Markets are continuously changing and to understand the dynamics of any industry it is important to understand what is happening and how the industry market players see the future for the industry. In this article, we will discuss the recent trends witnessed by the retail sector. This document provides insights into major trends identified for the retail sector.
Given below are the key trends in the retail industry:
Competition among retailers has never been tougher and retailers need to build a competitive advantage to survive. On one side, Superstores are battling each other, while Internet marketers are stealing customers from stores. Some consumers are using stores as showrooms where they can touch and feel the merchandise, and then making their purchases at lower cost online sites. Online selling at deep discounts is even making inroads into major consumer purchases such as jewelry.
As retail chains expand and spread their operations they are focusing on the development of private brands. A private brand is the licensed brand of a retailer. These are exclusive and only available at outlets of a specific retailer. Marks & Spencer stores for example carry the St Michael brand. In India, West Side has emphasized private brands while Shoppers Stop focuses more on manufacturers' brands or brands available across retail chains. The use of private brand enables retailers to maintain an image of exclusiveness and develop a loyal clientele. It also enables them to quote lower prices since retailers do not have to promote or spend heavily on advertisements of private brands whose circulation is limited.
Manufacturers are adapting their marketing strategies to the needs of modem retail. They often develop products exclusively for a specific retail chain. Many consumer durable companies in India for example sell customized washing machines and refrigerator sets through hypermarkets like Big Bazaar, etc.
Retailers in developed markets are dealing with home markets that are growing at a slower rate and in order to achieve growth, these companies are expanding their base in new, emerging markets. Although large global retailers are making inroads into these markets, the companies that are best positioned to benefit are those that are already based in these markets. Many of these local retailers have been successful in expanding into neighboring emerging markets, becoming regional powerhouses. The most exciting stories in retail industry growth are in emerging nations, such as China, India, and Brazil. In China, many of the world’s leading retail chains are rushing to open stores and new malls have been developed at a rapid pace, even in remote cities.
The means by which consumers purchase products, services, or offerings have undergone vast changes during this decade. The consumer has adapted to multiple channels and they move easily across channels to search for products, decide on the best product through discussions or reviews, search for the best prices and promotions on the net, finalize a store/web-store and finally make a purchase. Retailers need to understand this need for changing behavior and enable themselves to service the customers through various channels while presenting an integrated view of the business.
E-commerce refers to buying and selling products over the Internet is being widely used for purchasing goods from the convenience of home. Retailers need to be consistent across all channels. Consumers expect to receive the same benefits and services from a retailer, whether they make their purchase online or in-store.
Mobile Commerce refers to using a mobile phone or smartphone to conduct retail transactions is gaining acceptance for shopping. The popularity of social networking sites, such as Facebook and Twitter, is also having an impact on the retail industry. A recent trend is that consumers increasingly reach for their phones and tablets even while shopping in a physical store. It is anticipated that consumers will make more purchases via their mobile phone than their credit card in the coming years.
New technologies are being incorporated to better predict customer demand patterns, improve marketing, and optimize product pricing and supply chain efficiencies. Retailers can use data they collect to customize their product selection to align with customer demands.
A proper framework is needed to understand all the facets of operations and technology which need to be deployed to deliver on the expectations. With the advent of the internet, retailers can create online stores that are open 24 hours a day, 7 days a week. Customers can shop from the comfort of their own homes, searching for products, and comparing prices of retailers around the world. The Internet has increased both opportunities and competition within the retail industry.
Mergers and acquisitions result in economies of a larger scale that result in increased profits; better-negotiating strength enabling cost reductions. Small retailers are merging with large players, decreasing the number of competitors in the industry. Large retailers can purchase smaller companies with new innovative products and market the products under their own brand names.
Home delivery from brick and mortar retail locations is gaining acceptance and more and more customers are expecting the retailers to provide this service.
The rise of multi-channel retailing and ease of online shopping have led retailers to update their stores with technological conveniences like tablets, interactive panels, and digital signage. Some retailers are expediting the checkout experience by allowing shoppers to use their mobile phones to instantly scan their items and pay at self-serve kiosks. Other retailers are adding kiosks that let consumers purchase products not available in-store and installing e-signs that allow for changing prices remotely.