As we look to 2020 and the new decade to come, it makes sense to stop for a moment and look back at the retail changes over the past 10 years – what’s changed and what hasn’t.
Over the past decade, we’ve witnessed massive retail changes in the way consumers live, work, and shop. The most spectacular of course, has been the way tech has shaped consumer expectations around speed, service, and availability – in all areas.
In fact when looking back, the wholehearted embrace of online shopping by people of all ages can appear to be the whole story, but so much more has happened. The forces of three profound changes — each transformative in their own right have combined to create a seismic shift in the way retail businesses win or lose.
And as we spend most of our time as business people looking forward, every now and again it makes sense to take stock of the past and note the retail changes that have gotten us here, while also considering what remains the same.
As I see it, there are three major drivers tied to consumer behaviour that have put the retail industry in flux and have pushed conversions around retail sales and service models, along with community development, and employment models.
Let’s dig in.
1. Colossal economic impacts on retail.
We can’t look back over the past 10 years of retail changes and not consider where we were in 2009. At that time, the still-fresh banking crisis cratered the global economy and the long recovery for the lower-middle and working classes took time, so much time in fact that for some groups they never recovered.
And as such, the Great Recession has had a lasting impact on consumer buying patterns – especially felt in different geographic local markets. This has further widened the divide between different socio-economic groups and regions.
Of course, the realities of consumers’ economic situations, hardships, or even just shifts in spending habits have further backed the rise of online shopping, the dollar-store movement, and big-box discount retail. For those who could go “discount,” they fully embraced the “discount” experience and for those who couldn’t, they were forced to go 100% the other direction by pouring time, energy, and investments in creating amazing and inspiring customer experiences. Those in the middle have run into trouble.
TAKEAWAY: Retailers need to not only consider their local economies and target consumer spending habits, but also be on the lookout for shifts in their local economies and get in front of how their target consumer’s spending habits may change.
2. Transformative technology changes.
Even the profound economic impact of the banking crises do not come anywhere near the magnitude of how tech, online, and omni-channel shopping has forced retailers to respond or fall.
Today, 68 percent of millennial consumers demand a seamless shopping experience that integrates online and in-store sales channels. How far the industry has come in just the last 5 years — from an almost protective fear of loss of in-store retail profitability (similar to the music industry when Napster came along) to fully embracing online, to full integration with it, is nothing short of remarkable.
Let’s be honest, online shopping, social media, and the internet in general was already a driving force pre-2009, but its takeover of our daily activities has reached proportions. We’re working full-time remotely through telecommuting. We buy everything from fast food to toilet paper on our phones. We have wearables that keep us on time, on our diets, and moving. And people are even finding their next hook-up virtually.
Being so digitally integrated, it’s overtaken all industries and for those retailers who embraced the change, they have one thing that retailers of past decades could only dream of: consumer data and the insights that come from knowing your customers intimately.
And while I believe consumer data is the greatest gain we’ve hit on over the past 10 years, it’s one of the many retail changes:
- Mobile Shopping — From online to mobile, and mobile to app, and app to social, shopping while on the go, including strategies like “Amazon 1-Click” (1-Click ordering places your order automatically and lets you skip the shopping cart) has become a way of life. 62 percent of all smartphone users have used a mobile device to make a purchase. As retailers we need to create shopping experiences that meet the evolved consumer values and expectations.
- Pricing Pressures — Consumers are constantly searching for bargain options with rapid delivery. In one survey, two thirds of respondents reportedly said they would switch retailers if one offered a better delivery rate than their current one does. This also goes for consumers who price check on a smartphone while in a retail location.
- Consumer Empowerment — Consumers posting online reviews and star ratings can directly impact the success or failure of retail businesses. Shoppers also have greater power now to make informed buying decisions, such as in seeking humanely produced products, all-natural products, etc. Data indicates that as many as 75 percent of younger consumers do online research prior to making purchases in stores.
- Social Platform Purchasing — Researching, clicking on ads, and shopping on social platforms have become very popular channels for consumers to find product reviews and word-of-mouth information about customer experience. Further, 38 percent of retail sales are currently being made across multiple channels.
- Supply Chain Advancements — Technology-enabled improvements in supply chain management have also had an impact on customers’ shopping and service experience. From third-party logistics, to integrated vendor and manufacturer inventory and delivery tracking and billing systems, retailers and their customers benefit from today’s tools for supply chain efficiency.
- Buyer Behaviour Tracking — Consumer behaviour tracking (a.k.a. big data) has become standard practice, using integrated data systems and analytics, to extract information on buyers’ activity patterns. Consumer data has enabled retailers to provide tailored product and service suggestions and to personalize users’ shopping experience.
- Market Insights — Retailers track activity in their market, to help maintain their position in it. There is a wealth of great tech tools in use for this purpose by big and small U.S. businesses alike. From social platform ad strategies to pricing adjustments, real-time market data contrasting the performance of a retailer’s own products alongside competitors is an increasingly critical component of business market intelligence for retailers.
