1) The document discusses 6 trends related to retail business models: The conflicted consumer, e-commerce converges with bricks-and-mortar, vertical integration makes a comeback, affiliate marketing has its moment, paying for usage, and please subscribe. 2) One trend is that e-commerce and bricks-and-mortar retail models are slowly amalgamating. Retailers are trying to provide seamless omni-channel experiences for customers. 3) Emerging technologies are helping smaller retailers offer integrated online and in-store solutions through platforms that connect point-of-sale, e-commerce, mobile, and more.

1. The Future
of Retail
November 2012 | Business Models

2. Business Models | November 2012 2
Executive Summary
Business models are no longer an invisible component of retail strategy. Changes in
customer expectations and technology have spurred the development of innovative
new business models that are shaping the future of retail.To help retailers navigate
these changes, Nurun has prepared a report that identifies and describes six key
business model trends:
Trend 1: The conflicted consumer
Retailers are struggling to adapt to a world of opposing consumer tensions.
Trend 2: e-commerce converges with bricks-and-mortar (and vice-versa)
Formerly separate business models are slowly amalgamating.
Trend 3: Vertical integration makes a comeback
Some of the most recent retail brands have embraced vertical integration from day
one.
Trend 4: Affiliate marketing has its moment
A new wave of e-commerce built around affiliate marketing has emerged.
Mini Trend 1: Paying for usage
Temporary ownership of cars, dresses and toys is growing in popularity.
Mini Trend 2: Please subscribe
New automated subscription services are providing enhanced consumer convenience
and product variety.
Along with a thought-provoking look at each of these six trends, this report contains
a series of provocative questions for each trend that will help retailers consider how
they might evolve their current business model.

