30 PREDICTIONS FOR 2030:

THE FUTURE OF RETAIL IN AUSTRALIA

 Consumers 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.

1The
2
Conference Board® Global Consumer Confidence Survey, conducted in collaboration with Nielsen
 Online 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.

3
 Food delivery services continue to grow

Outsourcing of food preparation to delivery Taking 25% to 35% of sales, delivery services will
services will grow. UBS estimates global food- exert pressure on businesses operating with tight
delivery sales will grow tenfold by 2030. Driven margins. Conversely, food delivery businesses can
by small apartments with less or shared kitchen bolster restaurant sales whilst keeping fixed costs
space, this will put pressure on existing facilities such as rent and labour stable.
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
 Shopping centres are ‘hubs’

Shopping centres will become the new high Many public transport networks are integrated
streets, fostering community and social into shopping centres, making them optimal
interaction. Containing several non-retail uses locations for community facilities such as medical
including community facilities, co-working centres, libraries and childcare. A larger focus on
space and last mile collection facilities, centre leisure, children’s play centres, recreational
footprints are expected to shrink in response to facilities, gyms and cinemas will see these uses
growth in e-commerce, backfilled by a range taking up large areas vacated by discount
of non-traditional uses. department stores and full-line department stores.

5
 Manufacturers the new retailers
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
 Convenience-based supermarkets proliferate

Shrinking levels of car ownership will reduce These supermarkets are currently expensive to run,
basket sizes, resulting in more convenience- with wages often running above 13% of revenue
based supermarkets. These supermarkets will compared to 9% in full-line supermarkets. Waste,
proliferate in infill locations with high-density shrinkage and other operating expenses are also
housing and will stock a range of ready- higher in these stores. By 2030 a critical mass of
made meals, competing against take away demand will enable higher profitability in
food and local high street retailers. convenience-based supermarkets and they will
become prominent in the retail landscape.

7
 Physical retail operates as showrooms,
shrinking retail footprints

Stores will be a place for customers to try Pureplay online retailers are increasingly
products before purchasing online and opening physical retail stores, enabling them
having them delivered, complementing to build brand recognition and engage with
online offerings and allowing customers to customers, indicating that physical retail will
interact with products. Increased efficiency continue to be important in 2030 and beyond.
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.

8
 Augmented 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.

9
 Successful retailers are experiential

Retailers will engage with customers through unique

instore experiences, providing a clear point of
difference to online shopping. Immersive experiences
in shopping centres will transform stores to create
interactive, ‘instagrammable’ spaces. Stores will sell
less but invest extensively in providing experiences.

Showcasing products in interactive and engaging

ways will drive sales and create connections with
customers, such as cosmetic giant MECCA’s
immersive experience ‘MECCALAND’. Nike’s flagship
store in Times Square includes a basketball court with
cameras to record shots and treadmills with screens
mimicking famous running routes. It has become a
tourist attraction, elevating brand engagement.

10
 Sharing economy has transformed
retail requirements

Cheaply produced furniture products that use Clothes, transport and living will be transformed
plastics and particle boards are easily broken or by the sharing economy. Many products will be
deemed disposable, resulting in large volumes entirely reusable at the end of their lifecycle.
becoming landfill. This is a key driver of a new Customers won’t need to own something used
industry of furniture rentals where customers rent only occasionally, instead paying a service or
furniture rather than buy it cheaply. person to provide it to them.

11
 Cafes and restaurants are
the new living rooms

Consumers will favour time-saving convenience due

to less conventional and probably longer working
hours. Also, as household stereotypes are broken
down, there is less likelihood a sole person in a
household will be responsible for cooking and
shopping. These changes will result in eating out
becoming commonplace rather than occasional.

The number and quality of establishments

available to consumers makes it cheap,
easy, healthy and convenient to eat out.
Vegetarianism and veganism is expected to
increase significantly by 2030 as more people
seek to mitigate the environmental impact
from eating meat, and restaurants will cater
to this growing demand.

12
 Consumers increasingly look
for personalisation

Consumers will be willing to pay higher prices for

personalised products. Research from Epsilon found
that 90% of consumers find personalised
experiences appealing and 80% say they are more
likely to purchase from a brand that offers them.

Subscription based services will attract shoppers

wanting a curated product shipped to them on a
regular basis. By 2030, retailers will use
personalisation engines linked to real-time biometric
data to make recommendations, such as meals
with optimal nutritional content and metadata
being used to deliver weekly grocery shopping.

13
 Retail offering revolves around meeting
consumer demands
The ability to compare product quality and price will be easier, as will the ability to review
products and express wants and dislikes. Retailer responsiveness and adaptability will be key to
attract and retain customer bases. Customers will demand the exact product they want, how
and when they want it.

