December 5, 2006
Stores Magazine Makes Predictions for 2007
Stores magazine has dusted off its crystal ball to see what will happen in 2007. Here’s what the editors at the publication saw:
1. The future’s calling.
Cell phones are poised to become “the most significant electronic consumer device in history,” according to Stores. Next year, retailers will advertise, run promotions and even process payments via the cell.
2. Cheap is the new chic.
Retailers need to find ways to bring new unique fashions to the market more swiftly and, oh yes, hold down the price if you’re looking to stay competitive in the future. According to Stores, the fast-fashion of retailers such as H&M, Topshop and Zara are among those leading the charge in this area.
3. Demographics assume greater power.
Shifts in the nation’s demographic profile will continue to shape retail for years and years. In response, retailers will increasingly turn to micro-merchandising and micro-marketing to connect with consumers on a level that addresses their individual needs.
4. Green is the new black.
Sustainability and social responsibility will be key for retailers as more consumers look to support products and merchants that help make the world a better place to live and shop.
5. Economy hits a speed bump.
Retail sales will grow 4.5 percent next year, according to the National Retail Federation. That number will be two percentage points off what the association expects the final tally to be this year.
6. New Rx for supermarkets.
Supermarkets are looking to provide consumers with reasons to shop in their stores other than in all the other retail channel options they have available to them.
7. Smart money is on retail technology.
Business intelligence applications, contactless payments, kiosks, self-checkouts, biometrics, and radio frequency identification (RFID) are some of the technologies that retail decision makers will be concerned with in 2007.
Discussion Questions: Which of the seven predictions made by Stores magazine do you think will have the biggest impact on retailing in 2007? Are
there other predictions you would make for 2007?
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7. Smart money is on retail technology.
There are two classes of benefits here:
First: Displacement of existing functions, such as the checkout. This is just barely over the horizon, with all the necessary technology in existence, but not yet cost effective and efficient enough to warrant immediate widespread adoption. Think of “EZ pass” for your groceries. It is this type of technology that will have an explosive impact on retailing. (And yes, that may be the right word. :>)
Second: Understanding and knowledge about shoppers and their behavior — insights. For this, we can look at the advent of scanners in the 70s as a model. Operationally in the store, the checkout was revolutionized — speed and efficiency. But the resulting flood of data was a mixed blessing. Nevertheless, that flood is the gold that has moved some to the forefront of the world retailing stage.
The first class of benefits will be ubiquitous. It is the second class that is dependent on the management and culture of the organization. As always, some will make it happen, some will wonder what did happen, and some will doubt that anything happened. The dogs bark, but the caravan moves on!
A pretty good list overall. I especially agree with Stores editor Susan Reda’s identification of cell phones, retail technology, and the bid for identity by supermarkets as coming trends.
But I’d quibble with one point a little bit. Demographics has been eclipsed by shopper insights. Retailers are no longer competing over which shoppers they can “own” – they are competing over which trips they can attract. Yes, there are some attractive target groups – Hispanics, boomers, GenY – but they are hardly homogeneous. Beyond that, all shoppers are split shoppers. Retailers compete over share of their wallets and attention.
I’d argue that need state, trip type and shopper insights are eclipsing demographics, as brands and retailers find more precise ways to go to market.
I’m not sure if this will be the single biggest impact on retailing — the the single biggest aggravation for consumers is going to be #1. “mobile marketing.” Generational differences in acceptance of cell spam notwithstanding, most of us have our cell phones set to give “message alerts” because we expect the message waiting to be important. After getting out of bed for the second time last night to stop the message alert beep from my cell phone, I finally turned the darned thing off. The important text message? “Mark” was just dying to help us sell our timeshare. We don’t own timeshares. Aaarrggghhhh!!!!
During Clinton’s 1992 Presidential campaign, Strategist James Carville placed a sign on Bill Clinton’s Little Rock campaign office in order to keep Bill focused on their campaign message, they were;
1. Change vs. more of the same
2. The economy, stupid
3. Don’t forget health care
Whilst oft repeated, it may well be worth repeating the second point here for all retail pundits to ponder. It’s still the economy, stupid.
While many of the country’s key economic measures seem pretty healthy with relatively strong growth, a managed inflation rate, fairly robust corporate profits, a mostly satisfactory unemployment rate and a pretty robust stock market, these measurements belie a trend which has continued to manifest itself over the last decade.
Income inequality and the narrowing of the middle class with increasing pressures on the middle classes sustainability (debt, including Home Equity raises the risk factor). Additionally real wages have been somewhat stagnant and productivity gains have slowed.
