After the sales

The warehouses are full, shops are desperate to get rid of surplus stock, and customers are eager to make the most of the inevitable sales to refresh wardrobes and indulge in some much missed retail therapy. The sales starting now will be the best and longest and deepest sales ever. Shops will all have to offer deep discounts because everyone else will too, and there is only so much space in wardrobes. Inevitably, much of the stock will not be sold, however deep the discounts. Many people will still be hiding in their homes long after lockdown is lifted, only venturing out when they have to. Social distancing in shops will make them less appealing, scarier, and deter some potential customers. More importantly, although most people have kept their incomes and some have even managed to save and pay off debts, many others have lost their jobs, lost their savings, lost their spending power.

The result is all to obvious. Even if lockdown were lifted tomorrow, greatly reduced revenue and deep discounting will barely cover basic costs for many shops, and won’t for others, so there will be a long list of retail deaths to follow those we’ve already seen. A few healthy retailers will be able to buy weaker competitors and move into better stores, making the most of greatly reduced rents. With fewer retailers occupying more of the market, choice will soon dry up. They will have to cut costs too, and even after companies have been bought and merged, vast numbers of staff will be laid off, many shops will close, and with few ready to snap them up, high streets will soon look very sparse indeed. Fewer shops mean less temptation into town, less foot traffic, fewer people buying coffees and already frail high streets will shorten. Boarded-up shops at the end of high streets may soon be converted to accommodation.

It will be a very long and slow recovery from there to get back to anything like we saw before lockdown. It is not at all obvious why there would be a ‘V shaped recovery’. A very slow, weak recovery is more likely.

Online will do better. Many people will still be afraid or unwilling to go into town and put up with bleak social distancing, and no changing rooms. So lots of customers will carry on shopping online, and the retailers who have survived and upgraded their online presence will keep more of the market. But how healthy will that market be? People will still want new things, but social lives will not return to normal right away, with clubbing and eating out reduced, and lots of people will continue to work from home, so won’t need the same quantity of office outfits, especially since there is nobody to show off to. So although shopping online will keep much of the market gains it has made, the size of the pie will remain smaller. Retail will have shrunk, many retailers will have vanished, and there will be less choice. Warehouse-based automation will require far fewer staff, and many of the jobs lost will never return. With less competition, and costs of investments in infrastructure and tools to do online needing to be recouped, prices will soon start to rise.

The future of retail seems likely to be short term sales to dump old stock and get some cash flow, followed by rapid shrinkage, frantic retailer M&A activity, high street shrinkage, and many end-of-street properties switching from retail to accommodation. In the years following, as people gradually return to normal life, new retailers will gradually spring up, and a very slow recovery of the high street might occur, or it may well be that new business in the high street will only be enough to offset ongoing transfer to online.

It’s worth noting that in parallel to these changes, technology will continue to develop. Automated delivery will accelerate. Rapid custom manufacturing will reduce in cost, and if prices are increasing elsewhere, will become more competitive. As customers start expecting clothes to be made the their precise measurements and customisation, the relationship between customer and manufacturer may well be simplified, with retailers falling in importance. If so, the long term for retail looks even bleaker.

Retail, is just one industry. We should expect major changes in every industry as a consequence of lockdown. The world will not return to how it was before. Recovery will be slow, and the final destination will be quite different.

The future of retail and the high street

Over 3 months since my last blog, because… reasons. Futurologists are often asked about the future of the high street and the future of retail, obviously strongly connected, because the high street as we knew it not long ago has already changed hugely and yet seemingly always under imminent threat of extinction. I have blogged on it, but am shocked that my last one was a few years ago, so time for an update I guess, especially with the news today that Debenhams may be closing 50 of its stores.

A few old blogs that are still relevant:

https://timeguide.wordpress.com/2013/01/16/the-future-of-high-street-survival-the-6s-guide/

Just one of those Ss stood for Surprise, or serendipity if you prefer. The surprise aisles in Lidl and Aldi are among the biggest reasons for their success. There’s always something you never knew you wanted at a price you can’t resist, so they do well. Good luck to them! Not knowing what you want before you see it explains much of the attraction of charity shops too, it isn’t all about price.

My other Ss are also still proven well founded (socialising (including coffee shops & Facebook clubs), synergy (between online and physical), service, special, and ‘suck and see’ (try it out before you buy)).

Another blog addressed the balance between high street and out of town centres:

https://timeguide.wordpress.com/2013/03/01/out-of-town-centres-are-the-most-viable-future-for-physical-shops/

A more recent one on possible reversal of urbanisation in the further future is also a bit relevant:

https://timeguide.wordpress.com/2018/06/13/will-urbanization-continue-or-will-we-soon-reach-peak-city/

So, updating then…

Retailers all know that they must have an online presence, but it’s still surprising how little effort they put into making their IT work. I experimented with setting up accounts with some of the big retailers and the experience is shocking. This week, I tried to set up an Argos account, but couldn’t get any further than typing my email address and hitting continue, at which point I just got a message ‘unknown error’. I tried it from various links from emails and their Sainsbury’s owner site, and tried a few times on different days, same result. How can they win new customers online if nobody can set an account up? Does nobody actually ever check whether it still works?

