7 Trends Set To Influence The Future Of The Retail Sector
The effects of e-commerce on retail are well known — but now retailers are needing to pay much closer attention to ethics, the commoditisation of time and big data to stay ahead of the curve when it comes to consumer behaviour.
New research from JLL shows how seven key trends are affecting the retail industry worldwide, which the broker said could be helpful to the future of the retail sector.
1. Urbanisation and Population Growth
Global population growth and increasing urbanisation is underpinning the radical changes happening in the retail sector.
The World Bank estimates that 60 million people are moving to cities every year, which equates to more than 1 million a week.
Today's urbanisation is happening around the world. Millions of people every week have more access to stores, which leads to more spending.
2. Information Age
Consumers are constantly bombarded with and are seeking out a huge amount of information, data and knowledge from retailers and friends alike.
Freely available data, information and aspirational images mean that consumers are super-informed and have endless choice. This unending choice is also leading to "choice exhaustion", clutter and indecision within consumers’ minds.
Consumers are getting better at managing and processing the huge amounts of data out there with apps such as Pinterest. This trend of "curated consumption" has been adopted by some retailers, who are curating their stores, displaying pared-down merchandise as a way to attract consumers with a showroom experience.
3. Consumer Ethics vs. Consumer Desire
Consumers’ ethical and environmental idealisms are seemingly at odds with the technology-driven desire to own the "next best thing" but the conscious consumer is on the rise.
Rapid innovation and new technology are leading to new or improved products appearing at an increasing rate, often before the previous is defunct. So, while the best products will survive and prosper, the commercial lifespan of most products will become shorter, as the next big thing materialises ever faster.
In response to this, a rising countermovement toward hiring, repairing, recycling, borrowing, renting, sharing and reusing has sprung up among some consumers.
Consumers are realising that one of the best ways to return to a sustainable way of life is to maximise product usage through collaborative consumption — shared goods and services being distributed via the marketplace to a community of users.
While consumers do not necessarily expect positive ethics from retailers, any hint of unethical behaviour will be penalised severely and be viral within minutes.
4. Time as a Commodity
Shopper expectations are profoundly different from a few years ago. Next-day delivery and pre-orders are no longer novelties; they are basic expectations across the retail sector.
While there is still a place and a future for convenience shopping, consumers now expect nothing but the best from a comparison-based shopping trip. Consumers expect retail venues to be destinations in their own right. Interesting architecture, the latest range of brands and a host of in-store activities are among the things that consumers have come to expect, and indeed take for granted, from a shopping trip.
5. Big Data
Effective use of big data will enable retailers to gain insight into how they can attract customers into their shop or retail space. Using this data to tailor the retail experience to customer preferences could result in more consumer loyalty.
Retailers also are presented with an unprecedented data explosion. As a result, retailers everywhere are, with varying degrees of success, facing up to the big data challenge.
This is partly driven by the rapid emergence of new payment methods, such as mobile wallets, like Apple Pay or Android Pay, which provide retailers with valuable customer data, such as how many times a shopper has purchased an item, and the rise in social media usage.
Consumers want to access products wherever, however and whenever they want. If retailers want to compete, they must provide a seamless, integrated multichannel strategy with real choice, convenience and ease of access, or consumers will go elsewhere.
While e-commerce is already a global phenomenon, there are significant regional and national nuances. Consumer behaviour varies by country and by region; South Korea, the U.K. and the U.S. have highly developed online markets, but some developed markets, even mainstream Western European nations, are seeing minimal online activity for now.
7. Redefining Space
The concept of the store is fundamentally changing, and what happens in the virtual world is increasingly influencing how we use the traditional physical space.
For retailers, the key to keeping the consumer entertained is to integrate physical and digital experiences to provide an interactive and all-inclusive in-store experience, combined with excellent service. Today's consumers need a reason to come to the store, beyond merely making a transaction, because a transaction can take place anywhere.
The advent of new digital concepts, such as holograms and augmented reality technology, is also increasingly being integrated into our shopping experience. The technology allows the consumer to window shop with the use of augmented reality and to try on products without having to step foot in the shop.