Agile Retail: Embracing the pace of change

AGILERETAIL
CARLY TYSH
ASSOCIATE DESIGN DIRECTOR

#SPECS2017
#FITCHAgileRetail
@FITCHdesign
@carly_tysh
www.slideshare.net/FITCH_design/presentations
PLEASE JOIN THE CONVERSATION:

1: What we mean by AGILE (and what we don’t)
2: Why it matters today
3: From then, to now, to next
4: Who is taking the first AGILE steps?
5: How do the rest of us get there?
AGENDA

1: WHAT WE
MEAN BY AGILE
(AND WHAT WE DON’T)

If the past few years have been all about experience, we
see the next few as being all about agility.
AGILE is abuzz in the world of retail.

taking these experiences we create at retail, and making them
more adaptable, more responsive and more nimble
AGILE is all about
Trey Ratcliffe

get used to seeing AGILE bolted to anything that moves, and hearing
that agility as a concept is a kind of panacea for all manner of ills
Like all “buzz” words

it’s important to clarify our intent around how we are
using the term, and specifically in the context of retail
In the face of this AGILE epidemic

AGILE RETAIL
ISN’T JUST
FAST FASHION
Although adopting AGILE thinking may well make a retailer faster,
and indeed more fashionable

Our definition of AGILE focuses on the
“means” and not just the “end”
• process
• approach
• methodology
• tools
And the influence working in an AGILE way will have on the design,
evolution and development of a new generation of physical stores

This idea…
of an AGILE methodology was born in the digital world,
and now represents that industry’s standard

characterized by short, intense phases of work, frequent reassessment
and adaptation - version after version, constantly in beta
A way of working…

that applying this AGILE way of thinking and working, will lead us to
a new dawn of physical retail
It is our belief

A truly quantifiable measure of a retail concept’s potential for success
and its long term health as a business proposition
That AGILITY will become a benchmark
David Trauwin

where physical stores finally move from trying to chase digital…
to (re)taking their rightful place at the center of a continuous
retail ecosystem
And that this will lead us to a future…

We’ve discussed why AGILE thinking is
important, but what makes it such a
pressing issue today?
WHY NOW?

Like most of the changes in our world, the need for AGILE is being
driven by emerging and shifting behaviors of next Gen Shoppers
Simply put, the audience is demanding it

that Generations Y & Z are underwhelmed with old school retail
(cue sudden rush of underutilized selfie walls)
We’ve known for a while…

Despite their spending $600 billion per year in the US, retail today is
“under-delivering against millennials’expectations…the capabilities and
enriched services that help make the overall shopping experience
better, faster and more memorable—remain works in progress.”
Source: Accenture MillennialOutlook
GenY has been raising Red Flags for years
Source: Forbes, What Brands needs to know about the Millennial ShoppingJourney, August 2015
“Millennialsare incredibly fast in their shopping journey, any brand
wishing to attract millennial buyers and influence their purchases
needs to keep pace.”

Source: Things Millennials Love & Hate, Business Insider, October2015
“Traditional retail simply doesn’t play to how Millennialswant to buy”
GenY has been raising Red Flags for years
Source: Retention Science, March, 2015
“The biggest problem traditional retailers face today is Millennials”

Loosely defined as today’s 7-21 year olds, a group FITCH describes as
“Shopping in a constant state of partial attention”
And right behind GenY is GenZ
Source: FITCH GenZ report, 2014

Because they live their lives at an increasingly frenetic pace, driven
by nothing short of a new definition of time - mobile time
The biggest reason for AGILE for Y & Z?

for every year physical retail takes to do something new, mobile
has already reinvented itself 7 times over (at the very least)
Which is like dog years vs human years

WHAT’S LIFE LIKE IN
MOBILE TIME?