I successfully set up a Next account ages ago, but never used it because it wouldn’t let me edit any of my data such as whether I wanted junk mail by various channels, or even how to spell my name (I’d used my initials ID and it insisted on calling me Id), the options either didn’t exist or were greyed out. I could phone up but why bother? A month ago it stopped working for several days, after which time it eventually said I didn’t have one. So I assumed it had evaporated during their IT changes due to never being used and set it up again, and it recovered all my data from its previous existence. I still won’t use it because it calls me Id, and I can’t change it to I D or even ID.

Very has the same IT trouble, can’t edit your name away from Id, and can’t change your preferences for receiving junk mail, but I only set it up as a test so don’t care.

These companies are among the biggest. If they can’t get it right, who can? I did try a few smaller ones to see if they were better but still got a mixture of some successes and some ‘unknown errors’, 404 messages and so on.

By contrast, I’ve never had an IT-related problem with Amazon or eBay and only a few minor ones with 7dayshop. So I shop there and ignore most other shops. They employ competent IT staff in sufficient numbers to make it work, and they thrive (though perhaps not as much due to IT as tax and rates advantages). Those shops whose poor IT annoys their customers enough  to go elsewhere deserve to do badly. 

Websites and apps are today’s platforms for extending high street presence into cyberspace. Augmented reality will provide those companies who are up to the job with massively superior platforms to do that. The web arose from converging just computing and telecoms. Augmented reality converges the whole of the real and virtual universes. Overlaying absolutely any form of computer-generated imagery, data or media onto anything in the real world, streets could be extra art gallery space, space for computer games, enabling digital architecture and avatar replacement of strangers, adding digital fauna and flora and aliens and cartoon characters and celebs and AI avatars anywhere they may be desired, making enticing imaginary worlds that add to the fun of actually going into town.

It won’t just be text, graphics and audio. Various haptic interfaces already exist, but soon active skin will link our peripheral nervous systems to our IT, allowing sensations to be recorded, associated with whatever caused them, and then reproducing those same sensations when something similar happens virtually. Tiny devices in among skin cells could simply record and reproduce the nerve signals. Each hand only generates about 2Mbit/s of data, only a little more than a basic TV channel, so it should be no big problem handling the data.

AI has really moved on since 2013 too. It’s still far from perfect, but you can use fairly normal English to ask an AI to find you something and it often will, so it’s heading in the right direction. Soon, with 3D life-sized augmented or virtual reality avatars to interface with, they’ll be more in touch with our emotional responses when we browse, getting signals from wearables and active skin, face and gesture recognition, gaze direction, blood flow, heart rates etc. An abundance of data will help future AI’s learn more and more about us and our desires and preferences until they can genuinely act as our agents, (as we already realised was the far future by 1990). It’s only a matter of time. In my estimation, AI is progressing about 30-40% more slowly than it ought, (I won’t write about why I think that is here) but it will still get there. As will VR and AR and active skin and active contact lenses, and various other also long overdue techs.

AI online will also be less impressed by all the distractions and adds humans are exposed to.  Functional shopping will be liable to AI substitution but recreational, social, emotional shopping will still be done by people themselves. 

AI links well to robotics, and at some point, robots will go out and do some of our shopping for us. They will have very different customer characteristics and ergonomic needs, and may be better suited to picking up from bleak warehouses than attractive high street stores with ‘surprise’ aisles.

Drone delivery is much spoken about but I don’t think it has a big future for domestic use except in areas with large back gardens and no pets, or mischievous kids. It will work well for rapid delivery to business delivery bays that have appropriate landing areas and H&S policies.

3D printing is much over-hyped, but will eventually replace a small proportion of shopping by home manufacture, or local 3D print shop for more complex production.

Self-driving and driverless cars will greatly reduce or even eliminate the huge problem of congestion that deters people from going to town, as well as eliminating the much-too-high cost of parking, but without incurring the current public transport penalties of waiting in poor weather, poor stop locations, lateness, sluggishness, discomfort, overcrowding, security, and exposure to disease and unwanted social pests. By collecting from home and delivering all the way to the destination in a suitable vehicle, they will also improve social inclusion for older and disabled people. Driverless cars using smart infrastructure could be achieved many times cheaper and earlier (given the will) than current self-driving approaches, but at the expense of virtually eliminating the car industry that hopes to continue to sell expensive cars that happen to self-drive rather the cheap ($300-500) public pods made of fibreglass that can be made without any need for engines, batteries, AI or sensors and would instead be propelled on factory-made and rapidly installed linear induction mats that switch each pod at each junction rather like routers switch internet data packets.

With easier and faster access to a high street that is made far more attractive by imaginative use of AR, companies sticking to the 6S guide would still be able to attract customers into the far future. While there, they would be able to browse much wider range of stock. A garment wouldn’t need to be stocked with lots of each size, but could just have one of a few sizes for people to see if the like the fabric etc before scanning it with an app or taking it to a till with their laser-scanned body measurements, to have it made in their exact size for delivery later by a rapid personalisation manufacturing industry. As well as having more stock present physically, augmented reality can also replace all the aisles of goods the customer isn’t interested in with ones that hold things available for online purchase from that shop or their allies, adding another virtual-physical synergy to improve revenue potential. Even a small store could potentially hold a vast range of stock to buy in an exciting and attractive personalized environment.

I guess I could go into far future services associated with shops, such as customising VR kit to people’s nervous systems, providing recharging for android shoppers or whatever, but this is already long enough.

