Millennials are forcing fundamental change and big retailers will be left in their wake

Millennials are forcing fundamental change and big retailers will be left in their wake

 

I read a huge amount of overseas media on retail, and hook-up on overseas calls with retail technology suppliers from Europe and the US, so have a fairly detailed view of what’s happening in key parts of the shopper landscape.

This is put to use in my work with retailers, brand manufacturers and pure online plays in Australia and New Zealand. I am working with a CEO and the board of a 600 store retail chain shaping a ‘2020 shopper experience’ strategy to shape the offering and format for their stores of the future.

Millennials’ needs and retail technology will be part of the service, which is key in this retailer’s future.  But I also have a very large network of amazing people who feed stuff to me that I would never see otherwise. There are only 24 hours in each day. So thank you Rochelle for highlighting this interview in the Huffington Post.

Robin Lewis co-wrote The New Rules of Retail. Have a read of his online forum The Robin Report. He did a long interview with Debra Scherer in the Huffington Post called Too Big Not To Fail? The New Retail Landscape” that covered everything from Apple to underwear. It’s a good read, but my own key outtakes are below.

These are the clear and present threats that face every retailer and manufacturer, and a continuing point to the shift away from employment and financial success for large corporations to employment and life success as owner/operators of small businesses. And it’s those millennials that are driving it! Robin Lewis has 40 years on the business side of fashion, and points to the fact that HOW the shopper has evolved is the blindspot in many large retailer strategies. In his words, “growth, which has always been the retail endgame, is now sinking a lot of (big) ships.”

This is a long quote but important so I’ve tried not to edit it down.

He went on to say: “(Big retailers) must transform or they’re going to die. Period. The problem is complex, as the older generation, the people running these businesses are having to deal with technology, the internet, things they’re not familiar or comfortable with. Frankly, 50% of it they really don’t have an understanding of, particularly how to use it all. On a scale of 1-10, the whole (retail) industry is probably 3 or 4. There are a few outstanding, like a Nordstroms or a Macy’s, who have been able to move further ahead with it all and they might be a 6 or 7 on a scale of 1 to 10. So technology and the internet, globalization, and the new generation of consumers – the millennials – are the main three driving dynamics forcing this transformation, which is the biggest in the history of retailing. The millennials are really driving it.

“By 2020, the age group from 18-34 will account for 40% of all retail sales in the USA. Replacing boomers who are either dying or downscaling into retirement and therefore aren’t interested in spending more of their money. Boomers are the biggest consumer segment in the history of the US. But they’re now spending more money on travel, leisure, entertainment and health and wellness, than on “stuff.” So the millennials are replacing them as the biggest group. And experience for millennials, is defined differently than by boomers. Young shoppers used to hang out in malls for that very reason, that was the experience. But today, for millennials, their smartphone is like another appendage, they are connected 24/7. So, today every store and every mall in the world is sitting comfortably in their pockets and they can scan through more brands, more stores, more malls in 10 minutes than they could by hanging out all day at the mall. Plus the fact they can be together on their smart phones anywhere in the world.”

Now none of Robin Lewis’s observations, in isolation,  is new if you trendwatch. But the headline talked of the fact that the largest retailers simply can’t compete with this need for choice among millennials. He talks of leading jean brands growing from six to 800 in the US over the past two decades. Small operators creating or curating cool brands with short lifetimes. But still relevant and profitable brands and stores during their brief, five to 10-year life. He went on to say that it is not only the shopping needs for millennials that will shape retail, but their lifestyle needs will shape the new brands and retailers too. To quote again:

“I’ll tell you, I think in the future landscape, there’s going to be a lot of small businesses that are very successful and people running them, like these (millennials) are going to be very happy making a little bit of money and having a nice lifestyle. That is I think the best path and I think it will happen. But in addition, there’s going to be thousands of small little mom-and-pop businesses or small chains.”

There is little doubt that change in our Australian retail landscape is bringing pain to many larger players, but also opportunity to new, smaller and younger players.

Kevin A Moore is a retail expert and the chairman of Crossmark Asia Pacific Holdings and Mirador Retail Technology. He is also the founder of TheRoadToRetail.

 

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