design:retail - June 2018 - 42

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For experience-oriented shoppers,
attractions will always trump anchors.
"showrooming" brands, products and services that
will support and complement, rather than compete
with, digital businesses.
It's important to remember that while the pace
has slowed a bit, retailers are still opening new
stores every year.
Future CESs will make good use of short-term
and midterm pop-up formats, allowing lesscapitalized retailers a cost-effective path for
reaching customers and giving established retailers
and brands platforms to test their approaches to
local markets and micro-markets. Pop-ups will
offer CES operators an easy way to change their
vendor population, providing consumers with unexpected "treasure hunting" experiences.
New consumers have an expressed preference
for "doing" over "owning." As a result, we anticipate the emergence of rich experience hubs. These
will be physical spaces inside CESs using immersive technologies, such as virtual reality (VR),
augmented reality (AR) and mixed reality (MR),
to create unique environments that provide customers sophisticated multisensory experiences,
allowing them to touch and feel co-created product and rich, deep content that can't be duplicated
on a computer, phone or conventional VR set.
Since convenience will play an even bigger role
in the future than it does today-call it the Amazon
Effect-the market for click-and-collect centers will
remain robust. Collection centers, operated by an
individual retailer or even the center itself, could
also serve as venues where online purchases can be
picked up, returned, rented and even resold.
While e-commerce continues to grow, by 2030
more than two-thirds of purchases will still occur
in physical stores and an even greater percentage
will be influenced by experiences in a physical environment, making it crucial to both rethink the
box and think outside it.

THINKING OUTSIDE THE BOX
Regardless of what form they take, all CESs will
share three common characteristics: creative design tailored around how and why consumers shop
them; competition (who else will be selling to their
target customers?); and the commercial context
they will operate in.
How we shop. Shoppers will demand CESs be
more than commercial spaces where transactions
are effectively and efficiently executed. They will
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have to function as a "commercial commons,"
where CES operators and tenants build sustainable
relationships with their customers.
Shopping is, and will always remain, an extension of customers' lifestyles and values. Many
players, including many technology companies, are
going to want to tap into this opportunity-meaning
competition from new and innovative nontraditional
competitors (many with deep, deep pockets).
Competition. Past competition was measured
in terms of metrics, such as market share, salesper-square-foot, margin elasticity and traffic
count. In the future, competitive effectiveness
will be judged by a whole new set of criteria,
including access to (and completeness of) consumer information, the effectiveness of ongoing
data collection and algorithm development, and
the real-time ability to translate social media
memes into "smart" inventory management and
merchandising strategies.
In addition, tomorrow's CES operators and tenants
will face the most implacable competitor of them all-
the new consumers themselves. Thanks to personal
shopping technologies, where customers used to go
to the store, they are-in many ways-becoming the
store. As we have seen, these future shoppers will
come armed with dozens of tools for disintermediating retailers, from bot technologies to voice-activated
ordering to subscription-based purchasing systems.
Context. Emerging retail models and changing
consumer preferences will transform our current ideas about successful tenant mix. Local and
artisan brands will co-mingle with national retailers. Product portfolios will shift to goods and
services less susceptible to disintermediation and
auto-replenishment. Subscription, sharing and
re-commerce platforms will expand their physical footprints. Non-retail tenants, such as fitness,
dining and entertainment, will account for a larger
percentage of the total tenant mix.
There are a near-infinite number of future CES formats we could consider, but for this analysis we've
focused on a few of the more plausible possibilities.

VARIATIONS ON A THEME
CESs that adapt to the changes and challenges
we've discussed will not only survive but prosper in
2030 and beyond. Without limiting the possibilities,
we believe that-with some notable exceptions-the

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majority of successful future CESs will fall into four
basic categories: destination centers, values centers,
innovation centers and "retaildential" space (see
Figure 4).

DESTINATION CENTERS
Destination centers are regional centers anchored by large, compelling attractions that have
the capacity to draw from extended trading areas.
For experience-oriented shoppers, attractions will
always trump anchors.
That said, the flagship store experience-whether
a more traditional department store or a specialty
store-will continue to play a more prominent role
in destination centers. Destination centers will be
consumer spaces offering compelling social experiences through New Age anchors and attractions,
such as theme parks, installations like indoor ski
slopes, large cinemas and theaters, museums and
art galleries, event space for concerts, food festivals
and themed galleries.
Other examples of possible specialty anchors
include retailers such as Bass Pro Shops, Lowe's or
REI, where discovery, education and experience are
key components of the brand experience.
Given the potential for the "showrooming" experience, customers may be drawn to destination
centers to build their wish lists for future online
purchases. Today, this idea may be enough to make
physical retailers shudder. But we are talking about
2030 and a world where the customer draws no
distinction between physical and digital retailing.
So anything that gets a customer close to you creates an incremental opportunity to make a sale.
Technologies that enable the customer experiences to start before and continue after the shopping
experience will also be crucial to getting customers
to make the commitment to visit a destination center. This will transform destination CESs into digital
hubs enabling a fully integrated, seamless customer
experience that builds sustainable relationships
between shoppers, merchants, entertainment providers and the CES operator.
Due to their size and the time commitment shoppers are being asked to make, centers will offer
package-less shopping, allowing customers to shop
hands-free. Purchases will be transferred to a central
staging area and then either collected by the shopper
at the end of the day or shipped wherever they specify.
Technologies also will enable real-time social
experiences, allowing customers to give and receive feedback in the form of "likes" displayed
on a central CES monitor or their phones. This
feedback will also be used to create just-in-time
personalized offers, promotions, and other

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