So the high street isn’t going to become just coffee shops and charities. Even if some existing retailers don’t up their games and go under, many new ones will appear that understand how to use new technology to good effect, and they will make good profits from both high streets and out of town centres.

 

Guest Post: Reed and Bhs are inevitable collateral damage in today’s omni-channel sales and marketing world

Another guest post from Christopher Moseley, (details below)

Reed and Bhs are inevitable collateral damage in today’s omni-channel sales and marketing world

It’s not hard not to get a little bit nostalgic about the death throes of well-known British High Street brands. Woollies was the first big name in living memory to get killed off in the Great War of the Internet versus the High Street; Austin Reed and Bhs are the very latest casualties.

Philip Green’s soon to face a grilling from a Commons committee, and no doubt the sense of outrage and accusations of asset stripping will heighten the tensions and anger associated with job losses and the of dying British High Street brands. As to Austin Reed, it’s hard to see a well-heeled target figure stepping forward to face similar political brickbats: it just kind of, well, died away.

Asset stripping aside it’s hard to see how tired old brands like Bhs might have survived in a world where choice is a touch screen away. The venerable British High Street, and the myriad shops which struggle to stay solvent within the confines of her bricks and mortar structure, still has a white knight in the form of Mary Portas, but it’s clear that the writing is on the, er, shop window … it reads, ‘Closing Down’.

Twenty or so years ago if I had wanted to buy a set of headphones I would have strolled to my nearest retailers to make my purchase.  In the 2010s, close as I am to my local high street, I can simply go online. It’s the only viable decision – there’s simply a much bigger choice, and greater availability.

And with a smartphone in hand, or a laptop or tablet at my side, I’m able to quickly locate a wealth of information about my desired product before being given a list of potential suppliers – often ranked by reliability and item price.

Why would I ‘go’ bricks and mortar, when with a simple click my goods can be delivered to my house the very next day?

Why break into a bipedal sweat when one can surf?

Omni-channel selling provides consumers with numerous channels through which they can interact with and purchase from retail businesses. There’s all the attendant information about products, the means to interact with technical experts, and a giddy range of devices: smartphones, desktops, notebooks to browse on.

The 24-7 shopping experience

The obvious advantage of Internet shopping is that is that one can shop well after the High Street curfew of 5:30pm. We can all shop to heart’s content, on the couch, in the bath, or in a tent on Ben Nevis. Businesses that can’t cater for the around-the-clock punters face obliteration. Why walk?

The future’s bespoke, more interesting and built for humans

Around 16 years ago, when the first corrosive impact of the Internet was being felt in the High Street, I once tried to stage a media stunt. I proposed a debate between several well-known exponents of retail, pitted against some toughies (clients actually) who worked in e-commerce. If memory serves I’d wanted to co-opt a Selfridges or Harrods window to conduct the debate. It would have been fab I think.

It never happened – I guess the issue wasn’t quite sufficiently in the public eye back in ’00.

It’s a different story today. We’re right in the middle of a bloodbath and it’s hard to see a future for the great British High Street, other than, perhaps, this is an opportunity to return to something rather old-fashioned, something much more traditional.

If there is a future for the High Street, it won’t be a continuation of today’s confection of identikit chain stores, but rather much akin to the boutique butcher, baker and candlestick maker of yesteryear. Throw in some vibrant street markets, some residential housing, and one has something like the world of the Edwardian era.

So, the mantra of the High Street in the 2020s might just be, ‘Let’s party like it’s 1899 …’

Chris Moseley

Head of Public Relations, Merchant Marketing Group

Email. chris@merchantmarketinggroup.com

Tel +44 238022 5478

Smart packaging: Acoustic sterilisation

I should have written this on the ides of March, but hey ho. I was discussing packaging this morning for an IoT event.

Imagine a bacterium sitting on a package on a supermarket shelf is called Julius Caesar. Now imagine Brutus coming along with a particularly sharp knife and stabbing him hundreds of times. That’s my idea, just scaled down a bit.

This started as a slight adaptation of an idea I developed for Dunlop a few years ago to make variable grip tires. (Still waiting for Dunlop to make those, so maybe some other tire company might pick up the idea).

The idea is very simple, to use tiny triangular structures embedded in the surface, and then pull the base of the triangle together, thereby pushing up the tip. My tire idea used electro-active polymers to do the pulling, and sharp carbon composites to do the grip bit, or in this antibacterial case, the sharp knife. Probably for packaging I’d use carbon nanotubes or similar as the sides with which to stab the bacteria, but engineers frequently come up with different nanostructure shapes so I’m pretty agnostic about material and shape. If it ruptures a bacterium, it will be good.

An easier to use alternative for widespread use in packaging would be to ditch the electro-active polymer and associated electronics, and instead to use a tuned acoustic wave to move the blades in and out of the surface. All that is needed to activate them is to put out that frequency of sound through a speaker system in the supermarket or factory. The sound needed would likely be ultrasonic, so it doesn’t irritate all the shoppers, and in any case, nano-structures will generally be associated with high frequencies.

So the packaging would include tiny structures that act as the dagger attached to a particular acoustic mass acting as Brutus, that would move when the appropriate resonant frequency is broadcast.

This technique doesn’t need any nasty chemicals, though it does need the nanostructures and sound and if they aren’t designed right, the nanostructures could be just as harmful. Anyway, that’s the basic idea.

