancie

54、nt times,temples provided a natural focal point to sell from.Over the last two centuries,urbanization drove the rise of department stores and shopping centers in cities and towns.Then motorways created the ability for retail to provide its own gravitational pull with out-of-town malls and hypermarke

55、ts.Commuting patterns and suburban development extended this need into neighborhood and business center convenience formats.Then came ecommerce,extending retail into homes and workplaces before smartphone shopping blew everything up by creating almost infinite points of sale.4G and 5G coverage now m

56、eans that people can potentially buy products while theyre climbing Mount Everest.This is a fundamental shift.Retail locations were once destinations for customers;now,customers are increasingly acting as destinations for retail.2.PlaceHow can retail be everywhere all at once?The switch from barter

57、to currency was pivotal for retail.By assigning value,price measured and dictated the relationship between supply and demand.Retailers knew that if they sold something cheaper,they would sell more.They also knew that if things were scarce or their customers were wealthier,they could command higher p

58、rices.But that process did not account for the choice and visibility that consumers have today.Price is no longer dictated by what the customer is willing to pay,but by how cheaply a product can be sold for.This means that price is only part of the value exchange between retailers and their customer

59、s.Loyalty,data and influence provide different degrees of value that can influence price strategies.Meanwhile,price for consumers is no longer about scarcity or need,but incorporates quality,exclusivity,purpose,convenience and experience.What a customer is willing to pay for a product today depends

60、on a combination of financial and nonfinancial factors that are difficult to quantify and likely vary from person to person or product to product.This makes price part of a wider new barter system that shapes purchase decisions.3.PriceWhat is the new value equation?1.Product Selling goods and servic

61、es that customers want or need 2.Place Selling goods and services at a place and time where the customer will buy them 3.Price Selling goods and services for something that customers are willing and able to pay These fundamental principles of retail remain relevant today.To deliver growth using thes

62、e rules,retail has been predicated for millennia on scope(sell more products),scale(sell in more places)and efficiency(make prices competitive).This model has accelerated over the last century,leading to a vast and globalized system,delivering billions of products in millions of places at optimal pr

63、ices.But the notion of scope,scale and efficiency are coming under pressure since product,place and price have become exponentially more complex for retailers to successfully navigate.12 The Future of RetailThe Future of Retail 13Three Is that will shape future value propositionsThe lessons that can

64、 shape the future of retail lie in three distinct areas.The first lies with the level of expectation conferred by innovation and the rapid development of technology platforms.Users of video-streaming channels have come to expect picking up where they left off on any device in any location at any tim

65、e.Consumers expect to find what they want,whenever they want it whether through using search engines for information,or ordering products within a 30-minute delivery slot.These expectations of convenience make the provider of the service almost invisible to the consumer,who only sees what they want

66、and when they want it,wherever they are.The second area comes from the blurring of boundaries between different areas of consumer need,which is driving convergence between sectors and leading to the emergence of new service models.For example,if someone wants to lead a healthier life,they might look

67、 to eat and drink better,exercise more,take dietary supplements,seek health advice and monitor their progress.Individually many of these things are found in different places,but providing all of them as one service would make that service provider indispensable to the consumer by holistically solvin

68、g a distinct area of consumer need.The third comes from the past,with retailers needing to understand the reasons that made their offering to consumers relevant in the first place.From the marketplaces of ancient civilization to the local mom-and-pop stores that once served local neighborhoods,retai

69、l has historically been more than just a place to shop.Stores and markets served as community hubs for social interaction and local events.Shopkeepers would know their customers by name and would enjoy a level of intimacy that todays mass market retailers struggle to replicate.Collectively,these thr

70、ee Is will shape the successful retail value propositions of the future by enabling them to differentiate their offering and provide tangible benefits and value back to the consumer:Retailers can make consumer lives more fulfilling by providing them with experiences that resonate with them,reflectin

71、g their core values,and making the transaction secondary to the services they provide.IntimacyRetailers can make consumer lives easier by providing them with the products that they need when and where they need them,seamlessly making the transaction a process that they are barely aware of.Invisibili

72、tyRetailers can make consumer lives better by providing them with bundled products and services that can solve areas of holistic need,using an ecosystem of partners that make the transaction part of a service to improve their lifestyles.IndispensabilityThe Future of Retail 1514 The Future of RetailE

73、ach of these value propositions will be explored in more detail,but they should not be taken in isolation.Nor should all three be considered as equal for a retailer looking to transform for the future.As retailers seek to reshape their strategies,they must examine their core capabilities and corpora

74、te purpose to identify the right blend of invisibility,indispensability and intimacy for their business.For example,a future value proposition might focus heavily on delivering a seamless“invisible”experience through the retailers online channels,but could repurpose physical stores to build“intimate

75、”experiential services,while training staff to provide expert advice that can connect products with services to become more“indispensable.”Retailers who fail to embrace the three Is or create the right combination of them,run the risk of another“i”:irrelevance.of consumers think the way they shop wi

76、ll improve in the coming years.43%EY Future Consumer IndexRetail value propositions must blend three Is to integrate into customers livesWhat it takes to be with the consumerBecome a time saver delivering invisibility Focus on speed,convenience and efficiency to save time for customers.Minimize pain

77、 points in order to seamlessly and invisibly integrate into consumers lives.Become a problem solver-delivering indispensability Create personalized solutions for customers.Bundle goods and services into holistic packages that deliver outcomes to specific consumer needs(dont just sell products).Becom

78、e an experience creator-delivering intimacy Focus on providing enriching experiences.Charge a premium(potentially)on sales because customers want to spend time shopping in digital and physical spaces.I want my life to be more fulfilling.I know which retailers I want to be spend time with those that