This growing inequality in the division of wealth in America is being played out in the store fronts across America. Department Stores and High End Specialty stores are seeing uncommonly strong comp store sales and their percentage of the total sales has been increasing. This is a phenomenon not seen in a decade or more, while at the same time the country’s largest discount store, whose core customer is made up of this country’s working and middle class citizens, is seeing an erosion of market share and flat sales comps. The rich are richer and spending more while the middle class and the poor are watching their disposable income shrink.
The biggest trend which will shape the retail industry will be centered on the disproportionate buying power of the consumers in this country which is in turn being fueled by the underlying problems within the economy.
Take a look at the populist economic sentiments raised by the winners in the November elections such as the low minimum wage, the problems inherent with free trade, protection of blue collar jobs, dangers of outsourcing, Big Oil profits and so on. These were the winning platforms for the largely Democratic candidates who swung to victory in November. It seems clear to me that the larger portion of this populace have significant concerns regarding the economy.
In exit polls during the elections voters were polled on their feelings concerning the economy. Half of all voters rated the economy poor or not good, while two thirds claimed that they were the same or worse off since the last election.
While I agree that many of the predictions are likely to continue to be in the news and making an impact, I believe it is going to continue to be all about the economy.
Most of Stores’ predictions for 2007 would be no surprise to anyone regularly reading RetailWire. Furthermore, many of these predictions could’ve been made anytime in the last 30 years. What would be really neat: unexpected predictions, especially those that would be unique to 2007. Here are some of mine, but like most Stores’ predictions, none of them are counter to recent trends: (1) more struggles to raise the minimum wage (notice that the state referenda on this all passed); (2) an increasing number of mergers and going-private transactions as long as interest rates stay stable; (3) continued very slow growth in the number of new regional malls; (4) further declines in print advertising volume; and (5) continued talk about union organization of nonunion stores but no breakthrough success. In other words, present trends will continue. Anyone expect something new?
From a practical point of view (although I know it isn’t trendy) I’d stay with retail technology.
All of these trends are valid bases for planning. Two are of particular interest. RFID is an industry expected to experience explosive growth over the next five years. According to internetnews.com, 33 billion radio tags will be produced annually by 2010, compared with 1.5 billion last year. The RFID industry could enjoy a 30-fold growth rate over the next half decade if certain issues are settled: i.e. costs of the tags and privacy concerns.
As the cost of micro sensors continues to decline over the next decade, we could see a world in which everything of material significance gets sensor-tagged.
The other trend of particular interest is retail technology. Where and how will business be conducted in the future? Everything businesses provide will be available everywhere, anywhere, anytime, all in real time (immediate and instant). Always on, always connected, will be the prevalent way to conduct business within 10 years. So writes Barton Goldenberg in Customer Relationship Management Magazine.
That means business systems and operations will have to be operating in real-time, all of the time. This approach will call for tremendous skills in the sphere of Customer Relationship Management, popularly known as CRM. It is no wonder that CRM is being recognized as the hottest tool of the next business revolution.
Real-time CRM solutions are being propelled by key business drivers that will expand in importance over the next decade:
— the need to be increasingly customer focused
— increased competition and the need to maintain long-term differentiation
— an increased emphasis on better market segmentation
— the need for tighter links between front- and back-office processes and technology systems
— the need for improved business analytics and metrics
Within 10 years, “always on, always connected” is what consumers will come to expect from every business. Broadband Internet connections will be ubiquitous, every mobile device will have a wireless connection to the Internet, all computing devices will be connected to each other and be synchronized and up to date.
At the end of the day, concludes Goldenberg, we are all people who make buying decisions based on a good customer experience. In the future, that’s what all businesses will strive to provide, using the optimal combination of personal service and appropriate technological applications.
I doubt if there’s any real end to the issues impacting retailing in 2007 and beyond. However, on a macro basis, I would add these to the list.
– Health care reform
– Food safety/security
– Government legislation on big box retailers
– Organized retail crime
– Development of small store formats
– Green movement/environmental awareness
– Human resources
– Improving the customer experience
– Illegal immigration
– Corporate ethics
– Leadership strategies
Had enough or should I go on? These are in no particular order and nothing here is really new. But we’re discussing the continuing evolution of this business.
The future is indeed calling. The mobile telephone is the communication link to the consumer. Brands and retailers alike must learn to understand their customers in ways they have never imagined. Consumers are taking control over brand communication and messaging. Mobile and retail technologies, together with an intimate understanding of the customer will come together to surprise and delight consumers in a permission-based environment.