In a networked age, nice guys win

A wide variety of marketing tools have been developed to fool customers into buying products that are more expensive than they need. A huge volume of psychology research has created departments of precision marketing staff whose main skill is tricking customers. Coupled with accounting trickery, pricing, packaging and phantom special offer tricks are often used to disguise price hikes or pretend something is a bargain when it simply isn’t.

This is not clever. It is dumb. It reaps an apparent short term gain at the expense of overall customer spending and customer loyalty. If you want proof, Tesco is proof. Even the dumbest Tesco customers eventually noticed that the company had changed from one that was looking after their interests and giving excellent service and excellent prices to one that seemed to be trying hard to trick and fleece them at every opportunity. Since marketers share ideas, the other big supermarkets used many of the same practices, with the same result. When new entrants arrived that didn’t try to trick people, customers walked and profits dived.

Using the very latest psychology and neuroscience is not the problem. Nor is honing marketing and sales tools to the Nth degree. It is using those top level skills while forgetting the basics that is bad, or worse still, using them quite deliberately to abuse customers.

Customers like to feel they are getting genuinely good products at genuinely good prices. If they are used to that in a shop, they come to feel safe there and more willing to spend. They don’t feel on their guard all the time, feeling they have to do hard sums to work out which one is the least rip-off, and buying only what they need, saving the rest for elsewhere. When they feel safe, they spend more, they buy things they might not otherwise have bought, and they’ll come back again and again, so your profits will be sustainable. They take far more notice of your marketing too. They won’t look at something and then go and shop around for it online. They come to trust you, and they’ll do more business with you. That is so simple and obvious it doesn’t need years of training to learn. Being simple doesn’t mean it is untrue. Basics are easy, but still important.

Good marketing lets customers know about your product and its relative merits. It can even be honest about its limitations. Good marketing is that which customers would seek out themselves if you didn’t deliver it to them already. Bad marketing is trying to fool someone into buying something they otherwise wouldn’t. You can fool someone once, maybe twice, but in the end it is you who loses a good customer. Social media exposes trickery quickly and effectively and tricksters lose. In the networked age, nice guys win.

If you use sophisticated marketing to fool customers, the fool is you. If you want a friend, be a friend.

The future of Tesco – a recovery strategy

Tesco’s share price has fallen dramatically after yet another profit warning. A once thriving supermarket chain finds itself in real trouble. Tesco blames the discount supermarkets, but although that is an easy excuse and some of the other chains are also suffering, it is too simplistic an analysis and merely distracts attention from Tesco’s own blame for the profit drop. The reason some others are suffering too is that similar problems also apply to them, the big chains copy each other a great deal. They take similar approaches and suffer the same consequences.

The root of the problem

Overall basket price is a big factor in customers migrating to the new discounters, but failure of trust is an even bigger one. A customer who is worried by prices still knows they have to eat and accepts having to pay, but is particularly worried about being overcharged, so trust becomes more important. It isn’t just the absolute shopping budget they care about. Feeling confident that they are getting the best value for what they have is equally important. Having to be constantly on their guard to avoid store tricks while doing what is already a boring chore is a sure way of making them want to shop elsewhere, and that is exactly why Tesco is suffering now.

Death by accountant and marketer

Accountants are critical to a successful company. If they are good, the company can flourish. If they are bad, it can die. The worst employee a company can have is an accountant who thinks they are cleverer than their customers. If they work with an equivalent self-regarding boss from marketing, they can destroy a company. Tesco sells a lot of products and its accountants and marketers have developed a large number of tricks to get customers to pay more than they should. It is easy to trick customers occasionally, and easy to think up new ways of doing so, but it isn’t clever. Eventually the customer notices. The practice of trying to trick customers to spend over the odds destroys trust and customer loyalty. When another supplier arrives that doesn’t abuse the customer in the same way, people vote with their feet, as we are now seeing.

I discussed death by marketing in a blog 9 months ago: https://timeguide.wordpress.com/2013/11/29/fake-sales-death-by-marketing/. If Tesco had read it and acted on it, perhaps the share price wouldn’t just have dropped.

I don’t need to list all the tricks here, you know them all too well, so just a few headline ones – reducing sizes while keeping the price the same, fake 50% off offers by charging double for a period, selling larger boxes at higher price per unit weight and so on. These are all technically legal, but any idiot can do that, and only an idiot would. A trivial short term gain may be had from a customer not concentrating enough, but the customer soon loses trust in the company. While it is inconvenient or more expensive overall to shop elsewhere they might still keep coming, but all the unnecessary effort they have to expend every time they go to avoid being fleeced all adds up. In the end, they walk. Nobody wants to be the poor sucker who paid £10 for a £5 bottle of win just so that others can be conned by a half price offer.

Trust has most definitely been squandered by repeated bad experiences of being fleeced. Frequently bad signage and misleading labelling don’t help. Some of that seems to be quite deliberate confusion marketing too, another fundamentally bad idea that only looks clever to the dumbest or marketers or store managers. Add to that rubbish customer service that seeks to defend the store against refunds and just argues that the customer is in the wrong and it’s a sure recipe for failure. The adverts may try to portray Tesco as the shopper’s best friend, desperate to give them the best possible value and service, but the reality experienced by the shopper is often the opposite. Many customers think of Tesco as the enemy rather than a friend. The share price drop is the direct result.

