Global competition, global and educated customers demanding more product information and limited brand loyalty are the realities of retail in the world today. The adage that the customer is king is more relevant today than ever before as it is the customer who drives the sale and in effect, the retail operation. Given such a scenario, what is it that the retailer needs to gear up for in the near future?
Technology will no doubt, play a key role in creating future successes, however, collaborating with suppliers, vendors and using technology to empower customers may be the new business realities for retailers. Retailers such as Wal-Mart, Tesco etc are aggressively moving forward with plans to upgrade their existing network infrastructures to intelligent networks.
Zara, the popular Spanish apparel retailer, provides store employees with PDAs so that they can enter custom orders for shoppers who want items that are stored. Transmitting the order in real time directly from the sales floor to the manufacturing plant, cuts the time it takes to produce custom orders from 10 days to two days. Providing customized service keeps Zara from losing a sale or even worse, losing a customer. Agility in response and integration within the organization will be key to future successes.
Retail in the years to come will be an age where the old adage of Darwinsm will hold good. The competitive marketplace requires retailers to build competitive and cost advantages in their lines of business. This will be a challenge, as understanding the consumer will not simply be on the basis of demographics. As lifestyles change, buying behavior will become more complex and hence, less predictable. A retailer will have to choose whom to cater to the days of one size fitting all may be over.
The environment changes occurring will force the retailers to re-examine and rethink their competitive strategies. Competition at the next level may not necessarily come from traditional competitors, but from new ideas or methods of doing business. As consumer lifestyles change and an increasing section of the population works for home, the method of shopping will also change. Channels of distribution will blur, and the Internet will emerge as a powerful channel of distribution, while mobile commerce may soon become a reality.
Lifestyle retailing which means the policy of tailoring offering closely to the lifestyles of specific target market segments will continue to evolve as consumer lifestyles evolve. Lifestyle retailers will continue to be at forefront of retail change. The emergence of restaurants catering to specific cuisines and target audiences and niche retailers are examples of lifestyle retailing. Retailers may choose to target different segments with different product offerings, thereby catering to different lifestyles.
In an age where the consumer is faced with a crunch on time, the mall may change to an entertainment center. Retailers will need to not only grasp customer trends but also their relevance and then respond. Retailers may need to invent not only in terms of design but also in terms of richness and reach.
According to the 2008, Global Powers of Retailing survey, total retail sales for the Top 250 Global Powers of Retailing rose to $ 3.25 trillion up 8.0 % from last year’s Top 250 total of $3.01 trillion. Compared with fiscal 2005, more companies participated in that growth. While 49 of the Top 250 saw sales drop in 2005, only 36 retailers experienced declining sales among this year’s group. A growing number of retailers have been taken private in recent years, making it more difficult to measure profitability for the group as a whole.
Emerging market investment in developed retailers:
One of notable aspects of the global economy lately has been the huge surpluses of key emerging countries. China, for example has accumulated $1.4 trillion of foreign currency reserves. Russia and Middle Eastern oil exporters have likewise, accumulated vast reserves. In the past, such funds were normally invested in low yielding government securities increasingly. However countries are diverting some of these reserves into investment funds that purchase Western companies or sizable interest in those companies.
Multi channel integration:
The rise of online retailing has taken share from store retailers in some markets. Yet in the US, 40% of online retail sales are conducted by store retailers themselves. The opportunity to create a seamless multi-channel experience for consumers exists. The reality is that many store retailers are failing to do this and that most do not integrate their online businesses with their store businesses. In addition store retailers are competing with no-store retailers who own a sizable share of online retailing.
To win this battle, the best retailers will most likely focus on enriching the brand experience for distinct customer segments across multiple channels.