3. Business Models | November 2012 3
Manage the ambiguous future with
strategic foresight
Daily blog posts. Monthly magazines. Quarterly trend reports. Must-read
books. Anyone who works at the intersection of technology and people is
swimming in information.This data smog can make deciphering the
implications of the latest tech and social developments difficult. One solution
is strategic foresight, which can help you make sense of emerging trends and
clearly evaluate your options for the future. It’s a tool to manage risk when
facing ambiguity in the marketplace.
Strategic foresight doesn’t predict the future, but it does help prepare you for
it by envisioning a number of different, yet possible, future states in the
market landscape 10+ years from now.These future states are often described
as a set of scenarios, and they emerge from an analysis of current trends. So,
as a simple example, the increasing popularity of pop-up retail spaces,
combined with the high adoption of mobile devices, could develop into a
future filled with transient storefronts.This scenario would be made possible
due to the minimal wired infrastructure required for information and
payment.
The rapid uptake of technology means that our social lives, cultural
experiences, policies, regulations, ecological landscape, and business models
are increasingly intertwined.Through its very design, strategic foresight is
built to accommodate complexity by considering trends from a multi-
dimensional perspective.
Steps of strategic foresight
Trend scan
Identify trend drivers
Evaluate critical uncertainties
Future scenarios
Strategic implications
Action plan
Monitor trends
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4. Business Models | November 2012 4
Why Retail Foresight?
The Nurun Strategic Foresight team has launched a strategic foresight
initiative to articulate the future of business-to-consumer (“B2C”) retail and
commerce, and explore implications for Canadian and U.S. retailers.The
scenarios we generate will give our retail clients the toolkit necessary to start
imagining (and preparing for) the possible futures in the marketplace.
The first of seven steps in the strategic foresight process involves trend
scanning.The trends we capture will be published as a series of trend
reports that focus on five domains of importance to both online and
omni-channel retailers.
This is the second of five trend reports, and it looks at retail through the
lens of business models. Next will be a report on transactions and payments,
followed by analytics.The culmination of trend scanning and subsequent
phases will inform future scenarios in our final stratgic foresight report. For
more information, you can follow the project on Nurun’s blog, Digital for
Real Life or subscribe to our email list,
futureofretail@nurun.com.
Steps of strategic foresight
Trend scan
Identify trend drivers
Evaluate critical uncertainties
Future scenarios
Strategic implications
Action plan
Monitor trends
Marketing and Merchandising
Business Models
Transactions & Payments
Analytics
Emerging Technology Platforms
Preparing for the Future of
Retail: A Strategic Foresight
Report
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3
4
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5. Business Models | November 2012 5
Introduction
For many decades, business models were one of the most invisible aspects
of retail. But changes in consumer culture, customer expectations, market
forces and technology have spurred the development of new retail models.
The resulting success and influence of companies like Amazon and Apple on
the traditional retail landscape has resulted in considerable attention from
consumers, media and retailers alike (Internet Retailer, 2012).
Given the necessity of rethinking retail strategies in an era of innovative busi-
ness models, Nurun has prepared a report that identifies six key trends. As a
starting point, Nurun used the definition provided by Alexander Osterwalder
andYves Pigneur in their book Business Model Generation: “A business
model describes the rationale of how an organization creates, delivers and
captures value.” Building on this, we defined value along three dimensions:
· Customer (utility)
· Business (financial)
· Social (community impact)
We also used Osterwalder’s business model canvas as a tool to help us un-
derstand the key components of various business models and relationships
between the different building blocks during our trend scan.
For many established retailers, a recent challenge has been to try and seam-
lessly integrate new business models with their existing retail approach. In the
process, core aspects of traditional retail business models are being rethought,
often out of necessity. New online revenue streams have added complexity to
business models that were originally designed to deal only with straightfor-
ward in-store retail transactions.This means finding new ways to drive profit
and stay competitive in an omni-channel environment.
Changes in consumer expectations and behaviours will continue to drive the
evolution of new retail models. As evidenced by The Conflicted Consumer
trend, many retailers are still struggling to adapt to a world of opposing con-
sumer tensions, such as a desire for the benefits of both local and global retail.
This confusion might be a necessary, but temporary aspect of the transfor-
mation of retail.The e-commerce converges with bricks-and-mortar (and
vice-versa) trend suggests that two formerly separate retail business models
are starting a slow and uneven process of amalgamation.
Just as with music or clothing, certain business models go in and out of fash-
ion.The retail trend of Vertical integration makes a comeback demonstrates
that extending an existing business model into new parts of the value chain
can give it a new life. In other cases, new business models have been made
possible by the Internet, explaining the Affiliate marketing has its moment
trend.
Along with these larger shifts in retail business models, Paying for usage and
Please subscribe are two mini trends that we believe will persist over the long
term and are worth watching closely.
This report offers a thought-provoking look at each of the six trends men-
tioned above, along with a series of provocative questions that relate to each
trend.
Defining Our Terms
Given our expertise in the
realm of digital retail, we
defined retail marketing to
include:
• Product findability and discoverability
• Recommendation and comparison tools
• Social commerce
• Issues relating to consumer privacy
Our examination of
merchandising trends
focused on:
• Pricing
• Localization of assortment
• Product presentation

6. Business Models | November 2012 6
A complete strategic foresight report that incorporates these six retail business model
trends, along with key retail trends relating to marketing and merchandising, value
exchange, analytics and emerging technology platforms, will be released in 2013.
(Our first trend report on Marketing and Merchandising is available here.)
The conflicted consumer
eCommerce converges with bricks-and-mortar (and vice-versa)
Vertical integration makes a comeback
Affiliate marketing has its moment
Paying for usage
Please subscribe
Major Trends
Mini Trends
Nurun Toronto found four major trends and two mini trends relating to retail business models:
1
2
3
4
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2