Solving this isn’t rocket science and it is astonishing just how reluctant previous managers have been to abandon so obviously flawed practice. The new boss needs to avoid these obvious mistakes. Treating customers as fools to be fleeced at every opportunity will not restore profits or the share price but will instead ensure continued collapse of loyalty.

The first foundation stone for a recovery is to stop trying to fool customers. The above points firmly to that. If you want that as ancient wisdom: “Once bitten, twice shy”. All the fake half-price and special offers have to go, and all the confusion marketing and confusion pricing. I know that accountants and marketers want to show off to their peers how smart they are, but really, fooling customers is NOT smart. The smartest way to show off to customers is by getting them really good deals occasionally, genuine special purchases.

Secondly, there can be no profit without customers. The customer is not the enemy and certainly not prey. The second foundation stone is to start treating the customer as a friend, as a potentially loyal source of future profit who just wants good value and good service. If the ethos is right, that customers should be looked after, then Tesco will recover. That the marketing says so but the reality is the opposite is a key clue to finding out where the problems really are. All the areas where customers are seen as the enemy need to be eradicated from corporate thinking. The new CEO should look down that avenue and kick the butts that need kicked.

Customer services should also go back to the old wisdom that the customer is always right. That was understood by retailers for centuries. Why has Tesco forgotten it? It needs to learn it afresh.

Thirdly, customers want consistently fair markups. They don’t want to get bread cheap and pay double for fruit and veg to make up the profits. They’d rather have purchase price + x%. Profit isn’t a dirty word and customers don’t expect shops to be charities. Markup is both expected and accepted. They just want a fair deal.

These foundations can create a solid platform for recovery. More bricks are needed on top of course, but that will come down to company flair. Tesco is huge and has enough market clout to get excellent special buys on occasion. It can offer some things the discounters can’t. It can add value in a myriad ways without adding to cost. Survival ultimately isn’t about price wars, but about looking after your customers.

My 6S guide to retailing is my view for high street retailing from 18 months ago, and is only partly appropriate to superstores, but a company the size of Tesco should know better that me anyway:

https://timeguide.wordpress.com/2013/01/16/the-future-of-high-street-survival-the-6s-guide/

Tesco was once a great company. You could be sure of getting good quality at a good price and you didn’t have to be on your guard the whole time. On that strategy, it grew from a tiny company into a huge one. All it needs to do to recover is to remember its old values and apply them again. Those are the very same techniques the new discounters are using. They treat customers as friends, they try to get them the best deals, they offer good service, and they don’t try to fleece them. Tesco can even charge a little more than the discounters and survive, because price isn’t the only factor in play – the environment, types of display, range and quality of produce all count too. But it needs to go back to its original ethos. Genuinely.

If Tesco wants to survive, it can’t carry on treating customers as dumb prey. The trust has run dry.

 

The future of ‘authenticity’

I recently watched an interesting documentary on the evolution of the British coffee shop market. I then had an idea for a new chain that is so sharp it would scratch your display if I wrote it here, so I’ll keep that secret. The documentary left me with another thought: what’s so special about authentic?

I’ll blog as I think and see where I get to, if anywhere.

Starbucks and Costa sell coffee (for my American readers, Costa is a British version of Starbucks that sells better coffee but seems to agree they should pay tax just like the rest of us – yes I know Starbucks has since reformed a bit, but Costa didn’t have to). Cafe Nero (or is it just Nero?) sells coffee with the ‘Authentic Italian’ experience. I never knew that until I watched the documentary. Such things fly way over my head. If Nero is closest when I want a coffee, I’ll go in, and I know the coffee is nice, just like Costa is nice, but authentic Italian? Why the hell would I care about my coffee being authentic Italian? I don’t go anywhere to get an authentic Danish pastry or an authentic Australian beer, or an authentic Swiss cheese, or an authentic Coke. What has coffee got to do with Italy anyway? It’s a drink. I don’t care how they treat it in any particular country, even if they used to make it nicer there. The basic recipes and techniques for making a decent coffee were spread worldwide decades ago, and it’s the coffee I want. Anyway, we use a Swiss coffee machine with Swiss coffee at home, not Italian, because the Swiss learned from their Italian sub-population and then added their usual high precision materials and engineering and science, they didn’t just take it as gospel that Mama somehow knew best. And because my wife is Swiss. My razor sharp idea isn’t a Swiss coffee chain by the way.

I therefore wonder how many other people who go into Cafe Nero care tuppence whether they are getting an authentic Italian experience, or whether like me they just want a decent coffee and it seems a nice enough place. I can understand the need to get the best atmosphere, ambiance, feel, whatever you want to call it. I can certainly understand that people might want a cake or snack to go with their coffee. I just don’t understand the desire to associate with another country. Italy is fine for a visit; I have nothing against Italians, but neither do I aspire in any way to be or behave Italian.

Let’s think it through a bit. An overall experience is made up of a large number of components: quality and taste of the coffee and snacks, natural or synthetic, healthy or naughty, the staff and the nature of the service, exterior and interior decor and color scheme, mixture of aromas, range of foods, size of cake portion, ages groups and tribal ranges of other customers, comfort of furnishings, lighting levels, wireless LAN access….. There are hundreds of factors. The potential range of combinations  is massive. People can’t handle all that information when they want a coffee, so they need an easy way to decide quickly. ‘Italian’ is really just a brand, reducing the choice stress and Cafe Nero is just adopting a set of typical brand values evolved by an entire nation over centuries. I guess that makes some sense.

