Table of Contents Executive Summary 2 Bricks and mortar: Actual sales instore might be less important in future 2 Next day everything: Making delivery faster and cheaper 2 Generation Y&Z: New Retail experiences to accommodate new tastes 2 Technology: Getting ready to transform shopping experiences 2 Untapped markets: Retailers will gradually adjust to suit older generations 3 Bricks and mortar: actual sales instore might be less important in future 8 Failing high street stores can be seen in all sectors 8 There are multiple and evolving reasons why online retail is so dominant in growth terms 9 In 2018 the new trend in retail is the slow move back to physical stores with a completely different model 9 After putting bookstores out of business Amazon creates its own 11 Amazon & Whole Foods could be the first of a new generation of stores 11 Amazon Go gives a glimpse into the future of payments 12 Walmart’s Bonobos and the showroom model is the future of the high-street 13 Next day Everything, making delivery faster and cheaper 14 Retailers care about delivery quality because their offering is poor without it 14 Shipping costs are becoming a huge, expensive problem for all kinds of retailers 15 Home delivery is currently failing as a concept, which is a major problem for retailers 16 Amazon already has a significant delivery network in operation in some markets 16 Amazon moving into the delivery business should worry transportation carriers 17 Making efficiencies, speeding up the process and innovating is the name of the game in delivery for the next decade 18 Autonomous delivery is the aim for all kinds of retailers but the current designs are not yet good enough 19 Delivery Drones and Amazon Prime Air is a unique idea but it doesn’t yet beat a delivery driver 20 Airborne delivery airships could provide an answer, but the technology is not there yet 21 Generation Y&Z: New Retail experiences to accommodate new tastes 22 Millennials are extremely online and the implications for retail are extensive 22 Preparing for Gen Z and the tastes of the future will not be easy 22 Generation Z do an enormous amount of aspirational shopping 23 Marketing has to be done very carefully done or it could actually reduce sales 23 Millennial online habits reflected in e-commerce 24 Online retail continues to grow rapidly, because of highly online consumers 24 Apparel is the key beneficiary of the e-commerce boom 25 Traditional retail outlets losing ground 26 Department stores suffering in both US and UK 26 Selfridges invests online in attempt to adapt 26 Sharing economy apps have potential to grow 27 Companies that prioritize convenience and price succeed 27 Tech startups generally lead to aggressive expansion 28 Sharing economy has led to the rise of the gig economy 28 Technology getting ready to transform shopping experiences 29 Virtual reality will change how consumers purchase high-value items 29 In-store retail apps close gap between online and physical store customer experience 30 Holographic technology creating new and immersive shopping experiences 31 Artificial intelligence personal assistant predicted to transform future shopping experiences 32 Interactive mirrors and video technology are propelling change in apparel stores 33 Untapped markets: Retailers must adjust to suit older generations 35 Older shoppers have extensive spending power, offering retailers lucrative sales opportunities 35 Retailers have so far failed to take sufficient notice of older consumers - this will change 36 Retailers are beginning to cater store design towards needs of older generations 37 Bricks-and-mortar stores begin to adapt to spending power of over-65-year-old shoppers 39 Key Findings 41 Appendix 42 Further Reading 42 Sources 42 Ask the analyst 44 About MarketLine 44 Disclaimer 44

List of Tables Table 1: Growth in UK operations of online retailers 26 List of Figures Figure 1: UK retail companies declared bankrupt or similar 2007-2018 8 Figure 2: UK Stores and Employees affected by bankruptcy 2007-2018 9 Figure 3: Google Store 10 Figure 4: Amazon Bookstore New York 11 Figure 5: Amazon Go 12 Figure 6: Bonobos’ Guide Shop 13 Figure 7: Amazon shipping cost, shipping revenue and net shipping costs 2010-2016 $m 14 Figure 8: Amazon, disparity between sales and shipping expenses growth 2010-2015 15 Figure 9: Amazon UK delivery carrier breakdown from Amazon seller 2016 17 Figure 10: Ocado Autonomous delivery test vehicle in the UK 18 Figure 11: Nuro Robotic vehicle delivery 19 Figure 12: Nuro Robotic vehicle delivery 20 Figure 13: Gen Z, aspirational browsing stage 23 Figure 14: Internet activities by age group, 2017, UK 24 Figure 15: Frequency of online shopping, by age group 2017, UK 25 Figure 16: Logos of sharing economy pioneers 27 Figure 17: Ikea virtual reality app 30 Figure 18: Target in-store app 31 Figure 19: Ralph Lauren holographic fashion show, 2015 32 Figure 20: Macy’s On Call AI 33 Figure 21: Samsung interactive mirror 34 Figure 22: UK Household debt (£bn) 2000-2016 36 Figure 23: UK over-65-year-old population (millions) 37 Figure 24: Recent internet use in 2011 and 2017 by age group, UK 38 Figure 25: Lack of seating deters older shoppers 39