7. Business Models | November 2012 7
Trend
The conflicted consumer
1 3 42
1
Trend
Consumer expectations for retailers continue to evolve due to a variety of social,
economic and cultural factors.These factors include a greater degree of social re-
sponsibility, a pressing need for convenience and a new awareness of shopping local
in a global marketplace. In order to stay competitive and respond to new consumer
demands, some forward-thinking retailers have developed innovative new business
models.
The result of this mutual influence is an ongoing dance between customer expecta-
tions and new business models.This has helped to encourage the rise of the conflict-
ed consumer, a development that has become more noticeable as startups, boutiques
and niche retailers populate the marketplace and highlight these new consumer
inclinations and points of tension.
Everything vs. one thing
Consumers appreciate the wide assortment and one-stop shop aspect of the
“everything for sale” approach made popular by Walmart. At the same time, they also
find that niche retailers like Lululemon or Dollar Shave Club provide them with an
opportunity to display their sophistication or save significant amounts of money. As
a result, the growth of both long-tail models and specialized niche retailers in the age
of e-commerce has led to an increasing polarization in retail business models.
Consumer vs. citizen
Many people are now trying to satisfy a human desire to contribute to the greater
community when they shop. In response, companies like Toms and Warby Parker
have woven a commitment to social responsibility into the core of their business
model.Toms donates a new pair of shoes to a child in need for every pair purchased.
Warby Parker follows the same model, only with eyeglasses.
Permanent vs. occasional retail
Work pressures due to a challenging job market, along with a variety of related time
constraints means that consumers are demanding an increasing amount of conveni-
ence when they shop. One of the biggest attractions of online retail is an always open,
24/7 shopping environment.While convenient, e-commerce can also decrease the
urgency of purchase.
One response to this challenge is the creation of retail scarcity and novelty through
location and product stock.This approach acknowledges that many consumers gain
social status and pleasure from owning “limited edition” items.This helps to explain
the continued popularity of pop-up shops that remain in a temporary location any-
where from a few hours to a few weeks. Some stores, including Toronto’s Dough by
Rachelle (Liu, 2012) and The Doughnut Vault in Chicago (2012), are taking this idea
further, staying open only as long as they have inventory to sell.
Hyper-local vs. mega-global
Due to the popularity of farmer’s markets and a newfound focus on the merits of
buying local, consumers have become more aware of the distance food travels to
reach their plate. Recent developments have also sparked similar conversations about
local versus global retail.

8. Business Models | November 2012 8
1 3 42Trend
In the Canadian retail landscape, new entrants such as Marshalls, Nordstrom and
Target serve as a reminder of the global reach of retailers. At the same time,Toronto-
based website Shopcaster curates products from local indie stores that do not
consider e-commerce to be their core strength. Meanwhile, recent entrant Shop.ca
aims to combat the growing dissatisfaction felt by Canadian online shoppers when
faced with high shipping costs and duty charges from American retailers (Silcoff,
2012).
What new retail opportunities might emerge as a result of
conflicting tensions in consumer attitudes and
behaviours?
How might you showcase specific products while also
offering customers a wide array of options?
What values and beliefs does your brand hold true? How
might you incorporate sustainability and social
responsibility practices into your business model?
How might you cater to both convenience-seeking
customers and those looking for unique products and
experiences with exclusivity?
What actions are you taking to make localization a part of
your national or international retail strategies?
FORWARD THINKING

9. Business Models | November 2012 9
Trend
e-commerce converges with
bricks-and-mortar (and vice-versa)
1 3 42
2
Trend
Consumers have always formed their understanding of brands
through a culmination of interactions and experiences.They
expect consistency across touchpoints, despite the prolifera-
tion of channels in recent years.
The result is that after amassing more than a century of retail
expertise following the emergence of the department store,
many traditional bricks and mortar retailers have had to add
an online component.While the goal is to offer customers a
seamless omni-channel experience, a smooth transition from
bricks to clicks has been difficult for all but a handful of retail-
ers.
New and improved in-store retail
Despite the numerous challenges facing traditional retailers,
having a physical location still provides many advantages. As
Jerry Storch, Chairman and CEO of Toys ‘R’ Us argued dur-
ing Shop.org’s annual summit, “While there has been much
focus on online-only shopping—and our own e-commerce
sites have grown to a $1 billion business—the reality is that
the vast majority of sales still occur in physical stores.”
The trick has been finding the best way of combining
e-commerce with in-store to create a connected retail
experience.The first step is rethinking multiple pools of
inventory for each channel (e.g. in-store, online, etc.) and
instead shifting towards centralized or fluid inventory. Such a
shift allows retailers to ship products between stores to meet
customer demand, or provide “endless aisle” options through
the use of in-store technologies. It also means giving custom-
ers the option to buy online and pick-up in-store (B.O.P.I.S.)
or buy online and return in store (B.O.R.I.S.). In doing so,
previously separate supply chains are now merging in order
to help retailers lower their costs.These and other related
omni-channel tactics were discussed in our previous report on
Marketing and Merchandising.
Multi-Channel
HIGHLOW
HIGH
LOW
Seamless
Omni-Channel
Traditional
Vertical
Integration
functional integration
channelintegration
Retail channel and department
integration matrix
“Managing customer service in e-commerce
is a totally different job than managing
customer service in bricks and mortar. There
are different skillsets and rules and you have
to understand what excellence means in each
channel.”
Dr. Donna Smith
Professor in the Ted Rogers School of Retail Management,
Ryerson University

