Retail is rapidly evolving and many of yesterday’s storefronts no longer exist. Gone are the Woolco’s, Radio Shacks, Gottschalks, Casual Corners, Ben Franklins, Mervyn’s, Montgomery Wards, and Miller Outposts of a bygone era.

While we still have some people predicting the death of traditional bricks and mortar storefronts, the reality is much different.

Physical stores are hardly going away. Retailers like Apple, Costco, Nordstrom, TJX, Dollar General, H&M, Ulta, Dollar Tree, Aldi, and Sephora are not only thriving, but plan to open thousands of new stores over the coming years.

Yes, ecommerce is making inroads, but it has taken roughly 25 years for ecommerce to reach 10% of retail sales in the U.S. At the same time, 16.4% of total retail sales in the U.K. came from the Internet

The retail industry continues to grow. Even in physical stores, overall sales continue to grow, albeit at a far slower rate than online shopping.

However, the changes happening in retail are far more nuanced than something we can derive from a single statistic. The percentage of e-commerce sales varies tremendously by product category, from around 2% for groceries to more than 20% for apparel to the overwhelming majority of sales in categories where products can be digitally delivered, like music, books, and games.

In the late 1990s, many were predicting the demise of physical stores altogether. Even today, many are still thinking in terms of a “retail apocalypse.”

What’s more likely is that sometime in the future we will hit “peak ecommerce.” That means we reach the maximum percentage of online sales, what some might describe as a hidden barrier, that can’t be crossed.

For me, peak ecommerce is a useful working theory because it begs the questions – how long until we reach it, and how high will it go?

Is there such a thing as peak ecommerce?

Let’s start by asking what it’d look like to have 100% of our retail purchases in the U.S. done online.

• Ten times as many delivery vehicles
• No malls, shopping centers, or retail stores of any kind
• No restaurants, coffee shops, bars, or nightclubs
• With grocery delivery, no personal selection of fruits, vegetables, flowers, or meat
• No beauty salons, nail shops, dog grooming, bike rental, banks, or fitness places
• No movie theaters, escape rooms, yoga classes, trampoline parks, health spas, dance studios, martial arts training, sensory deprivation tanks, or game salons
• No local sales tax for cities and local communities
• Very few places left to go and do things
• A complete reworking of all traffic patterns

Most of us would agree that this is not a likely scenario.

Yes, there may be scenarios where we still have stores, restaurants, and shops and every purchase is made through a personal device, but making a payment online is not the same as making the entire purchase online devoid of any retail experience.

If we consider the social nature of shopping and the number of places we frequent on a daily, even monthly basis, it becomes hard to imagine a world without markets.

For these reasons, and more that I’ll explain below, I would be hard pressed to find an argument for ecommerce to ever go above 30%, and it may indeed top out somewhere below 20%.

That said, retail is a brutally competitive marketplace that is not well described by a single data point.

How much will automated delivery affect your desire to purchase products online?

Are we facing a retail apocalypse?

There are still many who believe that most shopping will ultimately be done online, that commercial districts with brick-and-mortar stores are doomed, and that anyone who doesn’t agree with them is a relic of the past.

On the other end of the spectrum are the physical store cheerleaders that acknowledge the retail climate is changing, think traditional retail will pull through because, retail itself is still growing and after all the hype, even now, ecommerce only represents a meager 10% of all retail.

Neither of these are safe assumptions in our rapidly changing world. Every aspect of the buying-selling process is getting rethought, experimented with, tweaked, reengineered, and reimagined.

Our next generation retail pioneers are already in the process of dissecting and reassembling concepts of ownership, first impressions, product placement, purchasing environments, payment schemes, product lifecycles, delivery methods, the human-product relationship, and even the value and nature of possession.

No one-size-fits-all formula

In the past, consumers had relatively few options for finding and purchasing an item. Storefronts, catalogs, mail-order, tradeshows, and traveling salesmen accounted for most of our options.

Today, Amazon alone has roughly 1.8 million sellers adding another 1.3 million new products every day. Around 50% of all sales on Amazon marketplaces come from third-party sellers. This means people spot a product on Facebook, Twitter, Instagram or LinkedIn before making it to the purchase page on Amazon.

If you happen to be an inventor and develop a new product, does this mean you should focus on Amazon as your primary channel of distribution? Not necessarily.

Amazon still lacks the intimacy of talking to a sales person, having a product demo happen in front of you, feeling the fabric, tasting the food, smelling the fragrances, laying down on a mattress, having a person help you understand your choices, and personally testing the results.