79、give me the right experience.My loyalty is about shared values and good experiences.Invisibility I want my life to be easier.I care about getting what I need in the most convenient way.I will let AI buy things for me.My loyalty is limited to auto-replenishment and subscriptions.IndispensabilityI wan

80、t my life to feel better.I value retailers that optimize things for me.Im happy for them to join the dots on my behalf.My loyalty is based on trust.What the consumer valuesIntimacy16 The Future of RetailThe Future of Retail 17Using contextual experience to define your value proposition Every custome

81、r is different;they have unique priorities,needs and aspirations that are reflected in the products and services they buy.Their expectations of experience also differ based on their values and lifestyle.Their income,job,peers and geographic location will also influence their choices meaning that an

82、understanding of how best to serve your customer depends on developing a deep understanding of them beyond simply tracking what they buy.But the complexity of truly understanding your customer does not end here.Consumers will also see their own priorities and needs change in different contexts.There

83、 is a significant difference in the expected experience of a consumer picking up a prepared meal from a retailer on the way home from work and the expected experience of a consumer buying fresh ingredients,from the same retailer,for a dinner party where they plan to entertain their friends.There is

84、a further difference between these two examples and a consumer visiting the same retailer with the intention of changing their eating habits to improve their well-being and that of the planet.In understanding the customer and identifying different customer journeys based on a variety of contextual f

85、actors,retailers will need to develop a consumer-centered view of the entire business,from supply chain and operations to content and marketing.This requires a technology ecosystem that is powered by real-time data to provide visibility of the business itself and optimize operational performance,inv

86、entory levels and the right mix of goods and services accordingly.This ecosystem can combine business visibility with deep customer insights that can power point-of-need personalization in the services and products a retailer sells to individual customers.It also requires the right channel blend and

87、 the right talent capabilities to span these areas of need,with physical store footprints that combine convenience formats with service-led or specialty formats in relevant locations as well as a digital platform that can identify and direct consumers to the right experience based on their context.I

88、n the first instance,invisibility would be the driving force behind the retail value proposition.The consumer wants the retailer to save them time and would expect a curated assortment of relevant options that they can quickly choose from,with a frictionless checkout experience so that they can stil

89、l make a dash for their train home.The second instance sees the customer coming to the retailer to solve a lifestyle issue and opens the door to becoming indispensable to the customer by using an on-site nutritionist to build a personalized solution for them.Relevant ingredients could be bundled int

90、o a subscription-based meal plan delivered to their door,with options for related services such as gym membership,vitamin supplements and health insurance linked to the overall package.In the third instance,customer expectations might focus on spending time with the retailer,adding a greater degree

91、of intimacy to the shopping experience,with an in-store concierge or interactive technologies guiding them through possible recipes and showing the way to the relevant ingredients and drinks that might match the meal the customer has planned.But these are not three different customers,or three diffe

92、rent retailers.They reflect three different needs that the same customer might have of the same retailer for the same category of products at different times of need.Experience is about the whole ecosystem,not the individual customer journeyStore/digitalchannelPurchasePaymentDesign/merchandisingProa

93、ctive selling next opportunityLoyalty benefit/creditExperienceecosystemAI/MLsegmentationdata collectionPersonalized Post-salecommunicationReturnsdeliveryPick-upcommitmentLogisticsMemorableEnrichingAs retailers build their distinct value proposition around the blend of invisibility,indispensability a

94、nd intimacy,they can further refine these three value propositions to deliver distinct individual customer experiences that talk to these value propositions in the context of customer need.But retailers must also consider what their own core capabilities and value propositions can realistically deli

95、ver.No retailer can be all things to all people at all times;instead,they must focus on delivering a best-in-class experience in their areas of relative strength.of consumers intend to reappraise how they spend their time on things they value the most.62%EY Future Consumer Index18 The Future of Reta

96、ilThe Future of Retail 19InvisibilityHow retailers can be so seamless that the customer doesnt even know theyre thereAs consumers have become collectively wealthier over the decades,they have also had less time to enjoy that wealth.Time poverty is an increasing concern among consumers who find that

97、work,travel and other commitments weigh on their ability to do the things that they want.According to research by GWI*,people are spending an average of nearly seven hours per day connected to the internet globally,almost 40%of their waking life.This puts pressure on them to make optimal use of thei

98、r physical time and demonstrates a need to prioritize their online behaviors effectively.The relationship between retailers and efforts to save consumers time is already well-established.The worlds first self-checkout system was introduced by Kroger in Atlanta in 1986 and now there are millions of s

99、elf-checkouts in operation throughout the world,with stores rapidly taking further steps into checkout-less shopping.Those who have experienced the annoyance of“unexpected items in the bagging area”will testify that self-checkout has not been without its pain points,but directionally,it points to su

100、stained and continued efforts to remove friction from the shopping experience,while at the same time unlocking cost-saving efficiencies for retailers.Similarly,lead times for delivery of online orders have fallen from weeks to days to hours as e-commerce adoption has accelerated,with logistics platf

101、orms also stepping up and stepping in to plug capability gaps.More recently,technology has begun to enable shopping through home AI in the form of smart speakers,while home appliances are increasingly leveraging the Internet of Things(IoT)in a way that could ultimately see products auto-replenished

102、directly from home.Online shopping lists and curated suggestions based on previous shopping patterns are becoming more prominent and customer journeys are becoming more intuitive as they navigate through carefully curated choices of goods and services to get to what they want more quickly.of consume

103、rs do not see brands as very important in shaping purchase decisions.of consumers will be more focused on value for money in the future.50%66%*Source:Digital 2022 Global Overview Report,GWI,Datareportal,2022.EY Future Consumer IndexThe Future of Retail 2120 The Future of RetailA value proposition wi