9 out of 10 Zs multi-task while watching TV
(and only 1% are influencedby ads)
Source: Forrester’s Technographics®, How To Build Your Brand with Generation Z, 2013
What’s life like in mobile time?
Source: Pew Research, Generation Z study, 2015
Almost two thirds would rather their wallet was stolen
than their phone
Source: FITCH GenZ study, 2015
88% have a phone, 73% have phones that are smart

Screens and connections are a natural extension of their being,
unrestrained by the boundaries of time
91% of Zs take devices to bed
And they are comfortable toggling across up to 5 screens, always
connected across their netweave of collaborators
Source: Sparks & Honey, Generation Z 2025 - The Final Generation
Gen Z loses interest quicker than any other generation, with a
given attention span identified at only 8 seconds
Source: National Centerfor Biotechnology, US National Library of Medicine, The AssociatedPress, 2015
What’s life like in mobile time?

is less than the attention span of this guy
Which bizarrely enough…

is a shopper that is literally “addicted to distraction”
A group for whom the thrill of the new and the next
are the only things that matter
Consumers who are rewriting the rules of demand
And therefore, by proxy, the rules of supply
Retail’s new reality
Source: New York Times, November, 2015
TheRealMStiles

to a MARKET BASED ON SPEED
From an idea like “speed to market”

of perfectly planned in-store campaigns, brainstormed months in
advance and flawlessly executed
Gone are the days

and embrace a culture of trying hard, failing fast, picking ourselves
up if it doesn’t work and then doing it all over again
We need to move up a gear…
Wieden&Kennedy

LAUNCH,
IMPROVE,
REPEAT.
A cycle of continuous improvement, and don’t forget…

LAUNCH,
IMPROVE,
REPEAT.
INVOLVE,

is the inability to grasp this shift. And it’s potentially fueling an even
bigger threat just around the corner…
One of the biggest threats to retail today

a perfect storm of change, sparked by circumstances out of your
control and lurking on the horizon
Wholesale disruption of retail as we know it

is already reinventing retail, and we are just getting started.
Widespread category disruption

WHY ARE
DISRUPTIVE
BRANDS SO
SCARY?

Uber
world’slargesttaxi company,ownsno vehicles
Facebook
world’smostpopularmedia owner,creates no content
Alibaba
mostvaluable retailer,hasno inventory
Airbnb
world’slargestaccommodationprovider, owns no real estate
Source: Tom Goodwin

Amazon Google Uber Apple Snap Facebook
Netflix Twilio Chobani Spotify Alibaba
Tencent Xiaomi BBK Electronics Huawei
Dalian Wanda Airbnb BuzzFeed Open Whisper
Illumination Entertainment IBM
Vivint Smart Home Slack Glossier Kenzo
Source: Fast Company’ “Most Innovative Companies of 2017”

How many of these began their lives
through traditional bricks and mortar retail?

How many of these are turning traditional
retail on its head today?

AGILE THINKING
IS PROTECTION
AGAINST
DISRUPTION

the simple reality of today, is that we can’t afford not to
We used to say we can’t afford to
work like that…

3: FROM
THEN,
TO NOW,
TO NEXT.

let’s consider the lifecycle of traditional retail, which has been in place
pretty much since the birth of retail design…
Against our new reality

Jeremy Schultz
which we built out of things called bricks and a thing called mortar
and which we repeated about every 3-7 years
That lifecycle centered on stores

The cadence of this cycle was driven by…
• the type of retailer we were
• the category of retail we operated in
• whether someone else like us came along with something new and
bright and shiny which scared the pants off us and forced us to act

We began work on something called a new prototype. When we were
happy with it, we built it. Then kicked the tires. Then value engineered it.
Once we decided to make a move

Would we roll the prototype out. A process which would take years to
accomplish. And in the interim, we pretty much left the concept alone.
Then. And only then.
PMRPhotography

performing something at some point in the lifecycle we used to call a
refresh…which was rarely refreshing
Except occasionally…

- the retail equivalent of a store design spit wash, and more often
than not about as effective…
Or, frankly, even fresh

