Insights on business -- and life.
A Glimpse into the 2015 Retailing Environment
Shifting demographics, household downsizing,
and new marketing present industry challenges.
by Price WaterhouseCooper and TNS Retail Forward (October 22,
The retail industry will become more segmented and
customer-driven by the year 2015, according to Retailing 2015:
New Frontiers," a report released today by
PricewaterhouseCoopers' Retail & Consumer Industry Practice and
TNS Retail Forward.
The report identifies 15 growth drivers and predicts 15 trends
that will redefine the retail environment in 2015. Among shifting
demographics, household downsizing and new marketing channels, the
retail industry will face a variety of new challenges as the
industry progresses during the next decade.
"Overall, the retail industry will need to adopt a more
targeted approach in order to reach its customers,'' says John
Maxwell, retail & consumer industry leader for
PricewaterhouseCoopers. "The 'one-size-fits-all' approach of
the 1980s is not going to work as the population becomes more
diverse and tech savvy during the next decade."
According to Retailing 2015, the most rapidly growing age
segment in the United States will be that consisting of those older
than 55. Members of generation Y and millennials (those under the
age of 35) will be more culturally diverse and technologically
inclined, while less enamored of large conglomerates and chain
stores than their baby boomer parents. In addition, the population
will become increasingly diverse, with nearly half of the population
under the age of 25 identifying themselves as non-white in 2015.
Due to the demographic dichotomies, a new consumer mindset will
emerge in 2015 that will have far-reaching implications for the
retail industry," explains Maxwell. "Consumers will want
to be more interconnected with the businesses they patronize,
exercise more control over their purchases, customize their products
to serve their individual needs and indulge in shopping as a life
The study reveals that the fallout of marginal malls will
continue as fewer existing malls reach their financial targets and
conventional department stores fade away. New neighborhood centers
will pop up and will incorporate entertainment and dining into the
shopping experience. The fastest growth will take place in
developing retail markets, including China and India. Barriers to
global trade will buckle as restrictions on foreign retailer
operations are phased out.
In 2015, retailers and suppliers will be held to higher standards
around the world. Concern about the planet and its people will be an
integral part of mainstream consumer demand. Rising levels of
government involvement, omnipresence of news media, increasing
watchdog groups, and advancements in technology will all have an
effect on how retailers operate in 2015.
"Most of the technology trends anticipated for 2015 are
already in progress today," says Tom Rubel, President, TNS
Retail Forward. "With the advent of falling technology costs,
widespread availability and adoption of devices, consumers will be
able to access content on-demand, including information on the
source of the product, along with gaining access to peer reviews of
a product or service before purchasing it."
As a result of these anticipated economic drivers, the
PricewaterhouseCoopers report also predicts 15 trends that will
redefine the business environment in 2015. Examples include:
Downsizing: The current trend of sustainability will drive
the downsizing of products, packaging, resource consumption and
waste as more people look to smaller, more personalized products.
Share of Life Retailing: Retailers will no longer define
themselves by the products they sell, but by the customers they
serve. Retailers will position themselves as one-stop purveyors of
Multi-Channeling: Traditional storefronts will increasingly
co-exist with a growing array of multi-channel platforms, which
include catalogs, pop-up stores, virtual stores, and retailers
partnering with service offers, such as spa packages and hotel
Supplier Competition: Supplier-retailer relationships will
not only be increasingly collaborative but also increasingly
competitive. More suppliers will work vertically with retailers to
create unique brand and product offerings.
Triple Bottom Line Scorecard: Definitions of corporate
success will change by 2015, with increased focus on the
environmental and social performance of a company.
"Given the change factors and the predicted trends, the next
growth phase for retailers will be about segmentation and
localization," says Rubel. "The best way to define this
trend is through the term 'glocalization': retailers will need to
serve customers across major geographic, cultural, legislative, and
regulatory boundaries, all while catering to local tastes,
traditions, lifestyles, and economies."
Glocalization will stand as a major challenge for retailers, as
they attempt to manage the complexity and diversity of businesses
that will span the globe while reaching out to a local, niche
consumer. However, substantial improvements in customer databases
will help retailers and suppliers understand their customer base in
order to conduct business in a total customer-centric manner.
"To be successful in 2015, retailers will need to understand
and identify with their customers and be innovative by keeping on
top of trends while managing complexities that the future will
bring," explains Maxwell. "Retailers, along with their
customers, will be more demanding, more global, more diverse, and
will operate across more channels than ever before. That being said,
retailers should be proactive in addressing these challenges
(Note: The report says, "Members of generation Y and
millennials (those under the age of 35) will be more culturally
diverse and technologically inclined, while less enamored of large
conglomerates and chain stores than their baby boomer parents."
Any thoughts on that prediction? Email CLN at firstname.lastname@example.org.)