104、th a strong focus on invisibility takes this direction of travel to its limit,with the retailer able to create a seamless and invisible layer between the consumer and the products and services that they buy.Assortments in physical stores will focus on creating easy access to the most relevant produc

105、t lines,with digital technology directing consumers to the products they need.SKU reduction and curation of products are already being increasingly optimized around intuitive store layouts to enable any visiting customer to get to what they want quickly and easily.Once the customer has what they nee

106、d,checkout-less payment will enable them to simply walk out with their purchases.Through online channels,invisibility can be taken a step further,with subscriptions and automated replenishment predicting and delivering to consumer needs.The success of a time-saving value proposition depends on the i

107、ntersection of price,speed and convenience enabling the delivery of high retail volumes at a low margin with a focus on cost-saving and efficiency.By achieving a degree of invisibility,this retail value proposition integrates into a consumers life by being trusted enough to pre-emptively fulfil thei

108、r needs using complex algorithms that integrate their physical and digital infrastructure.A value proposition that focuses on integrating into the customer lifecycle through invisibility will deliver most effectively by creating seamlessness,not stickiness,in its interaction with its customers.Consu

109、mer awareness and consideration of the retailer will likely ultimately be delegated to technology through connected analytics that communicate with home IoT,household AI and connected devices to establish a customer need that can be fulfilled with minimal interaction.How invisibility works for the r

110、etailer and the consumerThe customer will only care about what they want and who can deliver it most conveniently.Invisible retailers must be wherever the customer is,whenever they need something(even if they dont know they need it).This requires a combination of targeted store locations where footf

111、all is likely to be most advantageous,integrated with a broad digital platform that can ascertain what the customer will want based on their purchase patterns.Delivering this infrastructure will make the act of purchasing from the retailer completely frictionless,wherever the point of sale takes pla

112、ce.Whether picking up in a checkout-less store or having products delivered,the consumer will get the products they want when they want them without really thinking about them especially in cases where the customer ultimately foregoes making basic purchase decisions and,instead,delegates them to AI.

113、When it comes to customer loyalty and advocacy,an invisible value proposition would rely on passivity rather than proactivity from its customer.Using auto-replenishment and subscriptions as a means of driving repeat purchases will enable the retailer to invisibly integrate into the customers life ov

114、er the long term.Consumers are creatures of habit who will often follow the path of least resistance,so fulfilling their needs invisibly is a must any complications where the customer encounters friction would attract attention and a search for a more seamless solution.A retail value proposition foc

115、used on invisibility would need to ensure that the combination of price,place and product is always relevant and always convenient.In fact,the customer wont even notice these considerations they will implicitly trust the retailer to strike this balance for them.Creating invisible value in the custom

116、er lifecycleLoyalty and advocacy There is no conscious loyalty or advocacy.Auto-replenishment and subscriptions invisibly integrate the retailer into the customers life over the long term.The customer will set baseline expectations of their needs and passively buy based on these.Purchase Point-of-sa

117、le is frictionless,whether picking up in self-checkout stores or having products delivered,the consumer seamlessly gets the products they want,when they want them.The customer may not make purchase decisions,but instead delegate them to AI.Awareness and consideration Using connected analytics to ass

118、ess real-time demand through home IoT,household AI or connected devices.This enables curation and fulfilment with minimal interaction.The customer only cares about what they want and who can deliver it most conveniently.22 The Future of RetailThe Future of Retail 23How companies are delivering invis

119、ibility todaySaving customers time and creating ultra-convenient retail experiences has been part of retail,particularly grocery retail,for decades.Examples of today focus on three distinct areas:time,convenience and seamlessness which are commonly delivered though automation,efficiency and scaled t

120、echnologies.For example,Chinese retailer JD.com opened the worlds first fully automated warehouse in Shanghai in 2018.The warehouse can process 200,000 orders per day under the watchful eyes of just four human employees.In tandem with warehouse automation,JD.com has continuously expanded its routes

121、since it began delivering by drone in 2015.It has more recently opened highly automated warehouses in Germany and Poland as well as two fully automated robotic shops in the Netherlands for in-store pickups and delivery.But automation of online fulfilment does not need to be the only facet driving in

122、visibility.Hard discounters such as Aldi and Lidl have designed stores around limited SKUs,often tailored to their local customers,with near-identical store layouts.Discounters incentivize their checkout staff to scan at speed,making shopping experiences as quick as possible.The next step in this pr

123、ocess is eliminating checkouts altogether,with Aldi following the likes of Amazon Go by trialing its own checkout-less format.In France,Carrefour took this one step further with a 10/10 concept store that promises an experience so seamless that shopping and paying will only take 10 seconds each.The

124、notion of speed is also a factor driving down delivery times,with a host of start-up platforms and established logistics platforms offering delivery times of under 30 minutes in urban centers.REWE Group has gone a step further by trialing a self-driving kiosk that can patrol streets,acting as a mobi

125、le-vending machine.Pre-emptive buying and auto-replenishment through IoT remain nascent,but the increasing number of connected smart devices represents an iterative shift toward invisibility in the way that consumers can be served on their staple products.Coffee machines can already order more pods

126、when they run low and smart assistants are increasingly suggesting households to reorder certain items based on previous buying patterns.As these algorithms become more accurate and other connected devices(refrigerators,cupboards,wardrobes)become more integrated,there is scope for consumers to compl

127、etely delegate purchase decisions to their household or personal AI at which point,the retailer will effectively become truly invisible to them.24 The Future of RetailThe Future of Retail 25IndispensabilityHow retailers shift from selling products to supporting lifestylesBy saving customers time,inv

128、isible value propositions can habitually integrate into their lives.Intimate value propositions can integrate into consumers lives by creating loyalty and advocacy around shared values.But in bundling a range of products and services together to create lifestyle solutions,retailers can also become i

