During the next decade consumers will change dramatically, shaping a far different business environment than anything seen in recent years. Retiring “boomers” will buy less; GenY will shop primarily via smart phone or other handheld devices; and growth in emerging economies will create a new middle class along with a geographical shift in spending. Linking these trends at breakneck speed are developments in media and technology that provide consumers with more purchasing information and further empowering their ability to purchase what they want, when they want it. Are retailers prepared to address these changes? What does the future have in store?
Let’s take a look at the remainder of 2011 to see what retailers are facing right now.
The Economy & Forecasting Demand: Although we were getting messages that the economy was improving,with the current problems in Washington and increasing debt, it is clear that the U.S. economic situation is not going away very soon. Retailers are still facing the unknown and are having a tough time trying to accurately forecast demand. Who will buy and how much will they buy are the questions retailers are struggling with today.
Volume Growth: Retail is basically a volume game. Going forward, with competition intensifying and costs scaling up, the players who are able to grow volumes by cutting costs and warding off competition will have the final advantage.
Price: In spite of an improved outlook at the end of 2010, frugality and conscious shopping will remain the norm for U.S. retailing throughout the rest of this year. That means that prices would prompt shopping decisions over merchandise quality. Across all income levels, all consumers rank price as the most important reason for store choices by a significant percentage ahead of other criteria. Hence, retailers will have to be very sharp about offering trend-right and well-designed assortments without compromising on quality in order to improve merchandise margins besides offering the wares at compelling price points. In addition, as a result of the limited availability of consumer credit and the fall in wages and personal wealth, shoppers are looking for more discount shopping opportunities.
Reinventing Retail: In this recession, consumers are rewriting the rules by demanding a synergy of value and price. Retailers will only be able to provide value by making sure the items they sell are well-made and are meeting the needs of the consumer.
A New Normal: Digital super-convenience, multi-channel retail and innovative product ranges are some of the ways retailers will need to go in order to appeal to the recession age consumer. Consumers want to shop when and where they decide, so make sure you have a good e-commerce capability and don’t overlook the strength of social media.
Cost of Living Index: Rising inflation can put the brakes on sales as consumers are forced to spend disposable income on more expensive food and fuel. Any sustainability of momentum will rest squarely on the continued economic recovery and improvement in the job market. This will ultimately boost consumer confidence and disarm prudent discretionary spending.
If you like this information, you’ll really like this SPECIAL REPORT “Top 5 Strategies for Retail Store Growth in Difficult Economic Times”.
About the author; Elias Amash is the President of GRIP. Located just south of Grand Rapids, Michigan, GRIP features a 200,000 sq. ft. state of the art warehouse facility including a 2,000 sq. ft. product showroom. GRIP carries a product line of over 1,500 specialty hand tools, household items, automotive, air tools, wood working, and general merchandise. With its proven track record of excellence in supplying retail clients with innovative products, timely fulfillment, and world class customer support, the ideal solution to your retail needs in GRIP.