Agile Retail: Embracing the pace of change

There are numerous problems with
this approach…
1: It’s a long tail
2: Resource intensive
(and the procurement of those resources is a part of why retail is so slow)
3: Inherently unresponsive
4: Doesn’t anticipate changing shopper behaviors
5: Lack of integration with new/emerging channels

it’s also repetitive, and predictably so - the antithesis of the surprise
and delight which retail was always supposed to be about…
If that wasn’t enough
Yui Sotozaki

With a perceived rate of change at retail that feels GLACIAL
compared to the daily lives of our next generation of shoppers
Which is where we are today

A decade ago, none of these things
seemed to matter that much…

Today, they are the only things that matter

the vast majority of retailers are still in some form of this cycle, and
physical retail is still stuck in its own mud
And yet, despite all the pitfalls

Painted into a corner
by an entire industry built around the old model
• bulk orders and mass production
• production brokerage focused on lowest price over flexibility
• off shore procurement and manufacturing
• long-term locked contracts
• change fees and delay penalties
All of which fuels an environmentof rigidity - the opposite of agility
- again, despite the evidence of the dangers of a bored shopper…

The results are clear…
N o v / Dec F o o t T r af f i c
40 Billion Visits
30
20
10
Source: The Wall Street Journal, 2014
2010 2011 2012 2013
16.7 billion

40 Billion Visits
30
20
10
2010 2011 2012 2013 2014
-9.5%

40 Billion Visits
30
20
10
2010 2011 2012 2013 2014 2015
-6.4%

And this trend continues…
2016 Holiday sales at brick-and-mortar
chains fell 10%, while traffic declined 12%
Source: Wall Street Journal, source RetailNext

In years past we blamed the weather
Perhaps it’s time to face up to reality and
recognize the real reasons people are
staying home

to make things fun again, and to get collective bottoms off of
collective sofas and back into stores…
And that it’s going to take some new thinking

4: WHO IS
BEGINNING THE
REVOLUTION?

A traditional retailer which adopted AGILE thinking with the advent
of their CEO Brian Cornell in 2014
Target

Which presented a sharp contrast to the pace of change able to
happen in Target’s chain
Cornell was inspired by a trip to Story

New merchandise development with a faster cadence to the way product
is launched in store (including - rather cleverly - a capsule line with Story)
A series of initiatives
Fortune

Where the brand fast tracks testing of a host of new ideas in real time,
with real customers
Living Lab Stores
Fortune

Repurposing an underperforming space in San Francisco to introduce
customers to all things IoT in an approachable and engaging way.
Open House
Re/code

Translating learnings from a one-of-a-kind concept out to an
experimental space within the store’s fleet
Connected Living
A Bullseye View

A collaboration between Target, IDEO, and MIT, looking at how to
create a future of complete transparency in what we eat in terms of
nutrition and freshness.
Food + Future coLab
A Bullseye View

but, strategically, a continued evolution for us to think about what physical
shopping is like when you blur the lines between experience and digital”
“A gift to our guests,
Jeff Jones, Chief MarketingOfficer, Target

But in different ways and for different things…
Other retailers use labs
Lowe’sInnovationLabs

Imagines future store experiences and tools for customers like this
Holoroom where you can preview room settings designed in store
Lowe’s Innovation Lab

iPad Augmented Reality with Oculus VR which creates the
walkthrough in store which you then upload to your smartphone
The concept combines

Through Google Cardboard, a great way to extend the purchase journey
beyond the 4 walls, available in 19 stores across the U.S. beginning in
November 2015
And take home

Led to the development of Holoroom How-To, extending the VR
platform to bring confidence to customers in basic DIY skills
Learnings from Holoroom

Of a host of ideas the Innovation Labs are piloting. Bringing new ways of
thinking and selling into the physical environment.
Holoroom is just one

Launched in late 2013, Nordstrom continues to surprise and delight
guests with a continuous rotation of under-the-radar brands.
Pop-In @ Nordstrom
Allure

Nordstrom’s The Lab, which provides a platform of exposure- both in
store and online- for young emerging designers.
Which paved the way for
LA Times