129、ndispensable by enabling their customers to delegate holistic challenges to them.Consumers are increasingly leading complex and time-poor lifestyles which are bombarded with a dizzying array of different choices and messages.Everybody wants to lead a better life.This can mean being more productive,l

130、earning more,being healthier,being more sustainable,or any combination of these factors.If a customer buys a nutritious meal,they are doing so because they want to lead a healthier life.If they buy nappies,it is because they have a child to care for.If they buy a tent,it is because they want to go c

131、amping.Currently,most retailers solve only part of this need.Retailers are already making in-roads in connecting the dots between what their customers buy and what they might need.In the supermarket,nappies can usually be found next to related products such as baby wipes and baby food.If someone buy

132、s a tent online,algorithms may recommend a camping stove.Some retailers are taking this further by building out services that support the products they sell.Furniture and consumer electronics retailers offer packages that support the delivery,installation,assembly and maintenance of the products the

133、y sell.However,these are often limited in scope and do not talk to the overall need of the consumer.Retailers can become more indispensable by continually elongating the scope of supporting services they offer into a single consolidated package that eliminates any pain points in the customers effort

134、 to improve their lives.of consumers would share data for personalized support and service experiences.60%EY Future Consumer IndexThe Future of Retail 2726 The Future of RetailDeveloping a value proposition that goes beyond selling products to meet a consumer need,one which bundles products and serv

135、ices together to holistically meet those needs,will enable retailers to become indispensable as customers delegate areas of their lifestyle to the retailers that service them.For example,instead of simply selling some nappies,and maybe a few jars of baby food,a value proposition focused on indispens

136、ability may look at how it can help parents more holistically(which most parents would be very grateful for).These could include the delivery of nappies,baby food,wipes and other essentials through a subscription model that changes with the size and age requirements of the child.They could further a

137、dd subscriptions that rent out baby clothes that remain age-appropriate as the child grows.Going further,the package could include recommending local babysitters,partnering with local creches and nurseries to support childcare,or connecting parents locally with similarly aged children to build a sup

138、port network.All of this could be bundled into a single monthly package for the parent,from birth through the childs formative years.How indispensability works for the retailer and the consumerAnother example would be moving from simply selling nutritious meals to curating diets,providing gym member

139、ship,monitoring health through wearables and supplying health insurance for those wanting to live healthier lives.Others might include full-service,year-round DIY and maintenance of homes,furnishings and household appliances or exclusive lifelong ticketing and access rights for fans of sport or musi

140、c.Providing one or two relevant services might make a retailer useful,but solving for multiple aspects of a lifestyle would make them indispensable.It would create value for consumers,the retailer and the retailers ecosystem partners.The benefits of scale through a guaranteed subscribed revenue stre

141、am would also make the relationship financially stable and relatively cheap to plan and deliver.Success for a problem-solving value proposition depends on the relevance and breadth of the services the retailer can provide to secure long-term buy-in from the consumer.This means that,besides having th

142、e expertise to identify and solve for consumer areas of need,the retailer will also orchestrate a robust ecosystem of specialist partners to deliver supporting services and connect with the customer locally.Underpinning this will be a strong and integrated technology infrastructure as well as commun

143、ity ties between the retailers geographic footprint and local,approved,independent third-party providers.Awareness and consideration of the retailer will start with identifying and building capabilities for the customer around an identified area of need relevant to the retailers core capabilities.Th

144、is may relate to lifestyle improvement such as health and wellness,fitness,education or sustainability.Alternatively,it may focus on things such as home,family,pets,or hobbies and interests.Connecting with a relevant ecosystem of third-party service providers and building the right skill-sets to ide

145、ntify solutions for areas of need will provide the credibility and the platform to raise awareness among their customers and drive discovery of their services.From a purchasing perspective,the retailer must ensure that the products and services it bundles are intelligently assembled and priced to re

146、flect the right sharing of value,not only back to the customer but also to the retailer and its ecosystem partners.This dynamic pricing may dial down margins on some products to accommodate higher margins on those which add more value.In this case,the sum of the package will always be greater than i

147、ts parts.To drive loyalty and advocacy,the retailer can further adapt and iterate the services it is providing to build out new areas of consumer need.One package may initially cover diet through a tailored meal-kit subscription,but could see the addition of personalized vitamin supplements or consu

148、ltations on wellness and fitness.A consumer that starts on their journey with a problem-solving retailer may take up only a fraction of the services provided,but as the retailer becomes more indispensable,the scope of those services will increase and potentially grow to include meeting the needs of

149、the whole household or family.Delivering consistent and relevant services will enable problem-solving retailers to increasingly integrate the products and services they sell into the customers lifestyle.This will,in turn,provide them with a deeper understanding of the customer and allow them to cont

150、inuously refine their value proposition based on the feedback they receive and the development of their ecosystem.Technology,through algorithms that can identify opportunities,combined with human expertise pooled between the retailer and its ecosystem partners,will build the trust that enables custo

151、mers to increasingly depend on retailers as a trusted lifestyle partner.To become indispensable,retailers need to take a holistic approach to solving particular areas of need for their customers.This requires much more than just supplying products,they need to develop a holistic value proposition th

152、at bundles products and services,giving customers the confidence to delegate areas of their life to the retailers they trust.28 The Future of RetailThe Future of Retail 29How retailers are delivering indispensability todayThe most relevant examples of delivering indispensability today are the prolif

153、eration of meal kit and food box subscription services,ranging from healthy or organic,to affordable or exotic.But these subscriptions form only part of the value proposition,the ability of retailers to personalize these subscriptions to the consumer have become more prominent.In addition the abilit

