Strange retailing
You'll still recognize retailing in 2010; at least some familiar stores will be around, but get ready to roll—or be rocked to the core
by Brent Felgner -- Gifts and Dec, 7/1/2004 12:00:00 AM
The change will be mind numbing. The retail world in 2010 will be journeying to altered states, along with the consumer base and shopping behaviors, in the process destroying some merchants, elevating others and creating small, barely discernable opportunities for yet others.
It will be a brave, in many respects frightening, new world, suggests Retail Forward, the consultancy based in Columbus, Ohio, in a report and recent seminar, Growing into 2010, part of its 2004 Strategic Outlook Conference.
The findings are sweeping and impact all retail channels. The study projects that the biggest retailers will get bigger still. Wal-Mart will continue its domestic and global march, capturing more customers with a variety of new businesses, products, and services. Supercenters will continue to expand their influence, tripling sales by 2010.
That might be the good news.
Retail Darwinism
For nearly everyone else, it will be a struggle to survive. Some large retailers will disappear completely, as will some retail formats and entire industry segments.
The shopping process will become smarter with an increase in e-kiosks, smart cards, and RFID-enabled (radio frequency identification tags) checkouts in physical stores.
Consumer preferences for mall shopping will tend to decline with the remaining market share for department stores. That will force remaining department stores and malls to become more creative, carving out clear market positions.
“The most promising position for malls will be value, entertainment, upscale or lifestyle driven, with a much broader mix of retail and non-retail tenants,” says Thomas Rubel, Retail Forward's president and CEO. At the same time successful specialty retailers will be forced to re-concept.
The days of the large, mass-merchandised specialty chain are over, he warns, because of the increasingly compressed lifecycles for products, retail concepts, and brands.
I, global
The Internet will be transformational to the process, although not attracting the levels of direct sales transactions commonly imagined. Annual e-commerce sales are forecast to reach just $230 billion by 2010, according to Retail Forward, a small part of overall retail sales.
And, as the retail marketplace, particularly, becomes more global, more suppliers will find their biggest competitors are their retail customers.
“Many [retailers] will become brand managers, some will pursue innovative store-within-a-store, or brand-sharing, partnerships and still others will become 'über-retailers'—leveraging their brand identities, customer relationships and scale to move from share of market to share of wallet to share of life,” Rubel explains.
Mind games
As a result, the supplier that survives longer term will become “best-in-class category consultants” as they offer more activities and services traditionally reserved for retailers. As suppliers get locked out by some retail experiences, expect more supplier-direct-to-consumer relationships to become more visible, the report says.
Finally, consumers are becoming more demanding, more diverse and multi-dimensional in their expectations, giving them more power and control over the retail experience than they've ever enjoyed.
That will necessarily result in more demand-driven change among younger and more diversely ethnic consumers. There will be massive life stage shifts where Baby Boomers age out into a new stage dubbed, “Zoomers,” with time and money to spend. Gen-Yers will move to “Gen-Realit-Y,” as they start careers, manage households and become parents, spawning a mini-baby boom.
They'll have higher expectations for their lifestyles, based on the go-go spending of the 90s, as well as from broadened expectations from growing up in a more high-tech world where media, communications and computers rule.
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