Understanding individual customer buying trends and preferences using analysis of big data
will enable retailers to provide tailored product or services through in-store services,
promotional material, personalised product offerings and loyalty rewards. Brand loyalty and
return customers will be key to retailer success, as competition is easily sought and compared.

14
 Wellness and health is a
lifestyle, not just a product

Wellness and health will be a holistic lifestyle choice,

influencing products and everyday lives of consumers.
Bricks and mortar stores will increase in-store activities
such as fitness, meditation and mindfulness sessions, or
educational food and nutrition sessions. Wearable
products monitoring health, wellbeing and fitness levels
will be used by a large proportion of the population,
tracking almost all aspects of their daily lives.

Studies have found that over 40% of shoppers

would value more green space and 17% want
an increase in fitness-related concepts.
Shopping centres will focus on retailer
selection and programs or events to increase
visitation, build customer loyalty and provide
a sense of community and wellbeing.

15
 Digital supermarkets enable grocery
shopping anytime, anywhere

Digital supermarkets will have virtual products

and changing price displays, eliminating
delivery, unloading, stacking and store
monitoring requirements. Customers will scan
products through an app linked to their
desired payment method, and a required
delivery time will be selected, enabling
customers the flexibility of shopping anytime
and anywhere, which will be important as
customers increasingly value convenience.

For retailers this means less space occupied

because loading and storage will not be
required, and customers will still be able to
have a ‘shopping experience’ and the ability
to browse a physical store.

16
 In-store experience is key to
retaining customers

In-store technology will provide experiences that

cannot be replicated online, increasing the
convenience of shopping and payment
through in-store product information and
comparison and promotion of brands, offers
and loyalty programs. Implemented across all
retail categories, technologies include:

• Robots addressing queries, taking orders,

payment and stocking shelves

• 3D scanning and virtual fitting rooms which

select the most suitable product for a
customer such as shoes, clothing, glasses or
cosmetics

• Virtual Reality (VR) to allowing customers to

use a product in-store or configure a
bespoke product

17
 Household staples shopping automated

Integrated home appliances will allow This service will be restricted to products
monitoring of consumption patterns, with low engagement levels without
automating ordering and purchasing. This will research or comparison requirements such
be especially prominent for regularly used as home and personal care products. The
products such as grocery staples and other automatic selection and purchase of high-
items such as laundry detergent and pet food, engagement products such as electronics
achieved through automation of appliances and clothing will likely take longer to be
like washing machines and pet food dispensers. adopted by consumers.

18
 Retail, storage and distribution
are integrated

Growth in online retail and popularity Sophisticated equipment will be

of in-store purchases being delivered prominent in back rooms. As order
to customers’ homes or workplaces volumes increase, picking and packing
will reduce retailer floorspace. There technologies such as item sorters will be
will be opportunity to utilise obsolete implemented into these spaces to
floorspace as storage space, increase speed and efficiency and
operating as a mini-distribution enable an automated process.
centre to fulfil online orders and
improve supply chain efficiencies
due to being located in populated,
inner-suburban areas. This will also
reduce distribution warehouse space
requirements and reduce delivery
times and transportation costs.

19
 Grocery deliveries are mainstream,
reducing trips to the supermarket

Grocery delivery will see high growth in online

adoption due to convenience and time-saving
advantages. Currently this is restricted by the
unfavourable economics for supermarkets
offering deliveries and also the perishable nature
of goods purchased, as consumers remain
reluctant to order online. Flexible delivery options
and refrigerated storage infrastructure will allow
fresh or frozen deliveries at a time specified by
the customer.

Meal kits will be popular, and instead of selecting

products individually consumers will simply select
recipes for which required ingredients will be
delivered, prepared by both supermarkets and
external providers. Consumers will still value the
ability to shop in store through virtual reality,
enabling them to see and inspect product
details and ingredients.

20
 Big data is central to retailer strategies

Data analytics will support businesses large and

small. Tracking customer behaviour and
inventory based on data analysis in real time will
be a cost saver for retailers as they will order only
what they sell, improving efficiency of storage.
Customer data will also enable retailers to be
more engaged with customers through
personalised services such as tailored sales,
promotions, loyalty programs and rewards.

21
 Landlords create curated centres
to maintain foot traffic
Landlords will be more particular in tenant selection to provide a curated retail offering
for their catchment. Understanding demographics and consumer demands will
determine the success of centres; tenants will need to serve a purpose within the centre
that aligns with consumer habits. A strong focus on creating a communal environment
will be key, achieved through longstanding tenants and provision of unique events.
Leisure and entertainment offerings will keep centres open and buzzing both day and
night. Centres will become part of the community and customer lifestyles.

22
 3D printing displaces some retailers

Sophisticated 3D printers will be ubiquitous,

simple and affordable enough for everyday
retail and personal use. Customers will create
tailored, bespoke products such as
homewares, clothing and shoes, putting
pressure on retailers who specialise in these
products. Experience and customer interaction
will be critical to prevent losing customers who
choose to print products for themselves.