But not all that much sense. The Italian bit is a nice shortcut, but once it’s taken out of Italy, whatever it might be, it isn’t in Italy any more. The customers are not expected to order in Italian apart beyond a few silly words to describe the size of the coffee. The customers mostly aren’t Italian, don’t look Italian, don’t chat in Italian and don’t behave Italian. The weather isn’t Italian. The views outside aren’t Italian. The architecture isn’t Italian. So only a few bits of the overall experience can be Italian, the overall experience just isn’t. If only a few bits are authentic, why bother? Why not just extract some insights of what things about ‘Italian’ customers find desirable and then adapt them to the local market? Perhaps what they have done, so if they just drop the pretense, everything would be fine. They can’t honestly say they offer an authentic Italian experience, just a few components of such. I never noticed their supposed Italianness anyway but I hate pretentiousness so now that I understand their offering, it adds up to a slight negative for me. Now that I know they are pretending to be Italian, I will think twice before using them again, but still will if it’s more than a few metres further to another coffee shop. Really, I just want a coffee and possibly a slice of cake, in a reasonably warm and welcoming coffee shop.

Given that it is impossible to provide an ‘authentic Italian experience’ outside of Italy without also simulating every aspect of being in Italy, how authentic could they be in the future? What is the future of authenticity? Could Cafe Nero offer a genuinely Italian experience if that’s what they really wanted? Bring on VR, AR, direct brain links, sensory recording and replay. Total Recall.  Yes they could, sort of. With a full sensory full immersion system, you could deliver an experience that is real and authentic in every sense except that it isn’t real. In 2050, you could sell a seemingly genuinely authentic Italian coffee and cake in a genuinely Italian atmosphere, anywhere. But when they do that, I’ll download that onto my home coffee machine or my digital jewelry. Come to think about it, I could just drink water and eat bread and do all the rest virtually. Full authenticity, zero cost.

This Total Recall style virtual holiday or virtual coffee is fine as far as it goes, but a key problem is knowing that it isn’t real. If you disable that by hypnosis or drugs or surgery or implants or Zombie tech, then your Matrix style world will have some other issues to worry about that are more important. If you don’t, and I’m pretty sure we won’t, then knowing the difference between real and virtual will be all-important. If you know it isn’t real, it pushes a different set of buttons in your brain.

In parallel, as AI gets more and more powerful, a lot of things will be taken over by machines. That adds to the total work pool of man + machine so the economy expands and we’re all better off, if we do it right. We can even restore and improve the environment at the same time. In that world, some roles will still be occupied by humans. People will focus more on human skills, human interaction, crafts, experiences, care, arts and entertainment, sports, and especially offering love and attention. I call it the Care Economy. If you take two absolutely identical items, one provided by a machine and one by another person, the one offered by the person will be more valued, and therefore more valuable – apart from a tiny geek market that specifically wants machines. Don’t believe me? Think of the high price glassware you keep for special occasions and dinner parties. Cut by hand by an expert with years of training. Each glass is slightly different from every other. In one sense it is shoddy workmanship compared to the mass-produced glass, precision made, all identical, that costs 1% as much. The human involvement is absolutely critical. The key human involvement is that you know you couldn’t possibly do it, that it took a highly skilled craftsman. You aren’t buying just the glass, but the skills and attention and dedication and time of the craftsman. In just the same way, you will happily pay a bigger proportion of your bigger future income for other people’s time. Virtual is fine and cheap, but you’ll happily pay far more for the real thing. That will greatly offset the forces pushing towards a totally virtual experience.

This won’t happen overnight, and that brings us to another force that plays out over the same time. When we use a phrase like ‘authentic Italian’, we don’t normally put a date on it. Do we mean contemporary Italy, 1960 Italy, or what? If 1960, then we’d have to use a lot of virtual tech to simulate it. If we mean contemporary, then that includes all the virtual stuff that goes on in Italy too, which is likely pretty much what happens virtually elsewhere. A large proportion of our everyday will be virtual. How can you have authentic virtual? When half of what everyone sees every day isn’t real, you could no more have an authentic Italian coffee bar than an authentic hobbit hole in Middle Earth.

Authenticity is a term that can already only be applied to a subset of properties of a particular component. A food item or a drink could be authentic in terms of its recipe and taste, origin and means of production of the ingredients, perhaps even served by an Italian, but the authenticity of the surrounding context is doomed to be more and more limited. Does it matter though? I don’t think so.

The more I think about it, the less I care if it is in any way authentic. I want a pleasing product served by pleasant human staff in a pleasant atmosphere. I care about the various properties and attributes in an absolute sense, and I also care whether they are provided by human or machine, but the degree to which they mimic some particular tradition really doesn’t add any value for me. I am very happy to set culture free to explore the infinite potential of imagination and make an experience as enjoyable as possible.  Authenticity is just a labelled cage, and we’re better if it is unlocked. I want real pleasure, not pretend pleasure, but authenticity is increasingly becoming a pretense.

Oh, my razor sharp idea? As I said, it’s secret.