These three predictions, working together as an integrated communication channel, will reward the practitioners of this initiative handsomely. The challenge here isn’t the technology but getting the retailer and brands to work collaboratively to create a successful integrated campaign.
As many people as there are already using cell phones, I think the market is fairly saturated there. However, there is an increase in the use of technology in the retail industry in all aspects of POP, inventory and administrative issues. This is positioned to make a bigger impact, I think, than just about anything.
I agree with many of the areas which Stores has “predicted” for 2007. However, the editors at this publication need to better identify their predictions. Each of these need to have a definitive timeframe and an action attributed to each component (i.e. RFID usage will double in 2007, or 20% of drug retailers will use RFID). None of their predictions are clear, accurate or concise, with a measurable timeframe and impact of the technology. This leaves their predictions very loose, vague and really not very measurable.
My vote: Mobile phones. If not this year, next year.
But never underestimate the power of cheap chic.
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7. Smart money is on retail technology.
There are two classes of benefits here:
First: Displacement of existing functions, such as the checkout. This is just barely over the horizon, with all the necessary technology in existence, but not yet cost effective and efficient enough to warrant immediate widespread adoption. Think of “EZ pass” for your groceries. It is this type of technology that will have an explosive impact on retailing. (And yes, that may be the right word. :>)
Second: Understanding and knowledge about shoppers and their behavior — insights. For this, we can look at the advent of scanners in the 70s as a model. Operationally in the store, the checkout was revolutionized — speed and efficiency. But the resulting flood of data was a mixed blessing. Nevertheless, that flood is the gold that has moved some to the forefront of the world retailing stage.
The first class of benefits will be ubiquitous. It is the second class that is dependent on the management and culture of the organization. As always, some will make it happen, some will wonder what did happen, and some will doubt that anything happened. The dogs bark, but the caravan moves on!
A pretty good list overall. I especially agree with Stores editor Susan Reda’s identification of cell phones, retail technology, and the bid for identity by supermarkets as coming trends.
But I’d quibble with one point a little bit. Demographics has been eclipsed by shopper insights. Retailers are no longer competing over which shoppers they can “own” – they are competing over which trips they can attract. Yes, there are some attractive target groups – Hispanics, boomers, GenY – but they are hardly homogeneous. Beyond that, all shoppers are split shoppers. Retailers compete over share of their wallets and attention.
I’d argue that need state, trip type and shopper insights are eclipsing demographics, as brands and retailers find more precise ways to go to market.
I’m not sure if this will be the single biggest impact on retailing — the the single biggest aggravation for consumers is going to be #1. “mobile marketing.” Generational differences in acceptance of cell spam notwithstanding, most of us have our cell phones set to give “message alerts” because we expect the message waiting to be important. After getting out of bed for the second time last night to stop the message alert beep from my cell phone, I finally turned the darned thing off. The important text message? “Mark” was just dying to help us sell our timeshare. We don’t own timeshares. Aaarrggghhhh!!!!
During Clinton’s 1992 Presidential campaign, Strategist James Carville placed a sign on Bill Clinton’s Little Rock campaign office in order to keep Bill focused on their campaign message, they were;
1. Change vs. more of the same
2. The economy, stupid
3. Don’t forget health care
Whilst oft repeated, it may well be worth repeating the second point here for all retail pundits to ponder. It’s still the economy, stupid.
While many of the country’s key economic measures seem pretty healthy with relatively strong growth, a managed inflation rate, fairly robust corporate profits, a mostly satisfactory unemployment rate and a pretty robust stock market, these measurements belie a trend which has continued to manifest itself over the last decade.
Income inequality and the narrowing of the middle class with increasing pressures on the middle classes sustainability (debt, including Home Equity raises the risk factor). Additionally real wages have been somewhat stagnant and productivity gains have slowed.
This growing inequality in the division of wealth in America is being played out in the store fronts across America. Department Stores and High End Specialty stores are seeing uncommonly strong comp store sales and their percentage of the total sales has been increasing. This is a phenomenon not seen in a decade or more, while at the same time the country’s largest discount store, whose core customer is made up of this country’s working and middle class citizens, is seeing an erosion of market share and flat sales comps. The rich are richer and spending more while the middle class and the poor are watching their disposable income shrink.
The biggest trend which will shape the retail industry will be centered on the disproportionate buying power of the consumers in this country which is in turn being fueled by the underlying problems within the economy.
Take a look at the populist economic sentiments raised by the winners in the November elections such as the low minimum wage, the problems inherent with free trade, protection of blue collar jobs, dangers of outsourcing, Big Oil profits and so on. These were the winning platforms for the largely Democratic candidates who swung to victory in November. It seems clear to me that the larger portion of this populace have significant concerns regarding the economy.
