Earlier this year Frost & Sullivan published a presentation titled "Bricks & Clicks: Next Generation Retailing" which highlighted the following retail industry trends for the year 2025:
- Nearly 20% of retail will happen online. In countries like the UK and USA online retail will be a quarter of the total.
- Everything from the product to the in-store experience will be customized and personalized as retailers increasingly offer "real time customization tools" to their customers.
- Multi-line retailers will reduce store size by 15%-20% and in larger formats create interactive customer experiences.
- Manufacturer retailers will open more "connected flagship stores" that are designed and created to support the brand image. The aim will be to make the brand stores a destination rather than a retailing zone.
- The gap between an order and a delivery will decrease as new services such as "same day shipping" become more affordable.
The three megatrends driving above industry shifts by the year 2025 include:
- Urbanization - Globally 25 megacities will emerge.
- Connectivity & Convergence - 80 billion devices will connect the world. Each person, on average, will carry 5 connected devices.
- Social Trends - The world will have 2.4 Billion Gen Y individuals with more digital shopping habits.
The good news for retail is the continued expansion of the overall industry across the globe. In 2011, the global retail industry was valued at $11.8 Trillion. By 2025, the retail industry will double to $23 Trillion as new important emerging global markets continue to join the modern shopping community.
To survive and more importantly thrive in the new interconnected, discriminating, urbanized global market, retailers (and technology companies serving the industry) need to focus on three fundamentals:
- The Brand - The most important fundamental element required to thrive in the year 2025 is having a strong brand. Building a global brand will actually become easier in the future through new innovative value building strategies. Sustaining the value of the brand will also become more challenging as emerging real time dialogue means simple mistakes can quickly detract from the value of the brand. As country barriers break down, the most successful brands will blend cross cultural growth strategies with culture sensitive approaches to expand the customer base. Emotion will be the dominant driver to the growth of future brands.
- Customer Experience - The power of the brand will be reflected ever more aggressively in the customer experience. A great 1998 article published in Harvard Business Review titled "Welcome to the Experience Economy" accurately forecasted the profitable migration to positive customer experiences. As the HBR authors said "From now on, leading-edge companies -- whether they sell to consumers or businesses -- will find that the next competitive battleground lies in staging experiences." For future retail customers, technology will play a major role in how the stage is set and whether the play is a long term profitable hit.
- Consumer globalization - Globally a dichotomy is emerging starting in developed markets. Consumers are increasingly getting access to more global options for their purchases, i.e. the market is getting larger. Concurrently, greater availability of information is leading to more discriminating consumers, i.e. smaller, profitable market niches. Winning brands will build product lines that can appeal to diverse customer sets. They will also ensure that customer experiences are tailored to each customer set, often from different cultures.
An exciting future awaits both consumers and technology companies serving the retail industry. The digital economy will lead to immersive customer experiences. Technology will blur the physical store with online onmichannel buying opportunities. The store will be the showcase for the brand and will focus on building the emotional connection with the consumer. Glocal will be the new local. The bridge between global and local (glocal) will rely on technology to drive consistent customer engagement.
The year 2025 is only 12 years away. Will you be a market leader or a laggard in the new $23 Trillion global retail market?
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