The future of Retail - Decline or renaissance?
The TMA laid on a thought-provoking in February, hosted by Gordon Brothers. The key-speech topic – “The future of Retail – decline or renaissance?”
Date Feb 14, 2018
Nick Taylor, Senior Managing Director International Retail, is a seasoned retailer and a recognised industry expert, was joined by Federica Pietrogrande. Fede has worked for major international law firms over the last 15 years and recently joined Gordon Brothers as Managing Director.
Retail headlines over the course of last year suggest a retail apocalypse and as we know, bad news sells! Nick shared with us deep-dive research he’s conducted, as well interviewing many key senior ‘C-Suite’ level retailers, across international brands. He distilled his findings into seven key emerging trends facing retailers today:
A personalised consumer experience is now a necessity
With an ever-growing competing environment and platforms to attract and sell to customers, personally engaging the customer is critical. Consumers now expect brand engagement and inspiration. In fact, they are stakeholders using brands to express their identity and in turn have a strong influence over brands. Fede used illuminating examples of brands that exemplify personalisation, such as Eataly and Shop Direct, describing how they use emerging technology to their advantage.
Big data and technology is key
Retailers who use big data and embrace new technologies through investment in resources will create sales and compelling, personalised products. Fede explained that big data comes as a challenge before an opportunity. Financial commitment and legal challenges are to be considered, but once these challenges are faced, great value can be created for the business as well as its balance sheet! Nick concluded that customer data is the new frontier and customisation will drive brand loyalty.
Consumer demographics and how consumers shop is changing fundamentally
The world is ageing and one-in-four Western Europeans will have reached retirement age by 2030. disposable income is dismissing post 2008 and (Brexit), especially in the important middle-class as the average wage increase is now outpaced by inflation. Millennials now account for 25% of the UK population, who are time-pressed and smart-phoned enabled and crave experience over products. Then there’s Generation Z, who require even more interaction and personalisation.
eCommerce has a lot more runway
eCommerce has been the retail industries shining star, as recent Christmas results showed. In 2017, 10% of global retail sales were made online and this is forecast to grow in 2020 to 14.6%, worth $4.1trn of sales. Nick elaborated that eCommerce however is not exclusive to PurePlayers; most of eCommerce sales attributable to multi or omni-channel sales platforms, the good news, a symbiotic relationship with Bricks-and-Mortar. Omni-channel is now a necessity and retailers will need to provide more digitally enabled environments.
Polarisation is a growing trend
The ‘middle’ generally is stressed. Polarisation to both ‘discount’ and the ‘premium’ end of the spectrum is evident. This is particularly visible in the Food and Fashion sectors. Retailers such as Tesco and New Look are experiencing market share adjustments, to discount and fast-fashion retailers such as Aldi, Lidl, and Primark. Yet, premium brands such as - Waitrose, Ted Baker, Superdry are growing steadily.
Sectors in retail are changing and evolving
The five trends described above are dynamic and impact on individual retail sector performance. Department stores have continued to decline as a sector on a global platform – Macys in the US, Myers in Australia, V&D in the Netherlands. The apparel sector shows a large shift to eCommerce, PurePlayers and fast fashion continuing to grow apace. The food sector? Amazon Go registered its trade-mark in the UK last year!
Retail space is being used differently
Nick explained that space will consolidate and contract and the trend towards brands collaborating in solving the over-spaced issue will increase; Jessops, Specsavers and Clarks as concessions in Sainsbury; Next can be found in Tesco and more recently Next has signed a deal with Rockar to use excess store space as a car showroom! Fede added that space is still key to providing an experience. The role of the store is changing, not ending.
In summary, Nick and Fede concluded that the (so called) Retail Apocalypse is somewhat overblown! What is true, is that retail is undergoing a rapid and ever accelerating evolution! A renaissance. Exciting, dynamic and there won’t be a dull moment.