154、y to bundle relevant services alongside the products they sell and the recruitment of third-party ecosystem players can add further value to the proposition.For example,in the crowded world of personal care subscriptions,brands like Dermatica and Skin+Me stand out by providing initial digital consul

155、tations that enable them to personalize the products they send.Physical retailers like Walgreens Boots Alliance have gone a step further by building a range of additional services around their prescription business,which include providing access to pharmacists,nurses,dietitians and doctors.In June 2

156、022,the retailer added a clinical trial business to its burgeoning health care division.In other areas of retail,consumer needs can be met more holistically based on what they are buying.Furniture and DIY retailers are increasingly building service offerings that complement the products they sell,in

157、cluding home design solutions and assembly and maintenance experts to enable an end-to-end service for those looking to improve their homes.One example of this is the interior design company Houzz,which has extended its software solutions into different stages of the value chain by adding costing fa

158、ctors,connecting customers with contractors and providing its own lines of furniture.In fashion,the movement toward subscription and rental led by companies such as Rent the Runway is evolving into much more rounded service offerings,with fast fashion giants such as H&M incorporating subscription an

159、d rental models alongside initiatives for repairing,reselling and recycling clothing aimed at lengthening their relationship with their customers as well as improving their environmental footprint.Service-led models are also increasingly curating and advising consumers in fashion through tailored pe

160、rsonalized services such as StitchFix.All these point to retailers gradually filling in gaps in experience and utility for consumers to increase their dependence on the services and products they offer.For example,German retailer Fressnapf began its journey in pet supplies,but has spent over 30 year

161、s expanding its offerings and its ecosystem of partners to incorporate a range of services,from veterinary care and medical insurance to pet tracking and dog walking services across 11 countries.However,in many cases,the jigsaw remains incomplete.Further progress toward becoming indispensable is lik

162、ely to come through a much broader collaborative ecosystem.These ecosystems can then be orchestrated by the retailer,which sits at the heart of them acting as a platform to stitch together the right combination of products and services to deliver holistic solutions that consumers will come to depend

163、 on.Creating indispensable value in the customer lifecycleLoyalty and advocacy The point-of-sale is only the start of a journey for a retailer that holistically improves the life of its customers.Loyalty and advocacy will be driven by the tangible benefits delivered.The customer will develop trust b

164、ased on the positive outcomes that lead to a curated lifestyle.Purchase Products and services are bundled and curated by expert advisors to reflect specific consumer needs.Dynamic pricing ensures a package that brings an inclusive solution at an optimal price.The customer buys an outcome to their ne

165、ed,not a product solving part of that need.Awareness and consideration Identifies multiple solutions to consumer needs in relevant areas(health,finances)and leverages a network of suppliers and service providers to bring them together.The customer wants a retailer to optimize their lifestyle rather

166、than just sell them products.30 The Future of RetailThe Future of Retail 31IntimacyHow retailers can make the act of shopping more important than the products they sellof consumers intend to spend more money on experiences in the future.44%EY Future Consumer IndexWhere invisibility is about saving t

167、ime,intimacy is about spending time.Instead of removing friction,shopping experiences become tactile and sticky.As priorities evolve,retailers that do not save time for consumers must provide a compelling reason for consumers to spend time with them.This means developing intimacy between the retaile

168、r and the customers it serves.Traditionally,intimacy has been a differentiating factor for luxury retailers and brands that focus on service and quality to command a premium on the products they sell.A consumer may want to get through their weekly supermarket shop as quickly as possible,but they wil

169、l spend significantly more time trying out designer handbags before purchasing them.This will usually be under the watchful eye of a dedicated store assistant who is on hand to make suggestions,fetch alternatives and provide refreshments to elevate the shopping experience.Similarly,luxury stores,bot

170、h physical and digital,are not usually stock-heavy,cluttered spaces to race around,adding items to a shopping basket.They are often calm,clean,crisp,spacious and aesthetically pleasing spaces where the customer can breathe and relax.But more recently,intimacy has become more integral to developing t

171、he value propositions of mainstream retailers,especially as both technology and consumer expectations drive new forms of engagement and personalization.Where the sales assistants in a luxury or specialist store might build a relationship with customers from repeated store visits over a period of wee

172、ks,months or even years,mass retail can leverage vast amounts of data to create personalized experiences which represent new ways to develop consumer intimacy.Underpinning this will be common touchpoints that attract like-minded“tribes”of consumers who see the experience as social,rewarding and fulf

173、illing.As online shopping and home delivery options continue to become more embedded in consumer behavior,the role of the physical store is shifting from somewhere that retailers can“pile them high and sell them cheap”to a space that consumers might want to spend time in.Experiential concept stores

174、are growing in prominence and popularity,driven by the need to reinvent empty spaces that once held stock.Consumers are increasingly visiting stores for an experience while buying products from the same retailer through online channels.The Future of Retail 3332 The Future of RetailA value propositio

175、n with a strong focus on intimacy centers on delivering an experience that appeals to the individual consumer.As data enables retailers to understand their customers better,a high-touch approach will also add more interactive elements to bring the value proposition to life and engage customers.This

176、could come in the form of integrating with social and digital media,or by gamifying the experience to make customers more willing to spend time,and money,with the retailer.Alternatively,it could come in the form of highly attentive and personalized services and assortments that not only exceed the n

177、eeds of customers,but also reflect their sense of purpose,making them see that their shopping supports their values.Expert staff who share the enthusiasm of their customers for the products and services they sell,coupled with deep category expertise,will also drive value creation.After all,a sommeli

178、er is always better equipped to sell wine than a checkout clerk.Experience neednt always be personalized to individual customers.In fact,excessive personalization may lose some of the theatre and serendipity that consumers enjoy when shopping.Customers who enjoy great experiences may end up buying p

