2012 Global Retail Industry Trends
Away from home
Globalization is not a new trend for retailers: in fact, it was the theme of last year’s Global Powers of Retailing. In 2012, retailers will continue to look to enter new markets like Asia Pacific, Africa and South America as higher growth in these regions continues, and they will look to improve their existing operational performance in these markets to achieve sustained growth.
Along the way, retailers have learned that to succeed in emerging markets they must significantly customize both their market models and product offerings to meet local needs and preferences. In addition, expect retailers to more fully empower store and regional managers when developing marketing and sales plans, given the managers’ better understanding of local consumer and community needs. Finally, real estate will continue to be of great importance when entering new markets, given the difficulties of gaining a foothold when local operators already own the best locations.
Retailers will not only be looking for growth in emerging markets; they will also look to innovate in multi-channel strategies, mobile and data analytics to maintain or grow their market shares in developed markets.
Retailers are entering new markets, both developed and developing, through various channels. For example, one may open an online store overseas to test the market before committing to a physical presence. Most retailers have a presence across multiple channels (e.g., stores, catalogs, online, call centers, social networking, digital displays, mobile). Few, however, truly understand how consumers are using and shopping across each of their channels (e.g., using social media sites to get discounts, going to the store to test the product and then purchasing the product online), and even fewer have a seamless, consistent and comprehensive multi-channel strategy. However, having a comprehensive multi-channel strategy will become more important than ever.
As consumers become savvier, they are increasingly taking charge of their shopping experience, identifying and leveraging many different sources of information and channels to optimize the different elements of their shopping journey. As of this writing, 71 percent of respondents to the Deloitte U.S. 2011 Annual Holiday Survey were planning on shopping multiple channels in some manner – viewing or researching products in one channel and purchasing in another, for example.
Since customers do not distinguish between channels, retailers will have to support seamless integration among and between each of them, including access to assortment, customer information and order information. Within the next few years, it is likely that consumers will expect to use a mobile device to get real-time inventory information about the closest stores or to order a product while in a store and have it delivered to their home. Therefore, in 2012 it is likely that retailers will continue to develop and launch innovative multi-channel solutions.
Retailers will need to have a clear understanding of the shopping journey and how consumers move across channels, from mobile to social networking, the web and in-store. Understanding how they go through the pre-purchase, purchase, and post-purchase process will be key to retailers identifying opportunities that both enhance their bottom line and actually make sense to consumers. For example, most large retailers in developed multi-channel markets like the United States and the U.K. no longer operate in silos but have become “brand and product showrooms” that drive revenues across all channels and are “destinations” for consumers to do more than just simply browse and transact To support similar integrated, seamless and consistent multi-channel experiences, many retailers will need to re-evaluate their business and make fundamental changes across their organizations in all functions.
With the incredible speed at which the iPhone 4S sold – one million units in 24 hours, four million the weekend it was launched – and smartphones emerging as the most dominant consumer technology platform, one cannot mention multi-channel without also discussing mobile. Moreover, since a significant population of mobile users has not even reached shopping age, one can anticipate that mobile, and all the capabilities and opportunities it offers, will be top of mind among retailers in 2012.
Mobile consumers are no longer just early adopters: They represent a broad range of consumer segments and have become part of the mainstream population. For retailers looking to remain relevant in this connected consumer environment, the ability to leverage mobile to deliver an improved customer experience will be a critical success factor. To be sure, there is a great deal of activity in launching mobile solutions focused on the pre-shopping experience. However, many retailers are diving in without a clear strategy and few have launched an integrated multi-channel experience. Retailers that can deliver an integrated customer experience demonstrating a clear understanding of consumer preferences and behaviors across the purchase process will have an advantage over the competition.
In the race to put out a “cool” app, retailers must not neglect three important factors:
• Usability and the user experience, including integration points between mobile and other channels. A poor customer experience is worse than no app at all.
• Security and privacy. A mobile-related security or privacy breach could severely damage a retailer’s reputation and hamper adoption of mobile capabilities.
• Access for employees and business partners. Sales associates need access to the same information as the connected “super user” consumers who walk through the door. Providing suppliers real-time visibility into the location and estimated arrival time of shipments can ultimately benefit consumers as well.
From data to personalization
Data analytics and personalization will continue to be critical success factors in 2012 and beyond. Indeed, personalization has become the norm for growing numbers of consumers. Given all the new channels through which retailers are interacting with consumers, from point-of-sale to mobile to social media sites, the sheer volume of data that can be collected about consumers and their shopping behaviors continues to grow. The industry is evolving quickly in its data analytics capabilities and in its ability to develop personalized marketing campaigns and customer experiences. Still, the ongoing challenge for retailers will be how to best analyze all this rich data and derive from it valuable insights about what consumers want and need.
What about the store?
While technology is bringing radical changes to how people shop, the bricks-and-mortar store remains the core of retail. The physical store, however, is no longer the final shopping destination; increasingly, it is becoming a piece in a larger, more connected customer experience. This transition will require retailers to innovate and re-think their operating models in ways many couldn’t even conceive of five years ago.
- Monthly Economic Review: The importance of job openings and hiring data
- Revzilla reinvents the shopping experience for motorcycle enthusiasts
- Back-to-school trends update: A look at last-minute promotions
- Connecticut retailers make their mark on the state’s culture and communities
- Small business retail is a big deal in Massachusetts