3D printing enables the creation of a zero-

waste business model through print-to-order
manufacturing and the use of laser-cutting
technology that reduces excess material.
This will be an extremely attractive prospect
to consumers who are environmentally
aware of the products they buy.

23
 Courier technology permits 24/7,
customised and convenient delivery options

Delivery will be a 24/7 operation rather than

restricted to business hours. Retailers and
couriers will provide customers with the ability
to choose a specific delivery time frame and
location. Flexibility around changing this
preference at any time will be key.

Real time tracking of deliveries from order

fulfillment to GPS monitoring of courier location
will be demanded by customers wanting to
know precise delivery times and also track a
product’s journey every step of the way.

24
 In-home technology is changing
consumption patterns

Use of Artificial Intelligence (AI) within homes

will be commonplace, automating many
aspects of daily life including shopping and
ordering products, managing finances and
payments and organising daily tasks.
Individual sizing and preferences will allow
ordering of clothing, shoes and other apparel
goods automatically. Virtual fitting rooms
visible through an in-home screen will allow
customers to ‘try on’ products.

Retailers will have apps that work directly

with in-home technology to create a
seamless shopping experience that does
not require the opening of a phone or tablet
screen, as it is all completed through voice.
It will also provide detailed information
about similar products, reviews and price
comparisons.

25
 In-store AI technology helps retailers
understand, cater for and retain customers
Using AI in their operations will improve
retailer efficiency and help them understand
their customers and retain loyalty. In-store AI
technologies will include the use of robots
and screens enabling customers to locate
an item or check its availability, view
product information and its source and
compare prices and alternatives.

Other in-store technologies adopted to

ensure a smooth customer experience will
include behavioural analytics that track
customers’ in-store movements, what they
try on and what they purchase or,
conversely, what they decide not to
purchase.

26
 Increased automation is shrinking the
retail labour force
The adoption of AI, automation and robots in conjunction with fewer visits by
customers to physical retail stores will see a reduction in the total labour pool
and required in-store staff. Retail payment processes will be dominated by
technology such as mobile device payment, self-checkout processes and
cashier-free stores where customers are able to walk straight out and have
products charged to their chosen app or payment method.

27
 Shop leases are flexible and based around
dynamic retail stores and offerings

The rate of innovation and change will see store

requirements vary quickly and often. As a result,
lease terms will be more flexible and shorter
overall. Turnover rent calculations will need to be
negotiated to clarify which of the retailer’s sales
are to be included.

Store fit out and design will always be changing

and will be completed at a lower cost with a
short-term focus and the ability to be altered
and rearranged easily.

28
 Flexible payments accepted anywhere
through a single platform

Consumers will have different payment methods, from

traditional bank accounts to cryptocurrencies and
digital payments. Apps will be integrated into one,
where all payment methods can easily be viewed and
utilised from a single platform.

Retailers will be flexible and secure in accepting

all forms of payment as customers demand the
efficiency and convenience of a single, user-
friendly platform. Online, single-click payment
will improve the experience for the customer
and help to avoid shopping cart abandonment
resulting from complicated payment processes
or the inability to pay a certain way. Saving
customer data to create a seamless, frictionless
payment process will be expected.

29
Department stores are broader ‘retail spaces’

Department stores will undergo significant The attraction of having multiple brands in one
network consolidation and floorspace location has been virtually rendered obsolete by
reduction. Traditional department stores will the internet. The size of departments stores
be replaced by conceptual ‘retail spaces’, prevents them from providing specialised
focussing on customer experiences that products or personalised service, making them
revolve around socialisation, leisure and dependent on in-store experience and service.
placemaking. Beauty will become a pivotal
offering, expanding into wellness, health
and leisure. Space that is not required for
retail use will be taken up by non-retail uses
such as coworking.

30
 Ageing population is influencing
retail offerings
Australia’s population is ageing with persons aged over 65 increasing to one in six due to
improving life expectancies, better healthcare and living standards and a declining birth
rate. This demographic will have more available leisure time. Health and pharmaceutical
retailers will benefit, and retail and services targeting older residents will cluster, creating
‘hubs’ focussing on things such as medical providers and leisure offerings. Older Australians
will have a higher adoption rate of online retail, and shopping and grocery delivery through
meal kits and readymade meals will be popular to those who can’t or won’t cook for
themselves. Associated with this, delivery services will provide a higher level of service,
including the delivery and unpacking of groceries or installation of products for free.

31
 Contacts

Bradley Speers Kate Bailey Verity Jenkins

Head of Research, Associate Director, Senior Research Analyst,
Australia Head of Logistics and Retail Research Logistics & Retail, VIC
[email protected] [email protected] [email protected]

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