 

 

The internet of things will soon be history

I’ve been a full time futurologist since 1991, and an engineer working on far future R&D stuff since I left uni in 1981. It is great seeing a lot of the 1980s dreams about connecting everything together finally starting to become real, although as I’ve blogged a bit recently, some of the grander claims we’re seeing for future home automation are rather unlikely. Yes you can, but you probably won’t, though some people will certainly adopt some stuff. Now that most people are starting to get the idea that you can connect things and add intelligence to them, we’re seeing a lot of overshoot too on the importance of the internet of things, which is the generalised form of the same thing.

It’s my job as a futurologist not only to understand that trend (and I’ve been yacking about putting chips in everything for decades) but then to look past it to see what is coming next. Or if it is here to stay, then that would also be an important conclusion too, but you know what, it just isn’t. The internet of things will be about as long lived as most other generations of technology, such as the mobile phone. Do you still have one? I don’t, well I do but they are all in a box in the garage somewhere. I have a general purpose mobile computer that happens to do be a phone as well as dozens of other things. So do you probably. The only reason you might still call it a smartphone or an iPhone is because it has to be called something and nobody in the IT marketing industry has any imagination. PDA was a rubbish name and that was the choice.

You can stick chips in everything, and you can connect them all together via the net. But that capability will disappear quickly into the background and the IT zeitgeist will move on. It really won’t be very long before a lot of the things we interact with are virtual, imaginary. To all intents and purposes they will be there, and will do wonderful things, but they won’t physically exist. So they won’t have chips in them. You can’t put a chip into a figment of imagination, even though you can make it appear in front of your eyes and interact with it. A good topical example of this is the smart watch, all set to make an imminent grand entrance. Smart watches are struggling to solve battery problems, they’ll be expensive too. They don’t need batteries if they are just images and a fully interactive image of a hugely sophisticated smart watch could also be made free, as one of a million things done by a free app. The smart watch’s demise is already inevitable. The energy it takes to produce an image on the retina is a great deal less than the energy needed to power a smart watch on your wrist and the cost of a few seconds of your time to explain to an AI how you’d like your wrist to be accessorised is a few seconds of your time, rather fewer seconds than you’d have spent on choosing something that costs a lot. In fact, the energy needed for direct retinal projection and associated comms is far less than can be harvested easily from your body or the environment, so there is no battery problem to solve.

If you can do that with a smart watch, making it just an imaginary item, you can do it to any kind of IT interface. You only need to see the interface, the rest can be put anywhere, on your belt, in your bag or in the IT ether that will evolve from today’s cloud. My pad, smartphone, TV and watch can all be recycled.

I can also do loads of things with imagination that I can’t do for real. I can have an imaginary wand. I can point it at you and turn you into a frog. Then in my eyes, the images of you change to those of a frog. Sure, it’s not real, you aren’t really a frog, but you are to me. I can wave it again and make the building walls vanish, so I can see the stuff on sale inside. A few of those images could be very real and come from cameras all over the place, the chips-in-everything stuff, but actually, I don’t have much interest in most of what the shop actually has, I am not interested in most of the local physical reality of a shop; what I am far more interested in is what I can buy, and I’ll be shown those things, in ways that appeal to me, whether they’re physically there or on Amazon Virtual. So 1% is chips-in-everything, 99% is imaginary, virtual, some sort of visual manifestation of my profile, Amazon Virtual’s AI systems, how my own AI knows I like to see things, and a fair bit of other people’s imagination to design the virtual decor, the nice presentation options, the virtual fauna and flora making it more fun, and countless other intermediaries and extramediaries, or whatever you call all those others that add value and fun to an experience without actually getting in the way. All just images directly projected onto my retinas. Not so much chips-in-everything as no chips at all except a few sensors, comms and an infinitesimal timeshare of a processor and storage somewhere.

A lot of people dismiss augmented reality as irrelevant passing fad. They say video visors and active contact lenses won’t catch on because of privacy concerns (and I’d agree that is a big issue that needs to be discussed and sorted, but it will be discussed and sorted). But when you realise that what we’re going to get isn’t just an internet of things, but a total convergence of physical and virtual, a coming together of real and imaginary, an explosion of human creativity,  a new renaissance, a realisation of yours and everyone else’s wildest dreams as part of your everyday reality; when you realise that, then the internet of things suddenly starts to look more than just a little bit boring, part of the old days when we actually had to make stuff and you had to have the same as everyone else and it all cost a fortune and needed charged up all the time.

The internet of things is only starting to arrive. But it won’t stay for long before it hides in the cupboard and disappears from memory. A far, far more exciting future is coming up close behind. The world of creativity and imagination. Bring it on!

Out of town centres are the most viable future for physical shops

So the government’s ‘retail guru’ Mary Portas has said that some high streets are doomed and should be turned over to other uses. I don’t share the government’s high regard for her but I do agree that it is time to reconsider the structure and location of retailing.

As usual, I’ll highlight the problem first, then suggest the solution.

I live on the edge of Ipswich. The area is a nice place to live but I rarely go into town. To be absolutely honest, I try hard NOT to go into town. I am sure they don’t want me there anyway, since they try hard to deter me from going in.