179、roducts they would never have considered otherwise,so curation needs to be balanced with coincidence.Physical and digital spaces can be given over to hosting events such as cookery classes,fashion shows,community events or concerts where the act of shopping becomes a secondary activity to the custom

180、ers who spend time there.By reflecting the values of their“tribe,”retailers can also convene and engage with like-minded communities,bringing consumers who share common values together to socialize and interact.In doing this,intimacy also opens the door to generate other revenue streams and elevate

181、the retailers relationship with customers beyond just selling products.How intimacy works for the retailer and the consumerSuccess for an experience-led value proposition depends on the loyalty and advocacy retailers can derive from the customer as part of a long-term relationship.By transcending co

182、nsiderations of convenience and price,an intimate value proposition will integrate into a consumers life by applying physical and digital channels of engagement to enrich their lives.As transactional retail models lose relevance,delivering intimacy will position retailers as a trusted confidant to t

183、he customers they serve.A value proposition that focuses on integrating into the customer lifecycle through intimacy will deliver most effectively by creating a lasting relationship that continually engages the customer on what they care about most.Consumer awareness and consideration of the retaile

184、r will come from how the retailer reflects the values and aspirations of their target consumers.So,intimate value propositions should avoid being all things to all people.Instead,retailers should identify their core values and purpose and then engage with the communities,or tribes,that best reflect

185、those values.In many ways,this requires applying and understanding data from a range of first-party sources to develop a much deeper understanding of customers and enable a degree of personalization that can be scaled,not only across consumers but also across contexts.This will ensure that the exper

186、ience that delivers intimacy is always relevant and tailored to the right occasion.Unlike invisibility,the customer will care deeply about the products they buy and assortments in this space will need to be carefully selected to align with their values and help to deliver to their aspirations.Equall

187、y,the physical and digital spaces used to showcase these assortments need to provide another compelling reason to attract customers apart from the product and service they purchase.Delivering this to enable a relationship beyond the transaction will require a blending of digital tools that can help

188、to gain a deep understanding of the customer and drive immersive social and digital media experiences.These must be augmented by strong human touchpoints that also reflect the authenticity a retailer can have reflecting the values of the customers they choose to serve.If the customer engages with th

189、e experiences a retailer provides and feels a shared sense of purpose reflected in the products and services they sell,they will remain loyal advocates of the retailer,driving a virtuous cycle as the retailer recruits more like-minded customers into their circle of trust.Retailers must provide a com

190、pelling reason for consumers to spend time with them.“34 The Future of RetailThe Future of Retail 35How companies are delivering intimacy todayCustomer experience has been a buzzword in retail for many years,but in many cases,what constitutes experience remains secondary to the products being sold.M

191、any retailers experiment with experience in specific locations,such as in flagship stores,as a means of scaling successful pilots more widely.Examples of delivering intimacy today span from repurposing in-store space or building communities around store,to providing highly personalized services.For

192、example,skate wear brand Vans has not just been opening stores to engage with the skateboarding community.It has also been opening skate parks,both physically and digitally through platforms such as Roblox(where you can customize avatars with Vans-branded products).Vans flagship store in London is a

193、 30,000 square foot space repurposed to include an art gallery(including graffiti art),a restaurant,a cinema and a skate park which offers skateboarding lessons.The space is also used to host concerts and other events,building significant goodwill within the skating community and making the products

194、 Vans sells almost secondary to the brand values it represents.AS Watson has taken a more personalized approach by launching an AI-powered skin analyzer that uses computer vision to allow for detailed product recommendations based on biometric data,along with personalized services such as virtual tr

195、y-on tools that can be accessed both in-store and online.For a more human touch,department stores from Nordstrom and Saks to Macys and John Lewis are increasingly offering the services of personal stylists to build stronger customer relationships as one-to-one services offered by retailers become mo

196、re accessible outside high-end luxury stores.Even grocery retail formats usually associated with delivering convenience are developing experiential capabilities.Existing capabilities such as in-store butchers,stylists or consultants could be augmented to provide deeper experiences through interactiv

197、e in-store displays,hosting cookery classes and hosting,or sponsoring,events in support of local community activities.These could elevate the store to a social space,not just by bolting on a quick-service restaurant,but by bringing together consumers to build a community around the retailer.As exper

198、iential pilots gain scale and filter down from luxury and specialist retailers into mainstream and discount retail,the ability to deliver intimacy through differentiating on more than just price and convenience will become a key component in enabling customer retention and loyalty.This will be espec

199、ially important against a backdrop where customers have greater transparency and choice in the products they buy and the retailers they choose to buy them from.of consumers are excited about spending money on things that will improve their lifestyle.43%EY Future Consumer IndexCreating intimate value

200、 in the customer lifecycleLoyalty and advocacy Regular interaction with high-touch engagement will create lasting relationships with a retailer that uses tailored experiences to continually delight its consumer tribe.Loyalty and advocacy will come from shared values and positive experiences.Purchase

201、 The product is a secondary activity to the other benefits that shopping with this retailer brings.A transaction is personalized to fit around the experience that frames it.The purchase is a by-product of the shopping experience a retailer delivers.Awareness and consideration Using prominent digital

202、 and physical concepts to amplify purpose and activities to specific consumer segments,supported by targeted engagement strategies.The customer consciously identifies the retailers they want to spend time with.36 The Future of RetailThe Future of Retail 37Bringing it all togetherHow retailers can cr

203、eate a blended value proposition around their core values and capabilitiesIn retail,uniformity is becoming the enemy of success,especially in a world where consumers are saturated with choice,and many are retreating from the increasing consumption that has defined shopping patterns for decades.Those

