As the merging of the physical and online worlds continues to gather pace, CACI’s Alex McCulloch examines how retail will look in ten years’ time.

The World Economic Forum argues that we are on the cusp of a fourth industrial revolution. After steam, mass production and electronics comes the merging of the physical and online world.

This obviously makes ten-year predictions pretty hard to make – and no doubt there will be significant game-changers – but for all the technological change and innovation, history tends to repeat itself.

In 18th century London there were three times as many coffee shops as there are today and you could get a four-hour, same-day delivery on the penny post system.

This is because, irrespective of technology, people have always valued experience, social engagement and their time. And this will continue.

Trend 1: Stores will be entertainment centres

During the next 10 years, we will see increasing partnerships between retailers and leisure companies, retailers and property owners, and directly between retailers. This will create unique shopping centres based around the concepts of “experience” and “entertainment”.

Flagship stores are already essential to retailers, capturing 15% more spend than regular shops.

But retailers will realise that they can offer shoppers an even more complete experience by pooling their resources and expanding their offers together.

Think of the Lion Coffee & Records pop-up in the Gap store on Oxford Street, only at a whole other level.

Already in Westfield, we have Jamie Oliver’s new cook school, operating out of the Jamie’s Italian. This isn’t a high-end concept, but a more affordable cook school.

In the US, high-end bath and kitchen retailer Pirch lets customers try out all the equipment in-store. Shoppers can use the kitchens, taste the food and have a bath, experiences that have driven the average dwell time in the store over the two-hour mark.

But this is only the beginning. Customers in the 2020s will expect incentives to go and sit in the coffee shop in a shopping centre while their order is fulfilled – an order that is possibly delivered from a local logistics hub, with cheaper rent than a warehouse, not far from the centre.

Such co-operation will require retailers to exchange ideas, work together and, essentially, understand which consumers are likely to combine which types of shopping.

Trend 2: Shopping will be even more local

Alongside the trend of increasing retail and leisure collaborations, we will see an opposite polarisation. Consumers will also expect to have small, efficient, local stores, with delivery points dotted all around their homes and offices.

This will again mean more partnerships between different types of retailers. Click-and-collect for big clothing brands, for instance, will proliferate across small, local shops, while online and multichannel retailing will only grow bigger.

Yet a considerable majority, around 67%, of clothes shopping will still be offline in 2026.

“This will again require co-operation between different types of retailers. And we have already seen the beginnings of such collaborative trends with Sainsbury’s takeover of Argos”

Alex McCulloch, CACI

We can see a scenario in 2026 where shoppers who visit a flagship entertainment shopping centre will find a jacket they like, but may be unsure about the colour.

They will then be able to reserve the jacket in three different colours at their local collection hub, instantly share pictures to their partner via the brand’s in-store messaging for a second opinion, and then pick up the chosen colour in a new small-format ‘fulfilment store’ close to their local Tube station later in the evening.

This will again require co-operation between different types of retailers. And we have already seen the beginnings of such collaborative trends with Sainsbury’s takeover of Argos.

Sainsbury’s is, in its own words, creating a “multi-product, multi-channel” retailer, with outlets as close as possible to where people live.

Trend 3: Customers will expect personal treatment

Finally, there is the much lauded concept of big data. The future, however, lies not merely in big data, but in being able to manage and organise data insight in such a way that it informs decisions, providing the “so what?” and the “what next?” rather than just beating you over the head with its gigabytes of size.

From today until 2026, retailers will continually invest more and more in customer insights and in building a relationship with consumers.

Through understanding who customers are and what they want, retailers will keep up with constantly shifting consumer behaviours and demands for personalised shopping.

Essentially, retailers have to embrace change and equip themselves to be nimble and bold in the face of new models and methods.

Consumers’ expectations will only grow and retailers will have to meet their demands for leisure-based shopping.

Even though we don’t know which types of technologies will dominate retail in 2026, we know that the technology will give consumers more of what they already want: entertainment, convenience and personal experiences.

  • Alex McCulloch is an associate partner at CACI