Consumer research giant Nielsen has released a new white paper that takes a look at how retail will evolve over the next five years, with an outlook that sees formats blurred, experience and entertainment raised in importance and technology having a more pervasive, consumer-facing footprint.
Called What’s In Store, In-Store For U.S. Retail In 2016, the report looks at what kinds of retails will prosper and which will shrink, as well as the ever-increasing impact/menace of online retailing.
The report’s highlights include:
A point for view that traditional mass merchants and grocers are losing share to club and dollar stores, and supercenter formats – which will drive a “series of changes running the gamut from format blurring to new marketing outreach techniques to shopper- tainment.”
Aimed at people who regard shopping as entertainment “that engages all the senses,” stores will blur tradition lines with with food markets that have restaurants, wine tastings, live music and even movies – “creating places for friends and co-workers to gather and socialize.”
Technology such as touch screen ordering, QR code advertising, mobile coupons and shopping lists will be used much more (I think this just scratches the surface and QR codes are NOT going to be in the mix in 2016).
Store footprints are either going to supersize for one-stop-shopping or downsize into smaller stores for quick grab-and-go trips and inventory tailored to the market and neighborhood.
The report suggests deep discounters will thrive is a steadily wobbly economy and that people like club chains like Costco because of the value and the treasure hunt aspect of seasonal items, i.e. outdoor furniture come spring. While other retailers stopped expanding or just went out of business, dollar stores grew like crazy. As a result, the 21,500 site store count for the three leading dollar store chains (Dollar General, Dollar Tree and Family Dollar) now exceeds that of the three largest national drug store chains (Walgreens, CVS and Rite Aid). Chain drug is still strong, though, because the baby boom is getting creaky (tell me about it).
Supercenter stores are growing because of the one-stop aspect, and chain pet store numbers have been growing fast since 2005 and pet ownership is reaching all time highs.
All other channels will lose ground, even if they continue to grow on a nominal dollar basis. Specialty retailers such as auto, sporting goods, electronics, books, toys and home/bed/bath stores will face the biggest challenge.
Some specialty retailers (e.g. toy, book and electronics stores) have experienced significant erosion in store count as big retailers in each sector closed their doors for good. Either declining store counts or lower shopper demand has led to decay in shopper penetration for many specialty retail channels. Pressure from offline and online big box competitors and pure play online retailers will likely lead to further declines.
The report concludes that volatility in energy and commodity prices are with us for good, so retailers have to innovate to justify premium prices. A redefined competitive set will prompt former adversaries to forge marketing alliances in an attempt to fend off the relentless encroachment of well- financed, disruptive competitors with global reach.
The yawning chasm between income and wealth strata will enable retailers at both the high and low ends of the price spectrum to prosper by merchandising to niche audiences. Technology, particularly mobile applications, will open the door to innovative marketing approaches that re-ignite consumer loyalty. Stores will emerge as the social centers of communities, where neighbors can feed their bodies with nourishing food, their souls with good conversation and their wallets with great deals.
So what does this mean to our little world?
Well-executed, well-integrated digital signage and interactive digital in retail is clearly a big part of the future for those retailers that are not competing purely on price and convenience. If it is about experience and shopper-tainment, that’s all about orchestrating visuals and engagement that starts pretty much the minute people pull into a parking lot and sticks with them through the aisles and, via mobile and online, after they leave.
It’s really important, I think, to take on-board that “shopper-tainment” is a lot more than the Wow Factor of big display walls and cool interactive stations. It all has to be meaningful and it all has to be part of the fabric of store merchandising, marketing and operations.
The report is a free download, but you need to register to get it.