By its very nature, retail will forever be a fragmented multi-option, multi-channel industry where the true innovators are constantly rewriting the rules of engagement.

Are shopping malls dying?

Even though regional malls, and their department store anchors, have been on the decline for more than two decades, the shopping mall industry is still quite viable.

The first threat to malls came in the form of big-box stores and discount mass merchandisers. The latest wave of disruption has come primarily from a surge of off-price and dollar stores. So while it’s easy to point the finger at online shopping, it’s only a piece of a much larger equation. At the same time, due to a surge in popularity, malls had gone through a rapid over-building phase and a correction of some kind was inevitable.

With shifting demographics and traffic patterns, many older malls lost the “relevance” battle to new malls. As a general rule, a newer mall with more desirable tenants will always win over an older mall that still appeals to yesterday’s trendsetters.

Finally, A-list malls are doing very well. This includes a group of 270 or so malls that represent about 20% of all locations, but they generate roughly 75% of total mall revenue. For the most part, these malls are unaffected by the closure of anchor tenants, and any specialty shop vacancies are quickly snatched up.

This is not to say that malls won’t die a painful death or be radically transformed. Rather, our need for finding an endpoint seldom matches with the reality of what’s happening in the trenches. More than likely, malls will still exist in one form or another even a thousand years from now, but consumers will interact with them in radically different ways.

How will ecommerce change in the future?

Twelve forms of future retail that haven’t arrived yet

So what comes next? How will retail morph and transition over the next decade or two? Here are a few options that may be added to the list:

1. Driverless mobile shopping

The number one challenge of traditional retail has always been driving customers to the store. As we move into a highly mobile marketplace, businesses can drive to where the customers already are.

2. Retail as a service

In this scenario, products are not purchased, but simply used for a time and returned. This already exist on some levels but may be expanded in unusual ways.

3. Slashcasters

Taking the “blue light special” to the next level, Slashcasters are a new breed of pitchmen geared to entertain audiences at retail showcases. Slashcaster events will be framed around our growing need for unique one-of-a–kind entertainment designed specifically to create an over-the-top shopping experience.

4. Hyper-individualized come-to-your-home customized products

With this kind of personalized shopping, your private team of professionals will show up at your door to step you through every detail of specialty products ranging from clothing, to shoes, to makeovers.

5. Experts shops

People love to talk to the experts and find answers for those nagging questions that create a cloud of uncertainty around most consumer products. The Apple Stores are a perfect example of an “experts shop” because each of their employees is an expert on the products they sell.

6. Maker districts

Where customers witness the making of products being sold. A maker district can best be described as a cross between an artist colony, farmers market, woodworking shop, music festival, bakery, brewpub, and brainstorming session all happening in the same space. It’s all that and more.

7. Model-driven click-to-buy

Imagine an engaging model working as a human billboard, wearing a 4K video t-shirt, where the t-shirt is looking at the audience as much as the audience is looking at him or her. The model’s primary objective is to garner impressions and sell products, as many as possible.

8. Mystery-driven experience shops/

Most people are already shopping for surprises, so in this type of discovery-your-own-adventure shops, participants are treated to a sprinkling of breadcrumb experiences that will help lead them to the ultimate and final pieces of the puzzle.

9. Certified one-of-kind shops

Every item for purchase is guaranteed to be original, one-of-a-kind merchandise.

10. Mobile mall

Set up as a large open-space building, every morning dozens, maybe hundreds, of mobile vendors show up and set up shop in new and different configurations. Mobile malls are similar in many ways to the Docking Shops.

11. Docking shops

Docking shops will be designed so mobile businesses can “dock” and expand into a larger commons area. First envisioned for rural communities where the customer base is too low to warrant a permanent location, a one-day-a-week storefront in five or six communities might be a perfect arrangement.

12. No-Inventory demo shops

One of the major expenses in traditional retail has been managing inventories and shelf space. Look for a new breed of retails shops that carry no inventory, only product demonstration stations with the ability to order on the spot (to receive a discount).

Final Thoughts

How long before we reach peak ecommerce? After studying consumer dynamics and examining our human need for social interactions, it looks to me like we will reach peak ecommerce by 2030 and peak somewhere around 20%.

At the same time, much our current retail environment will transition to experience-based products with a heavy emphasis on shared connections.

Naturally, when it comes to retail, consumers are in control. They decide what to buy, where to buy, when to buy, and how much they’re willing to pay.

In a connected world, where information is fluid and transparent, retailers become actively engaged in the global conversation. If not, their customers will begin the conversations without them.

