Retailers In The Year 2015 Will Need To Be More Locally Relevant

NEW YORK -- Retailers in the year 2015 will have to be more locally relevant, operating a portfolio of consumer-centric store formats, selling on the Internet and through catalogs, and increasingly focused on services that appeal to the aging baby boom generation.

Those are some of the predictions made by international management consulting and market research firm TNS Retail Forward at its annual Strategic Outlook Conference called "Retailing 2015: New Frontiers," held in midtown Manhattan yesterday.

Retail Forward paints a radically different environment for retailers and suppliers in 2015 -- one that is more global, more diverse and much more complex. According to Lois Huff, senior vice president of the firm, long-term cycles are being played out and new market forces are growing stronger. For example, she notes that the baby noom, which has dominated retail thinking for decades, will "stand on the precipice of age 70 and will start turning over the keys to younger generations."

With younger consumers, interconnectivity will be both a part of life and a way of life which impacts how people get and share information, communicate, transact business and socialize, Huff said.

Al Meyers, senior vice president, noted that many existing concepts will reach the end of their expansion runway. In the case of convenience stores, Meyers listed this channel among those likely to have above average sales growth between now and 2015. However, many other channels, including building materials and garden supply, home furnishings, sporting goods, apparel and accessories, office supply, dollar stores, supermarket, discount department stores and department stores will suffer below average or declining sales over the next eight years.

The consultants also predict that spending on services will grow at the expense of spending on goods and that the prevailing belief that bigger is better will die off.

Technology will be pervasive -- driven by falling costs, widespread access and adoption, a working infrastructure and increased standardization, said Retail Forward president Tom Rubel. He noted that retailing will evolve toward true demand -- replacing the artificial demand dictated by the limitations of shelf space -- in an increasingly digital retail environment where shoppers will have almost infinite visibility into product choice and increasing input into product creation.

Rubel also predicted that the value chain will become more intimate. Younger consumers don't have the same privacy fears as older shoppers --illustrated by the amount of information about themselves they voluntarily post online at such sites as MySpace. Consumers in the future will share more information about themselves with retailers and suppliers but will expect to get more value in return.

James Russo, vice president, told suppliers that they could either take a defensive stance during this period of change -- and probably lose more business to retailers' private label or other competitors -- or they could adopt an offensive position and explore such things as pop-up and permanent stores (like Apple and Nike), selling directly to consumers over the Internet and creating value-added exclusive product lines for specific retail partners.

Dan Stanek, executive vice president, added that no one will be able to take resources for granted anymore. Resources will be scarcer, in greater demand and more expensive in 2015. This will raise the bar on expectations for corporate responsibility and product sustainability.

CS News May 21, 2007