10. Business Models | November 2012 10
1 3 42Trend
A recent study from CrossView demonstrates that B.O.P.I.S. and B.O.R.I.S. provide
opportunities for retailers to demonstrate superior approaches to customer service
that are not possible with pureplay eCommerce (McCue, 2012).This explains why
some retailers, are using drop shipping (consumers buy online, but products are
shipped direct from the vendor to the purchaser).This allows for enhanced selec-
tion and helps companies shift their warehousing and inventory costs to funding
programs that improve the customer relationship.This strategy is not without risks,
however, as it adds complexity into the value chain through a need to coordinate
multiple organizations (both retailer and vendor).
Meanwhile, some bricks and mortar retailers are also trying to enhance their in-store
experiences, such as lululemon offering free weekly yoga classes in stores and show-
rooms (lululemon athletica, 2012) and Reebok opening a gym in its NewYork store
(Pinter, 2012).
Making clicks more like bricks
While pureplay e-commerce offers many advantages,
consumers are still hesitant to fully embrace online shop-
ping in categories where being able to touch or try on an
item prior to purchase is considered central to the
experience. But new options have emerged to help close the
close the gap between online and in-store experiences,
including virtual fitting tools like Fits.me (2012). After
taking a few basic measurements, Fits.me will display
garments on a representative version of the customer called
a “FitBot.”
New and nimble online retailers will continue to
experiment with fresh approaches to retail, thanks to
business models that have been built from the ground up.
But for all their cutting edge approaches, certain online
retailers are now realizing that e-commerce has limits and
are starting to contemplate the previously unthinkable—
a move into physical retail.
Convergent retail made simple
Emerging technology solutions are making it easier for
smaller retailers to offer convergent retail solutions through
platforms such as LightSpeed. LightSpeed integrates
front-counter Point-of-Sale with eCommerce and also
offers interactive sales tools via the iPad and mobile solu-
tions (LightSpeed Retail Inc., 2012). In a recent Reuters
article about the 2012 holiday shopping season, HSN Chief
Executive Mindy Grossman noted that, “I still see people
looking at their e-commerce strategy and saying mobile
comes later. Actually, it should be the opposite.”
(Bhattacharjee, 2012).
“We really believe in the integration of
online and offline. That’s why we offer
the free monthly home trial—because we
know that some guys need more than
pictures. They need to touch and feel and
try on the clothing.”
Hicham Ratnani,
CFO of Frank & Oak
Inventory Customer Demand
Online
Channel Customer
Retail Store
Retail Store
Inventory
Inventory
B.O.P.I.S.
Buy Online, Pick-up In-Store
B.O.R.I.S.
Buy Online, Return In-Store
Multi-Channel
HIGHW
HIGH
LOW
Seamless
Omni-Channel
Traditional
Vertical
Integration
functional integration
Vertical integration reduces the distance between
manufacturer and customer

11. Business Models | November 2012 11
1 3 42Trend
Shopify, meanwhile, makes the process of creating and managing a small online
storefront as simple and seamless as possible, thanks in part to a recent shipping
partnership with Canada Post (Bury, 2012).The growth of convergent retail
platforms such as LightSpeed and Shopify now allow smaller retailers to focus on
other aspects of their omni-channel retail strategy, such as findability (the ease in
which customers can actively seek out an a retailer’s website), conversion (the
activities designed to convert shoppers into buyers) and transactions (the ease in
which customers can pay for goods and services).
Are you ready for a world in which the distinction
between online and offline channels no longer exists?
Is your team ready to build seamlessness into online and
offline, along with all the channels through which you
deliver experiences?
FORWARD THINKING

