The Seven Trends Shaping Retail in 2015

The retail industry - like every other industry - is facing some huge challenges as it adapts to changing demographics, new consumer behaviour, and increasing competition from fast-moving online players.

By Terry O'Connor, Group CEO, Courts

 

I am an optimist and always believe that with challenges come opportunities. I have thought about which of these represent the biggest potential for retailers and, to be honest, all of them are critical.

 

Growth of mobile

 

The numbers are truly staggering in markets like China, but mobile shopping is no fad. Mobile retail is only growing: 87% of smartphone and tablet owners are using a mobile device for shopping activities in the US. China’s mobile transactions reached RMB222.89 billion (US$36.4 billion) in 2014, contributing 25.6% to China’s Internet economy. Mobile shopping will continue to grow in 2015, and it is likely we’ll see more jaw-dropping numbers as consumers become more comfortable with mobile commerce.

 

Rise of data-driven services

 

Through devices, we are able to learn more and more about shoppers: when they visit a store, how long they spend and where they spend their money in the store. The rise of data-driven services can help track changing habits of customers to better understand their needs and to better tailor the shopping experience for them. We are seeing more digital touchpoints for shoppers and, in my view, the retail industry has much to gain from more adoption of analytics. That will be a feature of 2015. Real-time data, accrued through mobile phones, is a key asset in creating a personalised shopping experience, although the issue of personal data and its security will become a critical issue going forward.

 

Blurring of retail channels

 

Just as real-time data allows retailers to better address shopping needs of consumers, we do need to create more multi-channel retail solutions—consumers are increasingly comfortable with moving between virtual and physical shopping environs. In 2013, around 70 million deliveries were made through click-and-collect, a figure that’s expected to grow to around 82 million by 2018. This has to be an incentive for retailers to develop better—and more seamless—channels for their customers.

 

Changing consumer demographics

 

Retailers are at the mercy of significant demographic shifts. In 2015, we are seeing fairly dramatic movements. A rise in the number of elderly in Asia means retailers will have to begin to develop strategies that don’t alienate this growing segment of society. The Baby Boomer generation, which will approach the age of 70 in 2015, is a generation retiring with increased financial resources. Generation Y is settling down, too: they are a much more diverse group of consumers. These present an enormous challenge to retailers in 2015, bridging between these vastly different consumer segments.

 

Social media-driven decisions

 

Shopping decisions are becoming much more personalised—with social media driving more awareness about products and ethical behaviour in retail. Younger consumers will continue to increase their focus on buying from socially responsible outfits and ‘green’ manufacturers and retailers. This is a trend that has grown in recent years, and shows no signs of abating, which means retailers have to ensure that best practice flows throughout their supply chains.

 

More strategic growth

 

In unstable economic times, retailers are looking far and wide for cost efficiencies to bring products to market in a timely fashion. There is continued interest in Asia’s emerging markets as a key plank in that goal. However, with barriers to entry in some Asian markets, retailers are looking at smaller markets with large populations and growing middle classes, such as Indonesia and Vietnam. These present huge opportunities, although there are local challenges and realities.

 

In-store value adding

 

So valuable to retailers is the in-store presence of customers that we will likely see more lifestyle additions to keep them from leaving—food, drinks, crèches—whatever it takes to create a better shopping experience. More retailers are realising that, next to online and mobile growth, the visit of a customer has to be enhanced and memorable. Expect to see more in the way of such offerings. 

 

About the Author

Terry O’Connor is the Group CEO of Courts Asia and former President of the British Chamber of Commerce, Singapore. This article was first published by Terry on LinkedIn.

 

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