Physical stores still provide the best way to create a high-value relationship with customers and build a branded experience.

Bricks and mortar stores are not going away any time soon, but the value they add to their communities and the variety of products they offer will remain in transition for the foreseeable future.

Slashcasters, a new breed of pitchmen for the digital age of retail

I was recently asked to do the keynote talk at a retailer conference in Orlando, Florida speaking on the topic of what the future of retail may hold. At one point in the conversation, the caller made the comment that one of the biggest problems in retail is that consumers are evolving faster than retailers can adapt.

In a digital world where shoppers have a very easy time of bouncing around websites to find the products that match their interests, and at a bargain price, traditional retailers have been left at a significant disadvantage. Add to this free shipping, no sales tax, and a far more efficient system for matching buyers and sellers and it is suddenly not hard to understand why retailers in the physical world are going out of business.

However, one piece that traditional retailers haven’t taken full advantage of is their ability to add an experience to the sales process. For this reason I’ve conceptualized a new tool that will allow retailers to recapture some of their lost market appeal. This tool involves a new breed of pitchmen well-suited for the digital age of retail. Using a new term I’ve coined, I refer to these people as the Slashcasters.

Brief History of Retail

Over a century ago, when food and supplies were relatively scarce, general stores sprang up as an important cornerstone of every town. Shoppers had few options and most were thankful to come across whatever limited supplies were available.

Working in a general store involved little more than putting products on a shelf. There was hardly any need to be organized because people would find whatever was for sale and buy it.

Over time, the number of available products began to grow and customers became increasingly picky about what they purchased.

In 1893, Richard Sears formed a partnership with Alvah Roebuck and the catalog business sprang to life. By 1894, the Sears catalog had grown to 322 pages, featuring sewing machines, bicycles, sporting goods and a host of other new items. By the following year, dolls, icebox refrigerators, cook-stoves and groceries had been added to the catalog.

Oddly enough, between 1908 and 1940, Sears sold over 70,000 ready-to-assemble houses. Shipped via rail, these kits included all the materials needed to build a complete home.

Throughout the 1900s retail, as an industry, was constantly evolving. General stores morphed into department stores, discount stores, convenience stores, and shopping malls. Warehouse clubs, hypermarkets, supermarkets, and big box retailers were all added to the mix and shoppers became far more particular about the products they were associated with.

Online retail sprang to life in the early 1990s, but it wasn’t until 1995 when Jeff Bezos launched Amazon that ecommerce would begin to make serious inroads, attracting a growing share of the retail marketplace.

Some of the most recent innovations in online retail include:

• Affiliate Marketing – The first use of affiliate marketing happened with the launch of PC Flowers & Gifts on the Prodigy Network in 1989.
• QR Codes – Created by Toyota subsidiary Denso-Wave in 1994, QR Codes represent the next generation of interactive bar-codes readable by mobile phones with a camera. QR Codes provide an instant link to websites and other product information.
• Pay-per-Click – The first pay-per-click models were used in 1996 by Open Text and Overture. Today, pay-per-click is the primary revenue engine behind Google.
• Co-Creation – Co-creation is the interactive process of involving prospective customers in the value creation of products. The concept was first introduced by C K Prahalad and Venkat Ramaswamy in their 2000 Harvard Business Review article, “Co-Opting Customer Competence.”
• Deal of the Day – Started in 2004 by Woot.com, hundreds of sites have now adopted this one-day-only strategy for selling products through massive email campaigns. The industry leader today is Groupon.

Forrester Research is predicting that 2010 total online sales will reach a staggering $173 billion in the U.S. alone.

Retail Trends

Rest assured, the retail industry is not about to stop evolving anytime soon. Here are a few of the more important trends to pay close attention to:

• Extreme Target Marketing – With the explosion of data from the Internet, cell phones, and credit cards, the people who can make sense of it all are redefining our world. Every personality trait that can be sorted mathematically defines the basis for an entirely new market.
• Hyper-Individualized Products – Long gone are the one-size-fits-all ideas when Henry Ford famously stated, “you can have any color you want as long as it is black.” We now believe there is a product available to solve every problem, need, or desire we might have. Our increasingly sophisticated communication system enables us to customize and personalize products like never before.
• Community Building as a Market Strategy – According to the recent Tribalization of Business study released by Deloitte, 94% of businesses will continue to increase their investment in online communities and social media. Every customer becomes a member of a buyer community, and these communities need ongoing attention, nurturing, and a voice in the process.
• Mobile Storefronts – Markets are changing quickly and it is becoming far more difficult to justify a retail storefront tied to a 10 year lease. For this reason, mobile storefronts are becoming a popular option with their ability to quickly adapt to consumer shifts and bring the products to the people as opposed to forcing the people to come to the products.
• Untethered Payment Systems – Competition is heating up in the pending war over credit card readers that work with mobile phones. At stake is the growing category of mobile merchants, as they promise significant improvement over the clunky, hardwired credit card terminals that have been a staple of brick-and-mortar commerce for decades.
• Any Product, Anywhere Purchasing – Google Goggles will soon be giving you the tools to purchase any product you happen to come across. While still crude in its application, Goggles will enable any handheld device with a camera to be pointed at an item, and with a combination of object recognition software, barcode and QR code readers, pull up information about the product from the manufacturer, and give the person an instant “buy” option.
• Physical Products = Physical Limits, but Digital Product = No Limits – Our physical residences have clear limits as to how much they can hold. Many baby boomers are beginning to shed their physical belongings as they prepare for retirement. However there are no limits to the number of digital products we can own. In the future there will be a significant movement toward minimizing physical and maximizing digital.
• The Coming Collapse of the Sales Tax System – The sales tax system has become increasingly unworkable, giving an unfair advantage to online retailers. Look for a major overhaul to happen in the coming years.

Shopping for Surprises

People who wander through retail stores are looking for surprises. For some the surprises may be subtle things. “I didn’t know it came in blue.” Or “Wow, that’s really a good price.”

However, the high amperage media laden shoppers of today need far more stimulation to get their attention. Every product needs a story, and the boxes, packaging, and surrounding commercials can only go so far.

We are shifting from a product-based economy to an experience-based economy. Our reputations are based on our experiences, not what we own, and in most cases, our experiences are now considered to be more valuable than products.

For this reason, people are typically willing to spend more on a product that comes with an experience over one that doesn’t.

Introducing the Slashcasters

Much of the commercial retail space in America today is witnessing an implosion caused by a combination of forces – losing market share to online retailers, rising cost of personnel, utilities, and sales tax, a fickle consumer base, demanding hours, and more risk than aspiring retailers are willing to take on.

But this is about to change with the introduction of Slashcasters, an entertainment-based retail experience inside malls and other kinds of stores. Think QVC meets Groupon meets the Blue-Light Special with a dash of the Riddler from Batman thrown in to make things interesting.

Every Slashcaster event will be staged around a charismatic pitchman (or pitchwoman) who brings products onto a stage, tells a story about them, and slashes the prices. But the events will be far more sophisticated than that.

Tons of on-line and offline marketing will be used to drive crowds to the events. Some will require that you be present to participate, others will be broadcast live over the web, but will involve customers picking up the products in person. Since the driving motivation behind this is to bring more people into the stores, there will typically be a requirement for customers to make an appearance.

Much like the deal-of-the-day sites, Slashcasters will be offering deep discounts that are only available for a short period of time. Some will involve limited inventory – “only 3 available at this price” – while others will involve a limited time offer – “for the next 30 minutes.”

Slash-casters will serve as a bridging engine between retail storefronts and the online world. Physical storefronts have some distinct advantages that few have bothered to exploit, the most significant of which is human interaction. People are very competitive by nature, and when directed by an energetic personality, a crowd of would-be buyers becomes a symphony of flowing energies waiting for the conductor’s next move.

Powerful and Outrageous

Slashcasters will constantly be pushing the envelope. Each event will be different, and most of the time every product will have a different sales process. Some products will be advertised in advance, but most will be unveiled at the show. Some will involve ridiculous games and antics to increase the entertainment value of the event. Some products will come with a set price, while others will be sold through a “Slashcaster-auction” process where prices decrease until someone buys them. Some will involve elaborate schemes such as a store-wide scavenger hunt, free product samples, demonstrations, hitting a bull’s-eye, live music, and the appearance of famous personalities. And some will even involve cause-marketing with proceeds going to a local charity.

While many of these sales tactics have been used in the past, the structure and organization will be framed around the viral storytelling ability of social networks, and the growing need for unique one-of-a–kind entertainment that can only come with an over-the-top shopping experience.

Many Slashcasters will develop a celebrity-class reputation for the work that they do. They will be judged by their performance numbers, but the very best will cause audiences to drive long distances to see their favorite personalities take the stage and “wow” the crowd.

As I mentioned earlier, the retail industry is not about to stop evolving anytime soon. But Slashcasters will represent an important stepping stone towards the revitalization of the human-connected marketplace.