12. Business Models | November 2012 12
Trend
Vertical integration makes a comeback
1 2 43
3
Trend
Vertical integration is by no means a new business model—Ikea, Sony and
Danier have spent decades bringing their manufacturing and retail operations
in sync. Lately however, certain retail sectors have rediscovered vertical
integration because it can offer a distinct competitive advantage when
combined with other retail strategies. For Zara, vertical integration was
crucial in creating a fast fashion business model that allows stores around the
globe to stock new clothing twice a week.
Manufacturers set up shop
Companies that began as manufacturers are now morphing and extending
themselves into the retail space.These include Apple (who started opening
retail locations in 2001), and Lego, who has spent the past few years
updating and expanding their retail presence (Wikipedia, 2012a).The move
from making to selling requires moving away from drop shipping and shifting
into customer experience and service, which usually requires outside
expertise and significant investments.
Moving into retail does allow the manufacturer to better align the brand
promise with the customer experience and offer a complete assortment of
products.This approach also increases profits, since the manufacturer no
longer has to provide a discount to another retailer in order to carry their
products. Conversely, retailers that do not produce their own products are
finding that vertical integration can turn former partners into competitors.
Think vertical from day one
Some of the most recent innovative retail brands
have embraced vertical integration from the start.
These include Warby Parker, Frank & Oak and
Shoedazzle. As venture capitalist Boris Wertz
recently argued in TechCrunch, “By eliminating
stores from the supply chain, these companies bring
products directly to consumers from the factory
without the bloat of the traditional retailer.This
translates into high-quality products ... at
significantly lower prices.” (2012).
In some ways, vertical integration is the ultimate
expression of a private label approach to retail. (For
more thoughts on private labels and the rise of
Sophisticated Frugality, see our previous trend
report on Marketing and Merchandising.)
“Historically, Canadian retail
investment in technology has
involved a relatively long
cycle. The trouble today is
that the technology in the
consumer’s hands is better
[than the retailer’s] and it’s
refreshing faster.”
Joe Jackman,
CEO of Joe Jackman Brand Inc.
r Demand Customer
Customer
Design &
Manufacturing
Retail
Store
S.
up In-Store
S.
rn In-Store
wholesale
fulfillment
Supporting B.O.P.I.S. and B.O.R.I.S.
through fluid inventory

13. Business Models | November 2012 13
1 2 43Trend
How are you approaching fulfillment, an often overlooked
part of a vertical integration strategy, especially for
e-commerce retailers?
How might you extend merchandising into a new realm of
product design and manufacturing?
What is the role of e-commerce in a vertically integrated
company?
FORWARD THINKING
Fulfillment beckons
Another example of vertical integration can be seen in the launch of Amazon Lock-
ers.These lockers serve as a convenient way for customers to receive and pick up
shipments from self-serve stations, allowing Amazon to compete with the immediacy
of bricks and mortar (Manjoo, 2012). In the future, vertical integration might mean
eliminating the retail experience altogether, thanks to 3D printing marketplaces such
as Shapeways (Shapeways Inc., 2012).

