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New in Management (page 66 of 74)
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The retail industry will become more segmented and customer-driven by the year 2015, according to “Retailing 2015: New Frontiers,” a report released today by PricewaterhouseCoopers’ Retail & Consumer Industry Practice and TNS Retail Forward. The report identifies 15 growth drivers and predicts 15 trends that will redefine the retail environment in 2015. Among shifting demographics, household downsizing and new marketing channels, the retail industry will face a variety of new challenges as the industry progresses during the next decade.
“Overall, the retail industry will need to adopt a more targeted approach in order to reach its customers,” says John Maxwell, retail & consumer industry leader for PricewaterhouseCoopers. “The ‘one-size-fits-all’ approach of the 1980s is not going to work as the population becomes more diverse and tech savvy during the next decade.”
According to ‘Retailing 2015,’ the most rapidly growing age segment in the United States will be that consisting of those older than 55. Members of generation Y and millennials (those under the age of 35) will be more culturally diverse and technologically inclined, while less enamored of large conglomerates and chain stores than their baby boomer parents. In addition, the population will become increasingly diverse, with nearly half of the population under the age of 25 identifying themselves as non-white in 2015.
“Due to the demographic dichotomies, a new consumer mindset will emerge in 2015 that will have far-reaching implications for the retail industry,” explains Maxwell. “Consumers will want to be more interconnected with the businesses they patronize, exercise more control over their purchases, customize their products to serve their individual needs and indulge in shopping as a life experience.”
The study reveals that the fallout of marginal malls will continue as fewer existing malls reach their financial targets and conventional department stores fade away. New neighborhood centers will pop-up and will incorporate entertainment and dining into the shopping experience. The fastest growth will take place in developing retail markets, including China and India. Barriers to global trade will buckle as restrictions on foreign retailer operations are phased out.
In 2015, retailers and suppliers will be held to higher standards around the world. Concern about the planet and its people will be an integral part of mainstream consumer demand. Rising levels of government involvement, omnipresence of news media, increasing watchdog groups and advancements in technology will all have an affect on how retailers operate in 2015.
"Most of the technology trends anticipated for 2015 are already in progress today," says Tom Rubel, President, TNS Retail Forward. "With the advent of falling technology costs, widespread availability and adoption of devices, consumers will be able to access content on-demand, including information on the source of the product, along with gaining access to peer reviews of a product or service before purchasing it."
As a result of these anticipated economic drivers, the PricewaterhouseCoopers report also predicts 15 trends that will redefine the business environment in 2015. Examples include:
* Downsizing: The current trend of sustainability will drive the downsizing of products, packaging, resource consumption and waste as more people look to smaller, more personalized products .
* Share of Life Retailing: Retailers will no longer define themselves by the products they sell, but by the customers they serve. Retailers will position themselves as one-stop purveyors of lifestyles.
* Multi-Channeling: Traditional storefronts will increasingly co-exist with a growing array of multi-channel platforms, which include catalogs, pop-up stores, virtual stores and retailers partnering with service offers, such as spa packages and hotel deals.
* Supplier Competition: Supplier-retailer relationships will not only be increasingly collaborative but also increasingly competitive. More suppliers will work vertically with retailers to create unique brand and product offerings.
* Triple Bottom Line Scorecard: Definitions of corporate success will change by 2015, with increased focus on the environmental and social performance of a company.
“Given the change factors and the predicted trends, the next growth phase for retailers will be about segmentation and localization,” says Rubel. “The best way to define this trend is through the term ‘glocalization:’ retailers will need to serve customers across major geographic, cultural, legislative and regulatory boundaries, all while catering to local tastes, traditions, lifestyles and economies.”
Glocalization will stand as a major challenge for retailers, as they attempt to manage the complexity and diversity of businesses that will span the globe while reaching out to a local, niche consumer. However, substantial improvements in customer databases will help retailers and suppliers understand their customer base in order to conduct business in a total customer-centric manner.
“To be successful in 2015, retailers will need to understand and identify with their customers and be innovative by keeping on top of trends while managing complexities that the future will bring,” explains Maxwell. “Retailers, along with their customers, will be more demanding, more global, more diverse, and will operate across more channels than ever before. That being said, retailers should be proactive in addressing these challenges now.”