30 PREDICTIONS FOR 2030: THE FUTURE OF RETAIL IN AUSTRALIAConsumers prefer environmentally sustainable products and retailers 85% of Millennial and Gen Z consider environmental protection ‘extremely’ important1, compared with 65% for those aged 65+. With Millennials and Gen Z constituting most of the workforce and consumer market by 2030, retailers will have sustainability part of their branding and business model. By 2050 there will be more plastic in the ocean than fish, with packaging accounting for almost half of all plastic waste. Single use plastic bags have been banned in supermarkets; however, it is anticipated that by 2030, most products purchased will be free of plastic. 60% of beauty and cosmetics retailer Lush’s products in store are packaging free and they are now experimenting with plastic free stores. 2 1The Conference Board® Global Consumer Confidence Survey, conducted in collaboration with NielsenOnline retail is more efficient with packaging and delivery Delivery of several packages to the same household multiple times per week is not only costly and inefficient for supply chains, but also has a profound environmental impact. By 2030 online retailers will transform systems to reduce packaging and number of deliveries. Using algorithms and machine learning, Amazon is creating a streamlined approach to delivery, where all packages are concentrated into a single delivery, increasing efficiency and reducing packaging. Packaging will be recycled and compostable, a concept already being experimented with by Australian retailers such as Nimble Activewear, which incorporated recycled plastic bottles into its garment materials. 3Taking 25% to 35% of sales, delivery services will exert pressure on businesses operating with tight margins. Conversely, food delivery businesses can bolster restaurant sales whilst keeping fixed costs such as rent and labour stable. Outsourcing of food preparation to delivery services will grow. UBS estimates global food- delivery sales will grow tenfold by 2030. Driven by small apartments with less or shared kitchen space, this will put pressure on existing facilities in smaller restaurants’ kitchens and will instead be serviced by industrial, centralised kitchens. This will see central retail locations with good access potentially transformed into dark delivery kitchens which have a basic set up, significantly reducing fit out costs. 4 Food delivery services continue to grow Shopping centres will become the new high streets, fostering community and social interaction. Containing several non-retail uses including community facilities, co-working space and last mile collection facilities, centre footprints are expected to shrink in response to growth in e-commerce, backfilled by a range of non-traditional uses. Many public transport networks are integrated into shopping centres, making them optimal locations for community facilities such as medical centres, libraries and childcare. A larger focus on leisure, children’s play centres, recreational facilities, gyms and cinemas will see these uses taking up large areas vacated by discount department stores and full-line department stores. 5 Shopping centres are ‘hubs’Traditionally, wholesalers purchase products at bulk prices to sell to consumers at a higher rate, doubling or tripling profits while providing retail space, infrastructure and labour to complete transactions. Advances in technology and supply chains will see manufacturers become the new retailers, with consumers buying directly from the manufacturer, eliminating the need for some types of wholesalers. This reduces overall costs for consumers and provides manufacturers with greater profits. This will be especially prevalent in the luxury sector, a traditional source of revenue for department stores. Department stores will be sidestepped in order to buy directly from the retailer’s physical store or online. 6 Manufacturers the new retailers Shrinking levels of car ownership will reduce basket sizes, resulting in more convenience- based supermarkets. These supermarkets will proliferate in infill locations with high-density housing and will stock a range of ready- made meals, competing against take away food and local high street retailers. These supermarkets are currently expensive to run, with wages often running above 13% of revenue compared to 9% in full-line supermarkets. Waste, shrinkage and other operating expenses are also higher in these stores. By 2030 a critical mass of demand will enable higher profitability in convenience-based supermarkets and they will become prominent in the retail landscape. 7 Convenience-based supermarkets proliferatePureplay online retailers are increasingly opening physical retail stores, enabling them to build brand recognition and engage with customers, indicating that physical retail will continue to be important in 2030 and beyond. Stores will be a place for customers to try products before purchasing online and having them delivered, complementing online offerings and allowing customers to interact with products. Increased efficiency means no need for back-of-house areas to store stock, increasing sales densities and reducing rent. A focus on sales density and branding will see retailers open in prime areas and close in secondary locations, leading to higher vacancy and transformation of secondary areas into other uses. Physical retail operates as showrooms, shrinking retail footprints 8Augmented reality central to the consumer experience Augmented Reality (AR) will enhance the physical buying experience. Shop windows will become virtual stores after they close, creating interactive content and allowing purchases through facial recognition or mobile payment. Apps will allow customers to see products as they appear in their home, virtually apply make up, or try on apparel and accessories. AR incorporated into products will provide additional information, resale opportunities or unique experiences. Adidas has produced a pair of sneakers with a scannable tongue, prompting a game to be downloaded and allowing the sneaker to be used as a controller. 9Next >