TAKEAWAY: Over the past decade we watched smart retailers blur the line between online and brick & mortar stores. We saw traditional retailers head online, and a handful of enterprising online brands buck the trend and move into bricks and mortar. But what hasn’t changed, naturally, is the need for retailers to stay on top of market trends and retool to changing conditions, adding to the customer experience, while retraining what makes their brand stand out.
3. Fundamental cultural changes.
Over the past decade, a deeper and wider cultural transition has been underway in major urban and suburban retail, employment, residential, food service, recreation, financial, and healthcare markets – and these transitions have changed much of the way we look at live/work/shop and built environments. Because what we’ve seen is the merger of these spaces in newly planned communities.
We’re seeing millennial and gen-X-ers wanting to bike or walk from home to work, from work to a shop, to dine, and to entertainment, without ever having to get in their car or grab an Uber. So, while high-end malls have continued to perform well through the last decade, on the whole, the popularity of the mid-level or strip mall has declined in many markets. In fact, the New York Times reported in 2015 that nearly 20 percent of indoor malls were at least 10 percent vacant, and the report also spoke to the number of “dying” malls with 40 percent vacancy or greater – forcing property owners to consider how to transform their spaces into new micro-communities themselves (we’re seeing these spaces turned over to flex workspaces, gyms, and even live/works spaces).
Part of this shift could be that city planners and land developers are planning and delivering much more fully localized lifestyles, in all-inclusive developments. These have proven to work really well, especially for Millenials and urban singles. The new way of living also has a significant effect on how people respond to retail stores operating in these microcosmic economies. Add to this, we’re seeing successful retailers fully embrace:
- Smaller retail footprints
- Mixed use space
- Store within a store layouts
Aside from the new urban community lifestyle, three other culturally-driven trends have come to the forefront in recent years:
- Conscious Consumerism: From the growing demand for humane food sourcing for restaurants to clothing and home décor manufacturing with all-natural materials, the consumer culture has evolved.
- In-Store Shopping Experiences: Even after a decade of digital revolution, there remains a robust consumer market for real-life retailing. Things like immediate and personal one-on-one assistance, try on clothing, testing devices and equipment, or even just grabbing a coffee while you browse, for certain retailers, online cannot compete with an exceptional in-store customer experience – and let’s not forget that the best social media posts are of people out and about trying new things. Even your store could be the backdrop for social.
- Personalized Retail: An extension to the shopping experience, whether in-store or online, personalization is helping many retailers reach new target groups and cross-sell to existing consumers. The wealth of consumer data and insight we have access to helps retailers, help customers, with more personalized offerings.
TAKEAWAY: As retailers we often think about cultural changes as it relates to our target customers, their buying habits, and the demos within our local areas. But cultural changes impact communities, the makeup of those who work, live, and play near our locations, and the likelihood that they’ll even come into our space. Looking at the shift over the past 10 years, its clear to see that where we place our locations, how we build out our spaces, and the experiences we provide shoppers will have a dramatic impact on our success.
Okay, that was looking at the retail changes. So, what’s remained the same?
What’s remained the same? Short answer: everything. Yes, there’s been a lot of retail changes. Yes, we’ve witnessed the rise and fall of huge retailers, online stores, direct to consumer brands, and more. But the retail truths that have always been there, those that have lead to the success of retailers in all regions for over a hundred years remain the same despite all other retail changes.
It’s the same game, it just looks different, sounds different, but it’s still the same. Great retailers understand that word of mouth trumps all other forms of advertising. And that value trumps creative pricing strategies. And that marketing will not go far without quality. And that people are hungry for amazing experiences. And that people are looking for quality, and fair pricing, and friendly people.
Rock bottom pricing helps. Wide selection of products helps. Fast delivery, if possible, helps. And integrated shopping experience or intuitive tech helps. But you still have to have a great brand, a great product, and deliver great experiences.
And cultural shifts in lifestyle, work lifestyle, consumer attitudes, environmental and social consciousness, health focus, and other elements contributing to the focus of the so-called “New Retail” doesn’t change any of that.
The economy has largely recovered. The natural adaptation that brick & mortar retail stores had to go through to come out the other end of the technological revolution has largely been made. Life goes on along Main Street, and behold: As it turns out, research decisively shows that 60 percent of the most digitally-inclined consumer generation, Gen Z, prefer in-store shopping. They want a shopping experience. And that’s good news for us. The challenge is in knowing how to create a shopping destination, a more meaningful customer experience in our spaces.
And for that we’d like to toss our hat in the ring. Because today’s retailers need to create that shopping destination, that place where people go to have an experience. And our exceptionally talented team of retail store designers are here to help you create that kind of experience for your customers. For more information about developing your retail store or to schedule an appointment to meet with an expert design consultant, contact CBSF Store Fixtures Canada at (800) 535-2279, to talk about your vision for your new store location.
What’s the future of retail?
Malls, as we know them, are changing. And many are changing not only to serve customers but to serve retailers, now and into the future. As the way we shop continues to change and evolve, retailers and malls have to find unique ways to adapt to consumer needs. Many malls across Canada are reinventing themselves not just for the short-term needs of consumers, but for long-term demand, thinking ahead for the future of retail.
Explore the future of retail for both malls and retailers alike in our white paper, “Reinvention: The Saviour of Canadian Malls?”.