The launch of their Beauty T.I.P. Workshop brings a tech-driven hub for
group classes, leveraging the brands services and category expertise.
Sephora Innovation Lab
Dexigner

SPACE10 is space launched in 2015 to explore the future of products
for the home, products IKEA will develop and then sell.
And then there’s IKEA
IKEA

Is exciting because it showcases innovation in a very public way, and
involved customers in shaping the future of the brand
SPACE10
IKEA

They let you test new ideas with lower risk and investment,
and in theory they can pivot faster than the entire chain
Labs are a great idea in principle
IKEA

But there are still challenges
• layers of prototyping, tweaking, testing and approvals
• often an inherently artificial (or limited) environment
• no true metrics - certainly not in the way that agile thinking
outside of our industry defines metrics…

We believe the adoptionof AGILE proposes
something more ambitious than lab stores
Something bigger and bolder

RETAIL IN A STATE
OF PERPETUAL
BETA

At FITCH it became apparent that in order
to work in an AGILE way it wasn’t just the
client that was going to need to change,
it was us.

1
The typical process today
Sequential, phase based, and in the digital industry, referred to as
waterfall methodology

1
One step runs into the next
Also known as a “baton pass” process

is the same, you can’t move on from one phase of work until you
have completed the one prior…
And the principle

With new principles and new activities
We recognized the need for a new process

So how do we do it?
These are just some of the ways in which we are adapting our
thinking to creating AGILE retail for our clients.
Sprint Cycles
New Measurement & Analytics
Rapid Prototyping
Road Mapping

LAUNCH,
IMPROVE,
REPEAT.
Adopting these principles under the umbrella approach of

New Activities: Sprint Cycles
What if instead of a single brief for a store of the future, our clients
hired us for 10 mini briefs, or 20 micro briefs?
And what if, because of their size, we were able to execute these
briefs in record time? Manifesting themselves in store in weeks not
months or years.
Briefs which are ideally authored together

New Activities: Measurement& Analytics
Real time research live and in-store. Ongoing and iterative.
New tools to allow us to track and monitor customer behavior and
respond rapidly.

New Activities: Measurement& Analytics

New Activities: Rapid Prototyping
The goal is to develop concepts that we can get into stores faster
than ever before.
And to ask ourselves: “How finished does something need to be
before we can begin gathering data on it?”
And, if we challenge ourselves, can we actually start to test things
much, much earlier?

And finally: Road Mapping
Once concepts are identified as a “go” what would be the fastest
way to bring them to market. And how could we prioritize?
Time
Investment
ROI (best guess)
New resources or skills
From here we develop our road map for execution

that AGILE should move to the front of the conversation, that the very
DNA of a brand itself should be mutable, fluid, liquid and adaptable
There are those that say…

has demonstrated our belief that AGILE is key to the future of
business in our world, we don’t agree that it applies to everything
While we hope that today

become chaotic and lose their purpose. And the people that interact with
them forget the reasons they ever fell in love with them in the first place
Brands in constant flux
OskarKorczak

We see the brand as a rock that our world flows around. It’s just that
the river is flowing a great deal faster these days…
In stark contrast

Further down the chain from the brand?
THIS is where the true mutability needs to exist… and retail has been,
is and always will be the perfect place to showcase our AGILITY
Where we lost our way was when retail became stale. Formulaic.
Driven by the realities of bulk pricing and mass orders…
Retail is all about embracing trends and creating environments which
can shape shift on a dime…
After all that’s where we started…

“Salesmanship, showmanship, call
it what you will. Every week there
must be something special,
something new”
Jack Cohen, founder, TESCO

“If the rate of change on the
outside exceeds the rate of
change on the inside,
the end is near”
Jack Welch

FROM SPEED TO
MARKET TO A
MARKET BASED
ON SPEED

THANKS FOR LISTENING…
#SPECS2017
#FITCHAgileRetail
@FITCHdesign
@carly_tysh
www.slideshare.net/FITCH_design/presentations
Carly.Tysh@fitch.com

Agile Retail: Embracing the pace of change

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