Is this retail's future?

Is this the future of retail? PKN looks at the changing retail landscape in 2015 and beyond, from four points of view.

According to Pricewaterhouse Coopers, retail will have to be nimble, adaptive and most responsive to the needs of those in their 50s now.
 
"The Baby Boomers have always been a defining generation and will continue to be so. We believe that the Baby Boomer generation will age with increased financial resources and with a greater emphasis on youth and vitality than previous generations. As a result, they not only will tax manufacturers to adapt products to their specific post-retirement needs, but also will require retailers to respond to their evolving needs as they approach the age of 70 in 2015. Challenging this older generation will be Generation Y (Gen Y) households, reaching their prime household formation years and attempting to emulate the lifestyle that their Baby Boomer parents have and to which they are accustomed."
 
It will also have to stop aiming to reach the most, and try to reach the most appropriate:
 
"Retailing will become an industry that realises, more and more, that it must tailor its offerings to select customers, as opposed to the mass appeal approach of the 1980s, in order to win over customers and foster greater customer loyalty."

According to Kantar Retail, "The retail environment of the future will see retailers increasingly opening smaller stores to generate new growth as already seen in several urban markets such as the UK, and Mexico. The online world will capture an increasing share of planned shopping trips, leaving brick and mortar retailers to capitalise on immediate, or impulse, needs."
 
Kantar also predicts that shopping, like incomes, will become increasingly polarised. This polarisation will be added to growing communities of recession-trained and fixed-income shoppers, making retailers at both ends of the spectrum the success stories of the future.
 
"For categories these shoppers care deeply about, we expect a rise in premium products that are tailored to their specific needs, and in the ?indifference categories, we expect a rise in the extreme value segment. The middle of the market will need to react with distinctive positioning to thrive."
 
Retail analysts, Willard Bishop, predict that the power of the customer will continue to grow. "There are two kinds retailers – those that clearly understand that the consumer is calling the shots; and those that soon will."
 
Read its view of what shoppers want here: What shoppers want
 
In Australia and New Zealand, consumers are realising their powers in two ways. The younger market, 16-34, is learning that it has the power to control a brand’s reputation. The older market is becoming increasingly aware of its rights. Both are due to the explosion of access to information, formal (Google) and informal (social media). People are increasingly aware also if corporate misbehaviour. Consumers will continue to demand more fairness and justice from companies personally. Consumers will also expect companies to be authentic about and active in their social and environmental responsibilities.
 
Health and technology are the two key consumer trends for Australia and New Zealand in 2015 across the board.

"For those companies that are not proactive or are seen as insincere, we expect to see a continuation of protests against these real, and perceived, transgressions," Ms Barnett said. "In 2015, companies globally will increasingly be forced to apologise, admit their mistakes and show a human face. To ignore the will (however fickle) of the people could foster a growth in boycotts," Jane Barnett, Insights Manager, ANZ, SE Asia, India at Mintel.

People are becoming more informed about, and more active in, maintaining their health. The word, superfood, will continue to be a key purchase trigger. Free from chemicals and additives and locally and seasonally sourced will also continue to feature in buying decisions. According to Mintel, the percentage of products with vegan and no animal ingredients claims have doubled, from 3% in 2009 to 6% in 2014. Vegetarian claims have increased at a similar rate, increasing from 4% to 9% in the last 5 years. Low/no/reduced sugar claims have also increased, from 6% in 2009 to 8% in 2014. "All natural” product claims in new products have increased from 4% to 8% over the last 5 years.

"Consumers will be buying less packaged foods, will demand more organic produce for a reasonable price, and will move beyond the supermarkets and towards farmers markets and the like if they can’t get what they want. Reduction of chemicals and additives is crucial, and the use of processes such as cold pressed and raw food will be more in demand," Barnett commented.
 
Internet shopping is growing, and mobile shopping is leading the surge. There are more than 24.4 million active mobile phone subscriptions across Australia and about 30% of all Australian internet users aged between 15 and 65 have purchased goods online with a smartphone and 19% with a tablet, in the last 12 months.

Bricks-and-mortar retailers are responding by integrating digital shopping into their services. More stores are offering in-store pick-up for online orders as a way to gain an edge over e-tailers. And e-tailers are challenging bricks-and-mortar, with packaging specifically designed for safe courier or postal delivery, for example, and packaging that facilitates returns.