14. Business Models | November 2012 14
Trend
Affiliate marketing has its moment
1 2 3 4
4
Trend
Affiliate marketing was popularized thanks to Amazon’s widespread
adoption of the technique in 1996 (Wikipedia, 2012b). Amazon helped drive
book sales and improve its online reach by paying a commission to websites
willing to embed custom widgets or otherwise link to specific books on their
site.
More recently, new business models have emerged that prioritize affiliate
marketing, as this approach provides a fixed cost per new customer
acquisition, among other advantages. Large-scale networks such as
Commission Junction have also made it easier for retailers to quickly plug
into a large and extensive database of relevant affiliates (Commission
Junction Inc., 2012).
The second wave of affiliate retail
Despite lower prices and increased convenience, convincing consumers to
shop online can still require a shift in habits and mindset, especially in
Canada, where e-commerce adoption has been slower (eMarketer, 2012).
Affiliate marketing can help with this shift, which explains why newer online
retailers such as Ebates (Ebates Performance Marketing Inc., 2012),
Upromise (Upromise Inc., 2012) and RedFlagDeals.com (2012) have built
their business around affiliate marketing. Skimlinks (Skimbit Ltd., 2012)
provides another approach, providing bloggers with an automated affiliate
process by searching for keywords in blog posts and providing links to the
products and services mentioned. As consumers spend increasing amounts of
time online, it’s important for retailers to appear on the sites that their
customers are already using.This is especially true of sites where customers
tend to research new products.
Affiliate relationships
A successful affiliate marketing program requires a series of strong, personal
partnerships between retailers and affiliates. In order to better incentivize and
customize their affiliate program, Canadian health and beauty e-commerce
retailer Well.ca built an entirely new platform to manage their relationships
with bloggers and deal sites (Banduk, 2012).This platform provides more
control, access to real-time info, and helps Well.ca offer more personalized
and creative promotions to their affiliate network.
“Affiliate programs are really
great for getting better reach
across the Internet.”
Sameera Banduk,
Marketing Manager,Well.ca
“When a customer is doing
research on a product
shopping engine, and you’re
not there, that’s a core
business issue. I think affiliate
marketing will continue to be
a important part of running
an e-commerce business.”
Sarah Trimble
Associate VP, Interactive Marketing &
Community, Sears Canada
Large
Retailer
Affiliate
(e.g. Blogger)
omer
traffic
commission
Large
Retailer
Affiliate
(e.g. Vendor)
traffic
commission
Affiliate versus reverse affiliate relationships

15. Business Models | November 2012 15
Are you able to provide affiliates with unique and
exclusive offers on an ongoing basis to keep customers
(and affiliates) interested?
Have you considered integrating your affiliate marketing
strategy with popular loyalty programs like AIR MILES?
FORWARD THINKING
Reverse affiliate
Along with bringing affiliate marketing to prominence, Amazon has also developed a
reverse affiliate program through their Marketplace. In this case, retailers pay
Amazon a commission to list their products alongside the rest of the website’s
comprehensive product assortment. Sears.com also offers a related service (Sears
Brands LLC, 2012). As with traditional affiliate marketing, the goal is to gain access
to a wider audience. For Amazon or Sears, a reverse affiliate model provides another
way to increase site monetization by selling access to their already sizeable customer
base.
Social commission
Along with traditional approaches to affiliate marketing are sites that employ
various forms of social commission.These include China’s Vancl Star (Daohen,
2011), sneakpeeq (2012) and Lockerz (2012), which was mentioned in our previous
trend report on Marketing and Merchandising. In exchange for promoting specific
products or services through social media ordinary consumers earn points that can
be exchanged for discounts or cash.
1 2 3 4Trend

16. Business Models | November 2012 16
Mini Trend
Paying for usage
1
Since Ford launched the Model T car in 1908, owning a vehicle has become
one of the most visible status symbols for North Americans. But as Generation
Y (Millennials) continues to face serious economic pressures, buying a car has
lost its luster. As Josh Allan Dykstra argues in a July 2012 Fast Company arti-
cle, a number of factors, including the popularity of cloud-based music services
and alternate forms of transportation in urban centres, are helping to shape a
new approach to ownership. Rachel Botsman and Roo Rogers provide a more
detailed exploration of the evolution of ownership in their 2010 book What’s
Mine IsYours:The Rise of Collaborative Consumption.
Zipcar, zipdress, zipbag, ziproom
This new paying for usage mentality helps explain the growth and popularity
of Zipcar and other car sharing options. But the idea of short-term rentals is
no longer limited to expensive items such as cars. It’s now possible to rent
dresses (rentfrockrepeat.com), handbags (BagBorroworSteal.com), children’s
toys (babyplays.com) and apartments (Airbnb.com).
Want to gain access to the private habits of influential cus-
tomers? Be prepared to openly barter for this information.
FORWARD THINKING
1 2Mini Trend
Our research uncovered four
significant trends in retail
business models, along with a
handful of smaller trends that
do not yet warrant a full de-
scription. However, we believe
that both of the following
mini trends merit inclusion in
this report given their rapid
uptake and popularity.

