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Report: Mobile and tablet commerce to drive non-store retail channel

BY Katherine Boccaccio

New York — A new report from PwC US and Kantar Retail suggests that the retail industry may be transitioning to a ‘post-modern’ consumer-centric era triggered by the speed of technological advancements, globalization and hyper-competition, both online and offline.

The Retailing 2020 report recommended that successful retailers will need to transform themselves to grow in an increasingly polarized world of greater channel fragmentation that will result in greater non-store retail growth and smaller retail formats.

"As we enter an increasingly complex retail landscape with accelerating competitive pressures and digital shopping options, retailers will need to prepare for a wall-less omnichannel retail world, one where shoppers will come to expect a seamless brand experience online, in-store and across multimedia touch points," said Susan McPartlin, PwC’s US retail & consumer industry leader. "This multi-format portfolio combined with the proliferation of small, urban, alternative retail formats will pave the way for future growth, dismantling the mass homogenization and scale assumptions that propelled two decades of retail growth."

According to the report, the U.S. retail industry will have entered the post-modern period by 2020 with the end of the growth of supercenters being a large change across the retail landscape. Non-store retail, driven by online today, and mobile and tablet commerce in 2020, is expected to be the fastest-growing retail channel, according to the report. Large chain retail growth through the decade is anticipated to remain very close to the early 2010s recessionary rate, with one-third of large chain growth projected to come from online sales. Discounter channels will capture larger growth while food, drug and mass channel retailers are expected to face a tougher growth environment through 2020.

In its analysis of shopper behavior changes, Retailing 2020 found that the older generation, having lived through several recessions, is more financially conservative than the younger generation. By 2020, this generational difference is anticipated to create two mega-cohorts – the ‘over 50’s’ and ‘under 30’s’ – dividing the U.S. into two distinct shopping nations.

"The demographic and income gaps between shopper segments are expected to widen, creating more shopper segments with different expectations for product offerings and shopping experiences," said Bryan Gildenberg, Kantar Retail’s chief knowledge officer. "Retailers must do away with the ‘one size fits all’ approach and consider the ever-diverging needs of both the ‘Have’ and ‘Have Not’ consumers to remain viable in the future. Forward-thinking retailers should diversify format portfolios, test smaller footprints and offer niche products targeted to specific shopper segments."

According to the report, by 2020 the speed of technology innovation will further transform the retail landscape. Retailers will leverage the use of ‘big data’ to gain a deeper understanding of individuals. In the future, retailers will have a more granular comprehension of product movement. Tracking technologies like Radio Frequency Identification and other innovations will enable seamless checkout while also ensuring that shoppers can understand everything from product origin to brand legitimacy on a mobile device.

The report outlined some of the success factors for retailers and suppliers to manage the retail landscape in 2020:

  • Total value chain management: Retailers will need to integrate themselves seamlessly into their shoppers’ replenishment processes, and best-in-class retailers will find ways to act as a bridge between this real-time consumer data and the rest of the supply chain.
  • Dynamic clustering to optimize fragmented growth: Forward-looking retailers will reframe the way their teams think about retail by consistently experimenting with structure and adapting it to shoppers’ cultures.
  • Competing on a truly global scale: Best-in-class retailers will operate using the concept of trading ecosystems, capable of understanding how those ecosystems require different competitive strategies.
  • Branding in omnichannel space: Leading retailers will need to build key capabilities and new multimedia, omnichannel-enabling tools to allow customers to interface through any channel of their preference on a 24/7 basis.
  • Managing data security and privacy: Retailers will need to master building digital engagement segmentation, cost/benefit/risk management and reputation recovery processes.
  • Managing diverse retail models: Leading retailers will need to address the challenges to their economic models and adapt their frame of mind on store formats, employment models and return on investment.
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