How Smart Cities Will Impact Retail Sales
Who will you meet?
Cities are innovating, companies are pivoting, and start-ups are growing. Like you, every urban practitioner has a remarkable story of insight and challenge from the past year.
Meet these peers and discuss the future of cities in the new Meeting of the Minds Executive Cohort Program. Replace boring virtual summits with facilitated, online, small-group discussions where you can make real connections with extraordinary, like-minded people.
I’m a retailer and retail industry technologist by trade. My early career days were spent in the apparel business. What was known then as women’s better sportswear. Sold through department stores, specialty stores, catalog houses, and those first little e-commerce sites.
For the past many years, however, I’ve viewed the business through a technology lens. For two reasons: my professional responsibilities and the fact that the entire retail industry has been pushed head-first into the digital age – often unwillingly, and with occasional stumbles and screams.
In a few days I’ll be participating in an exciting conference on the future of retail – and, specifically, the retail store — in the new landscape of the so-called connected or smart city.
Will the smart city make a difference for brick and mortar retailing?
We know that many see dark clouds over the traditional retail store. Some observers have declared that an Amazon- and internet-driven “retail apocalypse” has descended upon the land.
It’s simply not true.
US retail is, at present in robust good health, as measured by the most important metric: overall year-on-year revenue. What’s going on is not an apocalypse, but an ever-accelerating, very-Darwinian process of natural selection. This is calling into question the purpose and necessary capabilities of brick and mortar retailing. The brands that are able to adapt to the new realities are winning shoppers. Those that cannot are unable to reach even the low-hanging fruit of today’s retail abundance with their short dinosaur arms.
So what about smart cities?
What difference will they make for brick and mortar retailing? My hypothesis: yes, a connected and smart urban environment will provide fertile ground for brick and mortar success.
But not because of the technology.
Make no mistake – there is a value to the technology-driven capabilities of connectivity and data intelligence. It’s true that the connected and smart urban environment could provide destination shoppers with the do-not-underestimate-it value of efficient parking. It is true that they could provide retailers (and retail real estate owners and managers) with predictive and responsive digital, rich media signage. It is true that they could provide shoppers with high bandwidth WiFi and deep cell coverage, thus enabling the lowest latency and richest mobile content.
However: none of the afore-mentioned value propositions – individually, or in unison – will drive that which drives retail: traffic, conversion, or basket size.
And that’s what pays the bills.
So: how will the connected and smart urban environment benefit brick and mortar retailing?
In a word: traffic.
It will drive traffic:
- When it becomes, in integrated concert with a rich variety of entertainment and dining options, a destination stage set for artisanal and expertise-based specialty retailing.
- When it becomes, due to its attractiveness to the digerati, a place of dense residential living, and thus a valued site for national brands with small, unified commerce formats.
Let’s examine these one at a time.
There will continue to be meaningful demand for brick and mortar shops that offer unique and artisanal products, merchandised (curated) with thoughtfulness and whimsy, and backed (essentially) by on-site expertise. The essential experience here is one of authenticity. The shopper interface can be highly digital or achingly analog – depending upon the brand ethos – and the look can be sleek as Sweden or as gritty as your grandfather’s hardware store, with linoleum on the floor and a bell on the frail entry door.
How do shoppers measure authenticity? Most often in the deep usage knowledge of the proprietors. What low-water flowering plants attract bees and hummingbirds? What lovely Oregon vintage will go best with rack of lamb (and why)? What bag truly completes this look – and is so perfect to use when I travel? What doozit goes with this thingamajig within my 1940-era house? Really? You’ve got one of those?
Retailers of authenticity are, by definition, destinations. Because big box stores cannot, despite all the technology, replicate their expertise. But they need support, both in awareness and in traffic-building, far beyond what small ad budgets and word-of-mouth can bring. What does a smart and connected city do? Encourage them, certainly. But also surround and integrate them with price-point right hospitality and entertainment. Restaurants, taverns, tasting rooms. Live music. Boutique hotels.
Second: as the connected and smart city attracts residential digerati – and a density of population begins to form – there will growing interest in the connected and smart area from national brands that are expanding small, unified commerce formats. These are down-sized stores that fit into urban footprints. Ten to twenty-five thousand square feet, as compared to the 140,000 square feet footprints found in suburbia. With a narrowed inventory tailored to the needs of the urban apartment and condominium owner – and, most importantly, integrating the new fulfillment capabilities of unified commerce.
Think brands like Target or Lowe’s. Whole Foods. Offering busy professionals the option of buying online and picking it up in the close-by store – or, having it delivered to the door within a one-hour slot. Destination retailing, driven by the authenticity of expertise and integration with hospitality and entertainment. Unified commerce retailing, made viable by residential density and appealing household incomes.
This is the future that I see emerging amidst today’s Darwinian natural selection.
What do you see?
Leave your comment below, or reply to others.
Please note that this comment section is for thoughtful, on-topic discussions. Admin approval is required for all comments. Your comment may be edited if it contains grammatical errors. Low effort, self-promotional, or impolite comments will be deleted.
Read more from MeetingoftheMinds.org
Spotlighting innovations in urban sustainability and connected technology
Following such a tumultuous school year where change was the only constant, perhaps there is no greater opportunity for colleges and universities to reimagine their campuses than there is today. To stay relevant in today’s increasingly competitive educational marketplace, schools must embrace the smart technologies that will enhance the collegiate experience and ensure seamless operations regardless of the next crises. By being proactive and planning now, schools can install the robust communications backbone and agile infrastructure necessary to support emerging technologies and create the connected campus of the future.
Small-scale manufacturers are locally owned businesses that produce anything from hats to hardware to distilled spirits to coffee and more. Unlike large manufacturers, they fit into relatively small commercial spaces and are clean, quiet neighbors. Your city might be home to some of these kinds of businesses already.
Given the rapidly changing “future of work” space and the impact on our cities over the last 15 months, I decided to catch up with Robert Hoyle Brown to get the latest trends and insights on where we are now and where we are headed next.
Their new report “21 Places of the Future” touches on the key drivers for the creation of jobs in relation to place. We discussed how architectural heritage is tied to jobs and place. We also discussed how people matter and the future role of philosophers and ethicists in our data-driven world. Given the recent cyber attacks on US companies, we discussed the role of cybersecurity as a driver for the creation of jobs, including the jobs of cyber attack agent and cyber calamity forecaster. And we discussed the future of virtual workplaces. Here to stay, go, or evolve? Take a look.