It has been a slow period of retail growth in Australia as we near the end of 2014, in marked contrast to fast paced growth in US retailing.
Here are seven key trends that will continue or appear in retail – and not just at the big end of town.
In fact it’s been interesting to see how, throughout 2014, the big end of town has worked hard to present a smaller and more personal experience to shoppers. To be more intimate in store and online.
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Global retail trends for 2015
1. Retail owned and managed brands will continue to grow faster than national brands.
This trend has been playing out for almost a decade in the US and UK, and for the past seven years in Australia and New Zealand. We still haven’t maxed out share of volume or share of shelf for retail own brands in adult beverages, organic and wholefoods, consumer electronics, health and wellbeing or perishable food.
2. Growth through acquisition not through new stores or new ventures.
Large retailers will look to buy smaller, mid-sized and faster growing retailers to drive growth and keep the stock markets happy. The days of large, high risk investment in large new formats is over.
3. Medium growth will be faster than the big end of town.
It’s just the way it seems to be playing out everywhere. The very small are opening up as new, physical and online retailers providing a living for themselves and their families, whilst the big end is struggling with 1% to 2% growth. The 10 to 15-year-old medium-sized retailers are nimble and growing in almost every sector.
4. Convenience retail will be the fastest growing sector measured by store numbers and profit.
There are more convenience stores opening than any other form of retail store. With the building boom now running in every key large city of the world, time-poor shoppers buying new homes in multi-dwelling, high-rise buildings assume there will be a seven day a week, 18 hour a day store at the foot of their building. Automated time of day pricing will allow these retailers to charge very late night shoppers a little more to cover the extra cost of late night retailing.
5. Growth is supporting an appetite for risk and change; less following and more innovation and differentiation.
The US has moved out of recession and into growth again, and European growth retailers are looking for new markets to compensate for their slow domestic growth. Thus there are far fewer “follower” strategies being pursued. For a while, discounting was the only way to do business. Quality, range and service all shrunk as everybody pursued a generic low price strategy. With increased sales at retail we’ve seen retailers begin to fan out and individual strategies come into play. Wider ranges, more choice, newer brands and non-core shopping offerings are replacing pure price.
6. Technology to let a big store act like a small store – and vice versa.
Big retailers want to make each store and interaction as personal as possible. In the same way as social media has personalised the relationship between the retailer and the shopper out of store, so the need to treat shoppers as individuals in store has grown. It’s made possible by store associates’ time being freed up from the mundane time consuming tasks like changing printed shelf price labels, or standing at checkouts waiting for shoppers. Electronic shelf edge labelling technology will price at the checkout and the shelf simultaneously and automatically. Mobile paperless payment in store will let store associates transact in an aisle just like an Apple store. Small retailers want to do the same thing and have access to the same technologies tailored to small store formats.
7. Online, in store: “Same, same but different”
By the end of 2015 many of us will look at something we’ve bought and not remember how it got into our home. From mayonnaise to shoes, tyres to TVs, the blurring of lines between where we bought it will mean this differentiation will matter less and less. The same with pricing. Online prices won’t be cheaper than physical, they’ll be the same.
It’s never dull in retail!
Kevin Moore is a retail expert and the chairman of Crossmark Asia Pacific Holdings.