204、 retailers that thrive must have a point of differentiation in the services or products they offer.Otherwise,they will find themselves in a race to the bottom on shaving margins to bring down prices in a landscape where consumers themselves are more mindful about what they buy.This is an outcome tha

205、t no retailer truly wants and that few can succeed in delivering.As retailers develop and evolve their strategies,they should not fall victim to limiting their priorities to one value proposition,but must,instead,conduct an in-depth assessment of their capabilities and core business values in the co

206、ntext of understanding their consumers and how they are expected to evolve.In doing so,they can define how much they want to apply each of the three value propositions in different areas of their business.In some cases,retailers can seek to create this blend as a means of adding a different dimensio

207、n to their core business model.For example,hard discounters in the grocery sector typically show the greatest strength in delivering invisibility.Consumers visiting their stores are pushed through near identical layouts that have a largely consistent and highly consolidated range of SKUs at highly c

208、ompetitive prices.Their checkout staff scan items faster than the customer can pack them and their store footprints are small enough to race through quickly,while piling shelves high provides maximum exposure to their stock offering.This means that while a typical grocery shopping trip may take 40 t

209、o 60 minutes,a trip to a hard discounter can take less than 30 minutes.But at the heart of this invisibility lies an oasis of intimacy.In countries such as the UK,discounters such as Aldi and Lidl have created what is affectionately called“the aisle of wonder,”where they stock serendipitous seasonal

210、 selections ranging from power tools to childrens toys and everything in between.This elongates the time consumers spend instore,driving up impulse purchases of soft furnishings or kitchen appliances and providing a unique and differentiated shopping experience for every store visit.As a result,the

211、discount grocers are increasingly taking market share in new categories such as clothing,where Aldi has launched its own branded Aldimania range.The“aisle of wonder”blends invisibility with intimacyof consumers would prefer to see products repaired rather than replaced.of consumers currently use a s

212、ubscription service from a retailer.67%36%EY Future Consumer IndexThe Future of Retail 3938 The Future of RetailFor other retailers,blending these value propositions may be done through different channels in the same store network.For example,Apples experiential flagships are built around an intimat

213、e value proposition by doubling as exhibition spaces,hosting live events and offering free classes and courses to their customers.But they are also designed to offer indispensability,with in-store“Genius bars”offering advice and repair services.More recently,Apple has built out a retail channel dedi

214、cated to invisibility through its Apple Express stores,where customers can quickly collect items bought online and pick up essential accessories without having to spend as much time browsing for what they want or queuing up behind people who dont know what they want.By developing a strategy that see

215、ks to deliver degrees of invisibility,intimacy and indispensability through distinct channels,retailers can create the capabilities to deliver a contextual experience based on the needs of their customers at any given time.However,this contextual approach doesnt need to be siloed between channels.Re

216、tailers such as Nike have worked hard to integrate indispensability,intimacy and invisibility into a broader ecosystem of digital and physical spaces.Nikes range of concept stores span differing experiential priorities,from serving distinct communities to delivering personalization or gamification.T

217、hese are tied together through an app ecosystem that boasts hundreds of millions of active members where seamless personalized shopping experiences can go hand in hand with fitness advice and access to communities of shared interest or sporting clubs.While this stops short of a full-service offering

218、,it demonstrates the opportunity to build out a strategy that spans areas of brand strength,corporate values and business capabilities.Different channels can confer different experiencesBy developing a strategy that seeks to deliver degrees of invisibility,intimacy and indispensability through disti

219、nct channels,retailers can create the capabilities to deliver a contextual experience based on the needs of their customers at any given time.Using the three Is to identify future business needs.Creating a more sustainable service-led business in fast fashionToday:Leveraging its store footprint and

220、quick turnarounds to deliver convenient,affordable fashion to the consumer with minimal friction.Experiences are limited to flagship stores.Invisibility Time saverInvisibility Time saverIndispensability Problem solverIndispensability Problem solverIntimacy Experience creatorIntimacy Experience creat

221、orTomorrow:A business model founded on sustainability and circularity which integrates repair,resell,rental and recycle capabilities into a service-led value proposition.“40 The Future of RetailThe Future of Retail 41Three questions for retailers to considerWhat are my capabilities and values today?

222、Retailers can build from a position of strength by looking at what their current value proposition brings and how it resonates with the changing market around them.Tangible assets such as their physical and digital footprint,their business infrastructure,their ecosystem network,their existing assort

223、ment of goods and services,and their financial strength can be assessed alongside more intangible resources such as their core values and commitments,their brand value and its associations,their understanding of their customers,and their operational data.When combined,these will give a retailer an i

224、mmediate sense of how they balance invisibility with indispensability and intimacy in their business of today.What do I need to become tomorrow?Retailers can set the KPIs they hold themselves accountable for in the current business climate against those that will confer or create value in the future

225、.These will require an understanding of where their customers will be,what their expectations might be and how best they can serve those expectations with the right talent,technology,ecosystem and infrastructure.These KPIs could include reducing friction,increasing the scope of relevant services,dev

226、eloping the right experiences,creating transparency and trust with their customers,and defining a sense of purpose that will appeal to those they most want to engage with.This will enable them to see how the balance of invisibility,intimacy and indispensability might shift in different areas of thei

227、r business as they build for the future.What building blocks will I need to apply to todays business to deliver tomorrow?A retailer that knows its strengths and has a clear vision of what it wants to become,can plan to develop its capabilities by directing them toward anticipated customer needs of i

228、nvisibility,indispensability and intimacy.Some elements such as integrating and extending its analytics capabilities to develop a deeper and broader understanding of its business and the customers it serves will span all three core value propositions,while others may be more aligned to a specific ar