In exit polls during the elections voters were polled on their feelings concerning the economy. Half of all voters rated the economy poor or not good, while two thirds claimed that they were the same or worse off since the last election.
While I agree that many of the predictions are likely to continue to be in the news and making an impact, I believe it is going to continue to be all about the economy.
Most of Stores’ predictions for 2007 would be no surprise to anyone regularly reading RetailWire. Furthermore, many of these predictions could’ve been made anytime in the last 30 years. What would be really neat: unexpected predictions, especially those that would be unique to 2007. Here are some of mine, but like most Stores’ predictions, none of them are counter to recent trends: (1) more struggles to raise the minimum wage (notice that the state referenda on this all passed); (2) an increasing number of mergers and going-private transactions as long as interest rates stay stable; (3) continued very slow growth in the number of new regional malls; (4) further declines in print advertising volume; and (5) continued talk about union organization of nonunion stores but no breakthrough success. In other words, present trends will continue. Anyone expect something new?
From a practical point of view (although I know it isn’t trendy) I’d stay with retail technology.
All of these trends are valid bases for planning. Two are of particular interest. RFID is an industry expected to experience explosive growth over the next five years. According to internetnews.com, 33 billion radio tags will be produced annually by 2010, compared with 1.5 billion last year. The RFID industry could enjoy a 30-fold growth rate over the next half decade if certain issues are settled: i.e. costs of the tags and privacy concerns.
As the cost of micro sensors continues to decline over the next decade, we could see a world in which everything of material significance gets sensor-tagged.
The other trend of particular interest is retail technology. Where and how will business be conducted in the future? Everything businesses provide will be available everywhere, anywhere, anytime, all in real time (immediate and instant). Always on, always connected, will be the prevalent way to conduct business within 10 years. So writes Barton Goldenberg in Customer Relationship Management Magazine.
That means business systems and operations will have to be operating in real-time, all of the time. This approach will call for tremendous skills in the sphere of Customer Relationship Management, popularly known as CRM. It is no wonder that CRM is being recognized as the hottest tool of the next business revolution.
Real-time CRM solutions are being propelled by key business drivers that will expand in importance over the next decade:
— the need to be increasingly customer focused
— increased competition and the need to maintain long-term differentiation
— an increased emphasis on better market segmentation
— the need for tighter links between front- and back-office processes and technology systems
— the need for improved business analytics and metrics
Within 10 years, “always on, always connected” is what consumers will come to expect from every business. Broadband Internet connections will be ubiquitous, every mobile device will have a wireless connection to the Internet, all computing devices will be connected to each other and be synchronized and up to date.
At the end of the day, concludes Goldenberg, we are all people who make buying decisions based on a good customer experience. In the future, that’s what all businesses will strive to provide, using the optimal combination of personal service and appropriate technological applications.
I doubt if there’s any real end to the issues impacting retailing in 2007 and beyond. However, on a macro basis, I would add these to the list.
– Health care reform
– Food safety/security
– Government legislation on big box retailers
– Organized retail crime
– Development of small store formats
– Green movement/environmental awareness
– Human resources
– Improving the customer experience
– Illegal immigration
– Corporate ethics
– Leadership strategies
Had enough or should I go on? These are in no particular order and nothing here is really new. But we’re discussing the continuing evolution of this business.
The future is indeed calling. The mobile telephone is the communication link to the consumer. Brands and retailers alike must learn to understand their customers in ways they have never imagined. Consumers are taking control over brand communication and messaging. Mobile and retail technologies, together with an intimate understanding of the customer will come together to surprise and delight consumers in a permission-based environment.
These three predictions, working together as an integrated communication channel, will reward the practitioners of this initiative handsomely. The challenge here isn’t the technology but getting the retailer and brands to work collaboratively to create a successful integrated campaign.
As many people as there are already using cell phones, I think the market is fairly saturated there. However, there is an increase in the use of technology in the retail industry in all aspects of POP, inventory and administrative issues. This is positioned to make a bigger impact, I think, than just about anything.
I agree with many of the areas which Stores has “predicted” for 2007. However, the editors at this publication need to better identify their predictions. Each of these need to have a definitive timeframe and an action attributed to each component (i.e. RFID usage will double in 2007, or 20% of drug retailers will use RFID). None of their predictions are clear, accurate or concise, with a measurable timeframe and impact of the technology. This leaves their predictions very loose, vague and really not very measurable.
My vote: Mobile phones. If not this year, next year.
But never underestimate the power of cheap chic.