5 Trends That Are Radically Reshaping Shopper Marketing

Brands take retail real-time with VR, beacons and other tactics

Malls are lumbering, claustrophobic dinosaurs, while anchor stores like Macy's and Kohl's are shuttering hundreds of locations. Fresh Direct and Peapod make it easier and quicker to stock a cupboard than wading through the jam-packed neighborhood Kroger, and Amazon and eBay and Overstock sell, well, everything.

Who needs retail anymore?

In fact, 71 percent of U.S. consumers say they still prefer to buy from physical stores even if the same products are available online, according to a recent TimeTrade survey, which also found that 85 percent like to shop in stores because they say they want to "touch and feel" items before buying them.

Online shopping accounts for only about 9 percent of total consumer retail spending, according to the most recent quarterly figures from the U.S. Census Bureau. But make no mistake—everyone from retail behemoths to specialty boutiques is feeling the pressure to adapt more seamlessly to the digital world, to bring in that all-important foot traffic and to deliver an experience that consumers can get nowhere else.

That's a tall order at a time when the average head of household in the U.S. has cut his or her number of shopping destinations by 30 percent since 2010, WPP CEO Martin Sorrell said at the recent Shopper Marketing Summit in New York. The power is squarely in the hands of the consumer, and building brands has never been tougher, he noted.

High-tech bells and whistles (get ready for humanoid robots as sales associates) are only part of the equation, analysts say, and if retailers have their eye only on a consumer's wallet, they're more likely to falter. "Shoppers' most valuable asset isn't their dollars, it's their attention," says Christopher Brace, CEO at Syntegrate Consulting in New York. "Every move should be vetted against its ability to capture the shopper's attention. If it can't, then its relevancy significantly lessens."

Here, a look at the tactics, programs and concepts that retailers hope will do just that: endear them to mercurial, demanding shoppers who use their five senses as often as their smartphones when it comes to buying stuff.

    

Grocers go BOHO

There's no tattoo parlor, as had been rumored before the first 365 by Whole Foods Market opened recently in the Los Angeles hipster haven of Silver Lake. But there is a self-serve teaBOT that will brew a customized cup in 30 seconds, iPads for ordering to-go, a dog-hitching station out front, a coffee shop with beer and wine, organic fruit, responsibly harvested seafood and antibiotic-free meat.

The concept launched as a lower-priced, no-frills version of the chain and as an alternative shopping experience for millennials, looking like a sleek cross between Costco, Trader Joe's and an Apple store. It's an attempt by the parent company to reverse its sagging sales with a smaller, more streamlined, warehouse-like footprint. The Silver Lake store is one of more than a dozen West Coast locations in the works.

It comes as little surprise that Whole Foods—derisively nicknamed "Whole Paycheck"—would attempt to capture this coveted younger demo. Nearly every change in-store—from food to fashion to home goods—is going after millennials, a group that's 80 million cost-conscious digital natives strong. They are projected to spend $65 billion on consumer packaged goods over the next decade, according to a recent study by FutureCast and Barkley, which also revealed that less than half (about 42 percent) of millennials shop at local and chain grocery stores, spelling opportunity for retailers.

Enter 365, with its attached vegan restaurant (New York's by Chloe), curated selection of brands and speedy Apple Pay-equipped checkout. The outposts could eventually house bike shops and music stores.

Analysts have questioned whether 365 threatens to cannibalize the larger Whole Foods stores, but others think the offshoot is a smart strategy. "If it's a less expensive, more elevated shopping experience, why on Earth would millennials be the only ones who'd want that?" says Brace. "If they can make it a success, it won't be for the reasons they think; it'll be because it has broader appeal."

Picture this: the rise of VR

Not only does it seem like a Herculean task to remodel that crummy kitchen, it's tough for most people to visualize how the re-do, if successful, will even turn out.

Home improvement chain Lowe's identified the problem and discovered that consumers were saying "Oh, just forget it" to the tune of some $4 billion in lost revenue per year. That's where virtual reality comes in, with a program called Holoroom that lets customers become DIY masters without ever knocking down a wall.

"We wanted to give people a visceral view of what their project could look like," says Scott Susskind, partner and CTO of SciFutures, which developed the concept for Lowe's Innovation Labs. "The goal was to reduce the barrier and the fear for the consumer."

Holoroom, which has been dubbed "Minecraft for Moms," uses a tablet app to start the process of building that dream room—with Lowe's products, of course. The next step equips consumers in-store with an Oculus Rift headset so he or she can see the results as if they were standing in the middle of their reconstructed space. They can tweak the design and export everything to YouTube 360 and view anytime via Google Cardboard.

The technology, which has been a hit in the 30 Lowe's locations that have installed it, underscores why analysts have dubbed VR the future of retail. Brands that have embraced the technology include The North Face, Toms and Verizon. Also, Samsung and AT&T recently partnered on an activation that had consumers taking a virtual Carnival Cruise via Samsung Gear VR headsets. VR is a feature of the new Samsung flagship store in New York.

Next up: Mobile-enhanced VR experiences and v-commerce (Ikea and luxury retailer The Line have already experimented) once more consumers have their own VR headsets.

Science nonfiction

In an Orchard Supply Hardware store in Palo Alto, Calif., an OSHbot will find you some nails or check the sale price of a hammock. Touchscreen mirrors at a Bay Area Neiman Marcus give you a 360-degree view of the outfit you're trying on and let you share your new look with friends. Smart dressing rooms at Rebecca Minkoff's fashion-forward SoHo boutique in New York can take care of everything from your Champagne order to your vacation wardrobe.

Those are just some examples of what's known as mixed reality, a trend in retail that's blurring the line between ecommerce, augmented reality and brick-and-mortar stores. Some of the executions have merely been tests—among them, shoppable windows at Kate Spade and smart mirrors at Bloomingdale's and Ralph Lauren—but many experts see them as the wave of the future.

"We want to create experiences where we all look back and say, 'How did we ever get along without these?'" says Scott Clear, chief design and innovation officer at RKS in Los Angeles, which worked on the Neiman Marcus mirrors for client Corning. "We'll think that 2015 was the Dark Ages."

Out of necessity, retailers are focusing on solving problems for consumers, often by using the latest technology and the customization and personalization it allows. Cognitive computing will mean that stores recognize a customer much as a shopping site does and make suggestions accordingly.

"Shoppers are looking for ways to make their lives substantially simpler," notes Wendy Liebmann, CEO and chief shopper at WSL Strategic Retail. "Retail is trying to meet specific needs with a mix of both digital and physical solutions."

That will involve what SciFutures refers to as "lower-friction" shopping, meaning that nobody will have to stand in line to pay. Programs are in the works for client Visa, for example, that will enable customers to make their purchases in-store by simply walking under or past designated hot spots.

"The goal is to make the tech as invisible as possible and not distract consumers with the gadgetry," Clear said. "They say what they want, and the tech makes it happen."

I spy with my little I (beacon)