17. Business Models | November 2012 17
Mini Trend
Please subscribe
2
In order to provide consumers with a reliable and convenient way to receive
staple goods, a number of new automated subscription services have emerged.
The business model for subscription retail is relatively straightforward, but has
been tweaked in order to make it easy to return unwanted items.
Cheese, wine and underwear of the month
A wide variety of retail items are now available through automated
subscriptions, including cheese (Monforte Dairy Company, 2012), men’s
clothing (Frank & Oak, 2012), women’s shoes (ShoeDazzle.com Inc., 2012),
household products (Alice.com, 2012), cosmetics (Topbox.ca, 2012), diapers
(IncrediBundles.com LLC, 2012), wine (Zagat Wine, 2012) and digital books
(24symbols, 2012).Walmart Labs recently launched the Goodies Co. (Walmart
Stores Inc., 2012), a monthly subscription service that delivers an inexpensive
box of sample-sized servings of artisanal food products.The goal of the service
is to encourage customers to order full-sized versions of their favourite new
products.
Subscription services tend to improve customer retention rates and provide
a predictable source of income, as customers often create standing orders for
staple goods.There is, however, additional pressure on subscription retailers to
ensure a sufficient amount of relevance and novelty when including new items
in order to maintain customer satisfaction and loyalty over time.
1 2Mini Trend
“We realized that young
men now spend $50-$150 per
month on clothing or acces-
sories, instead of $500 twice
a year. It’s similar to how
these men consume informa-
tion. They use Twitter and
Facebook and blogs instead of
reading a gigantic book every
six months.”
Hicham Ratnani,
CFO of Frank & Oak
As part of our research, Nurun also considered evolving legislation that will continue to affect retail business
models, including:
Attempts at patenting user experience elements such as Amazon’s one-click checkout
(Kalanda, 2012)
The push for sales tax on online orders in the US through the Marketplace Fairness Act (Chen, 2012)
The California transparency in supply chains acts of 2010 (Spuhler, 2010)
New Crowdfunding legislation such as the Jumpstart Our Business Startups Act (JOBS) (Huhman, 2012)
The legality of short-term rentals through services such AirBnB (Yglesias, 2012) and
Uber (Auto Rental News, 2012)
How legislation is responding to business model innovation
How will you keep customers engaged once the initial
novelty of subscribing wears off?
FORWARD THINKING

18. Business Models | November 2012 18
What’s Next
Methodology
Our next report will look at retail trends through the lens of emerging transactions
and payments, followed by analytics, and technology platforms. Once these trend
reports are complete, we will move to the next phase of strategic foresight: identify-
ing the driving forces underlying the trends.Those driving forces will inform future
scenarios, leading to the last phases in this strategic foresight initiative to articulate
the future of B2C retail and commerce.
For more information you can follow the project on Nurun’s blog, Digital for Real
Life. If you have any questions, or want to receive an email reminder when our next
trend report is published, please contact futureofretail@nurun.com.
The Nurun Strategic Foresight team performed a horizon scan using the “STEEPV”
framework to locate current and emerging trends and signals in the following areas:
Social,Technological, Economic, Environmental, Political, and Cultural Values.This
scan generated over 60 relevant trends.
These signals and trends were then clustered and sorted into six overarching trends.
Each of these overarching trends required the support of three to five strong signals
or examples. Some trends had an excess of signals—in those cases, excess signals
were catalogued for future inclusion or consideration.
Sincere thanks to the business model experts who graciously shared their insights
with us for this report:
Sameera Banduk
Marketing Manager at Well.ca
Sameera is a key member of the Well.ca team that brought the first Virtual QR Code
Store to North America in April 2012. Sameera is also an organizer of e-commerce
Camp Toronto events and believes that the opportunity for the growth of
e-commerce in Canada is virtually endless.
Katherine Hague
CEO/Co-founder of ShopLocket
Katherine is a graduate of the Schulich B.B.A. program and ran her own marketing
consultancy throughout university where she worked with companies ranging from
the Fortune 500 to startups. Prior to co-founding ShopLocket she was the Market-
ing Manager for Toronto-based energy solution company ecobee.com and one of the
first Shopify Theme developers.You can find Katherine online at katherinehague.
com.
Hicham Ratnani
CFO of Frank & Oak
Hicham has a background in engineering and worked for several years as a strategy
consultant at Deloitte before co-founding Frank & Oak in 2012. As the company’s
CFO, Hicham manages the technology and finance team, and was named one of
Correction
In our previous retail trend report on Marketing & Merchandising,
Nurun described Krush as a retailer, when it is in fact a social discovery
and recommendation site.We apologize for this inaccuracy.