229、ea.For example,shoring up delivery networks and building demand-sensing capabilities integrated into IoT lends itself to developing an invisible approach with customers.Meanwhile,investing in media or community-led capabilities would be more in line with deepening intimacy.Developing a platform stra

230、tegy to build opportunities for partnerships and collaborations would align more closely with indispensability.Any retailer building for the future should consider elements across all three areas.To find the right blend of invisibility,indispensability and intimacy,retailers need to look at the mark

231、et forces outside their business to shape an adequate response to the changing consumer landscape.But change should also come from within,and retailers must explore their own operational capabilities and needs to ensure they have the right foundations in place to build future relevance.Here are thre

232、e questions that retailers can ask themselves today to ensure they can shape a preferable future.What are the technology requirements to integrate seamlessly into customer lives?Cashier systemsWebshopFrontendsolutionsBackendsolutionsLoyaltyPaymentsolutionsAppsCustomerdatacloudServicemoduleAnalyticsP

233、artnerecosystemIn-storeoperationsIntegrationOrchestrationPredictionIoTDigitaltwinBlock-chainProcess miningAIMLMaster dataAnalyticsBPIBotsRPAFinanceSupplychainHRDatalakeForecastingandreplenishmentProcurementRealestateInvisibility-the time saver Seamless omnichannel experience Quality of master data D

234、ata security Clean and stable core Standardization InteroperabilityIndispensability-the problem solver Agility,InnovationSpeed Customization Insights from data Decoupling frontends from backends,XaaSIntimacy-the experience creator12342 The Future of RetailThe Future of Retail 43ConclusionBuilding a

235、future-fit retail organizationWhile the key tenets of product,place and price arent going anywhere,what they mean to customers and retailers is changing.Products are increasingly being customized to meet individual consumer preferences and incorporate new expectations of service.Place is no longer s

236、imply a location,but now means being wherever the consumer is,whenever they need something.Price is being re-interpreted to reflect intangible elements such as impact on time,people and the planet.Customer-centricity,which has been a neglected mantra of retail for decades as retailers sought to buil

237、d businesses predicated on scope,scale and efficiency,is becoming a much more tangible goal.In truly putting the customer first,retailers can increasingly align their strategic value propositions around solving distinct areas of consumer need by making their lives easier(invisibly saving them time),

238、making their lives better(becoming indispensable in providing lifestyle solutions)and making their lives more fulfilling(delivering intimate experiences).A key challenge that many current retail business models have is that the focal point of value creation continues to lie in the transaction.Many r

239、etail KPIs point to the financial value generated per square meter of store space,the average size of shopping basket or the traffic conversion rates for online store visitors between browse and checkout.But this is only one stage in the customer lifecycle that points to retailers often providing fo

240、r a short-term need rather than engaging in a longer-term relationship.services together.If a customer buys their weekly groceries with one retailer,they may still choose another the following week.Buying discretionary products like clothing,household appliances or consumer electronics will often in

241、volve shopping around for the best option and choosing the best combination of price,quality,values and service.In building a future-fit retailer,it is important to consider the entire customer lifecycle and set KPIs that explore the lifetime value of the customer in terms of the systemic value that

242、 retailers can create for themselves,their consumers and their ecosystem.This holistic approach might include assessing how much time they save for themselves and their customers,the level of experience they apply to drive loyalty and advocacy,and the way they can leverage a network of partners to d

243、eliver more,and better,products and services together.of consumers feel that they have more possessions than they need.of consumers expect to buy more second-hand products in the coming years.43%38%EY Future Consumer IndexThe Future of Retail 4544 The Future of RetailHow retailers shape this into th

244、eir value proposition will depend on their core business capabilities,their aspirations for future value creation and the purpose they wish to promote in the market.Some retailers may see their biggest opportunity by embedding into communities and acting as hubs for connecting local people with loca

245、l products.Others may see opportunities to engage with digital communities by creating immersive and interactive spaces in the metaverse.Still others are already transitioning their business models to accommodate adjacent opportunities in the media,sports,health care or technology.Many may just opt

246、to give their customers what they want as quickly and seamlessly as possible.While the business models of today generate revenue by selling brands to the consumer,those of tomorrow may rely on selling access to consumers back to brands,or they may create value in entirely different ways through fina

247、ncial services,data or events that take primacy over the act of shopping.In all these cases,retailers that develop their value propositions around the right blend of invisibility,indispensability and intimacy can track the value they create beyond the transaction and create the right contextual expe

248、rience for their customers time and again.This enables them to reach the fourth“I”of integration by being welcomed into the customers circle of trust.Those that fail to embrace this run the risk of another“I”:irrelevance.Build on capabilities to create the right foundationIn truly putting the custom

249、er first,retailers can increasingly align their strategic value propositions around solving distinct areas of consumer need by making their lives easier.“46 The Future of RetailThe Future of Retail 47EY exists to build a better working world,helping create long-term value for clients,people and soci

250、ety and build trust in the capital markets.Enabled by data and technology,diverse EY teams in over 150 countries provide trust through assurance and help clients grow,transform and operate.Working across assurance,consulting,law,strategy,tax and transactions,EY teams ask better questions to find new

251、 answers for the complex issues facing our world today.EY|Building a better working worldEY refers to the global organization,and may refer to one or more,of the member firms of Ernst&Young Global Limited,each of which is a separate legal entity.Ernst&Young Global Limited,a UK company limited by gua

252、rantee,does not provide services to clients.Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via member firms do not practice law where prohibited by local laws.For more information about our organization,please visit .2023 EYGM Limited.All Rights Reserved.EYG no.002378-23GblED NoneThis material has been prepared for general informational purposes only and is not intended to be relied upon as accounting,tax,legal or other professional advice.Please refer to your advisors for specific