In the last year, I’ve been to radio studio three times, the cinema once (that involved over 20 mins looking for a car parking space nearby, eventually parking much further away and walking), and shopping once, dragged kicking and screaming, having to wade through a lake in a waiting-for-brown-field-development car park on our side of town that we used to avoid the trauma of traffic congestion. The planners were presented with a once-in-a-generation opportunity to fix a lot of the congestion when they started redevelopment of the docks, but instead actually worsened the traffic routing and created even more congestion.  I don’t know why they did that, but they did. You could say that Ipswich had been a one-horse town, but the planners shot the horse. Ipswich could have been a great deal better with just a bit of thought. Having said that, there are far worse places, far worse. I’m probably just a troglodyte that owns a shaver.

Like many other towns, a lot of the shops are closing. The issues are familiar all over the country. Congestion, lack of parking and high parking fees compete with easy home delivery from online purchases. Congestion is not the same as throughput, and even though it seems busy, town centre businesses obviously aren’t getting enough business or they wouldn’t be closing. 

I’ve written on the future of high street retailing before:

https://timeguide.wordpress.com/2013/01/16/the-future-of-high-street-survival-the-6s-guide/

https://timeguide.wordpress.com/2011/03/03/future-high-street-retailing/

Online shopping offers formidable competition, and in those previous blogs I looked at what can be done to compete . This time, I want to concentrate on the location of shops.

Sometimes I just want to get out of the house and go shopping. If I don’t have anything particularly in mind, I go to Woodbridge and Felixstowe, mainly because they are just as fast to get to as Ipswich, but prettier, it is far easier to park there, and parking doesn’t cost a fortune. If the trip is purely functional, I will often end up at a retail park. They are easy to get to, I can park close to the shop I want, and it is free.

There has been huge resistance to out of town shopping centres over the last decade or two because they obviously take customers away from town centres, and involve driving so were considered environmentally unfriendly. Let’s look at both of those in the light of the new reality.

Big retail parks are mostly full of enormous warehouse stores that offer a purely functional destination. Some are selling stuff that is best suited to online purchasing and the less competitive ones are likely to die or shrink. As they free up the big warehouses, these could be attractively redesigned to house many shops that once lived in town centres. So when someone goes to their local retail park to look at furniture or DIY kit, they might well spend an extra while wandering through some interesting small shops.  The big stores would act as a functional magnet, and the small shops would add interest and serendipity, making a boring functional trip into an enjoyable experience that could fund a flourishing retail community. Provided the rents and rates are OK, and that parking is free and abundant, this could work well as a model for high street condensation and relocation. It could even rejuvenate physical retailing, especially small businesses.

As for environmental impact, being stuck in a traffic jam is far more polluting than driving along unimpeded. Out of town centres can be placed to work well with the local human geography and roads so that traffic can flow smoothly and make less pollution. Parking must be adequate to cope with latent demand or that will drive potential customers onto the net, or force them to drive round and round car parks looking for places, polluting as they go. People who live in town centres generally have ready access to public transport and it is just as easy to aim routes at out of town centres as it is to town centres. If the old high streets are re-purposed, then retail business would just be moved to more viable locations where they could flourish.

If we move shopping out of town, almost everyone benefits. People living out of town would not have to go into town to shop, and congestion there would probably fall so that it would be less traumatic when they do have to go in for other reasons. People living in towns would still have public transport access to shops, just in different locations. The few who live within easy walking distance of town shopping centres would suffer having to go further to shops, but they will suffer their loss anyway if they don’t move.

For people out of town, well designed out-of-town shopping centres offer the potential of reinvention and to rekindle the joy of shopping. For townies, the alternative to shops that are a bit further away might be to have no shops at all. That’s probably the new reality and we either embrace it or suffer it. Government and planners should recognise that and make policy accordingly.

 

Sainsbury’s marketing have lost the plot

This one is more of a rant against poor marketing, and isn’t about the future.

I won’t mention names, but I know a few marketing chiefs who think their staff are largely a waste of space. I don’t have any experience of working with Sainsbury’s marketing though so only have experience as a customer as evidence one way or another.

I am sure someone thinks their new campaign is fantastic. Lets run a TV campaign telling everyone that if they could have got stuff cheaper elsewhere, we will give them a voucher for the difference. It worked well for John Lewis didn’t it?

Well, yes it did, but John Lewis did it right. You did it the opposite of right.

So, if we’d shopped in one of their competitors, we would have paid less.  But they are kindly ‘making it this easy to claim the difference back’. So, if we are still dumb enough to go back to Sainsbury’s soon, knowing we had been overcharged, and remember to take this voucher with us, we can ask for a refund of the overcharge, but only as a discount of our next purchases, which presumably, being a similar basket, will also be overcharged, so we’ll get another voucher and be locked in forever into a cycle of being overcharged and having to juggle vouchers and keep shopping there to get a fair deal. But it is only £1.31, (it was only a small top-up shop of around £20) so we’ll cut our losses and shop in Tesco’s again, where according to Sainsbury’s, we’ll presumably save even more than that every time, since we normally pay rather more than £20.

Not quite John Lewis is it? They are ‘never knowingly undersold’. If they find a competitor would have charged less, they will charge you that or less, at least that’s what I have always assumed. Not give you a voucher that you have to take back and get a discount of another overcharged shopping trip.

Sainsbury’s, you are not being clever, locking people happily into forever shopping there. First, you are telling them you overcharged and then secondly, instead of just deducting it at the checkout at the time which would be easy and fair, you are making people additionally jump through hoops before you’ll give them a fair deal, while telling them where they can get one right away. Not clever. Not at all clever.