19. Business Models | November 2012 19
Montreal’s Top 25 Emerging Entrepreneurs at the 2012 international C2
(Commerce + Creativity) Conference.
Dr. Donna Smith
Professor in the Ted Rogers School of Retail Management, Ryerson University
Donna’s current research examines the influence of family business on retailer-
vendor strategic partnerships. In September 2010 she won the Best Paper Award in
the Doctoral Colloquium at the International Colloquium in Relationship Marketing
in Henley-on-Thames, England. Donna was President of the American Collegiate
Retailing Association (2006-2008), a global network of university professors who
teach and conduct research in retailing.
Sarah Trimble
Associate VP, Interactive Marketing & Community, Sears Canada
Sarah has been in marketing for over 10 years. Her marketing experience has covered
both traditional and digital media, with roles at a major multi-national book publish-
er along with Indigo and Sears Canada. In her current role, Sarah is responsible for
the strategy, optimization and management of all digital marketing programs at Sears
Canada, including the affiliate program. Sarah recently finished her Executive MBA
at the Richard Ivey School of Business.
The Nurun Strategic Foresight team will continue to monitor and collect new
developments in business models to inform subsequent strategic foresight work,
especially scenario development.

20. Business Models | November 2012 20
About Nurun
Nurun is a global design and technology consultancy that works with some of the
world’s most innovative companies.We create products and services for the
connected world through a combination of human insight, new technology and
smart thinking. Clients include Adidas, BBVA, Bouygues Telecom, Coca-Cola,
Electronic Arts, General Electric, Google,The Home Depot,Tesla Motors, Sony
and Walmart. Headquartered in Montréal and with 12 offices across North America,
Europe, and Asia, Nurun has multidisciplinary teams of more than 1,200
anthropologists, designers, strategists and software engineers. Nurun is a wholly
owned subsidiary of Québecor Média Inc., one of Canada’s largest tele-
communications and media providers.
Meet the Nurun Strategic Foresight Team
Ryan Bigge
As a Content Strategist at Nurun, Ryan Bigge combines over 12 years of experience
as a freelance journalist with a passion for design thinking and interactive art. His
writing has been published in the NewYork Times Magazine, Report on Business
and the Toronto Star. Ryan recently spoke at SXSW Interactive about analog
souvenirs and physidigital trends.
Jen Chow
As Nurun’s Design Strategist, Jen utilizes a diverse set of consumer research tech-
niques to uncover insights and shape new opportunities for various retail clients. Jen
recently co-authored a report on the future of consumer-to-business payments that
focused on the Canadian banking industry as part of her work in OCAD University’s
Master of Design Foresight & Innovation program. Jen’s work fuses her eclectic
background in accounting and finance with her keen interest in sociocultural trends
and technology.
Kira Levine
As Senior Retail Strategist at Nurun, Kira’s focus is on translating consumer needs
into viable retail solutions, bridging both in-store and online capabilities. She brings
a unique blend of passion for retail with over nine years of experience in
category and product management. She holds a Bachelor’s degree in Retail
Management and an International MBA.
Audrey Carr
As Vice President, Strategy, Audrey guides Nurun’s cross-functional teams in identi-
fying, framing and solving customer-centric opportunities across our omni-channel
retail clients, including Sears Canada,The Home Depot Canada, Acklands-Grainger
and the LCBO. She also leads the development and evolution of Nurun Toronto’s
strategic capabilities in design research, design & retail strategy, analytics and inter-
action design.

21. Business Models | November 2012 21
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