Top 11 Retail Trends for 2011
This is arguably the most fascinating, puzzling, daunting, challenging and ultimately exhilarating time for retail in history.
Markets are polarising, brands globalising, media fragmenting, consumer expectations rising, space retracting, transactions digitising and economies still struggling. But for those who embrace the conflux, there are fortunes to be made and fun to be had in what we at IdeaWorks call the “New Retail” world. (If you don’t believe me, witness the rise of collective bargaining website, Groupon, which created a half a billion dollar business from a standing start in two years, and recently attracted a US$6 billion offer from Google.)
In order to navigate this uncertain retail terrain, you need to understand what’s on the horizon. So listed below are a few of the trends I’m seeing for 2011 (and some retailer references if you’re interested):
1. Customers in Control – I wrote about this trend in my column last week. It’s all about the power shift first from manufacturers to retailers, and now to consumers, and how (as US Wired Magazine puts it), “shoppers are beating retailers at their own game”. Technology is driving this trend – eg. smartphone price comparison apps, “deal of the day” websites, and overseas online shopping – which I’ll discuss further under trend #9, “Constantly Connected”. Retailer references: Groupon, Amazon
2. Value and Values – Value has been the megatrend in retail for the past few years, but customers are starting to demand that retailers not only offer “value” but also espouse “values” like environmental and social responsibility. It’s all part of a more sophisticated understanding of what “value” really means. Traditionally, we have often confused “value” with “price”. A study from Verdict Research in the UK shows that British consumers are becoming less sensitive to price, and looking for more quality and service. In addition, shoppers are beginning to look for retail that’s a little less selfish – “good for me, good for you, and good for the planet” – as UK retail doyen Mary Portas puts it. Retailer references: Uniqlo, Timberland UK
3. The Death of Discounting –This is a corollary trend from #2. Percentage-off promotions are running out of puff and the discounting drug is just not giving retailers the same sales kick as in previous years. Where do you go from 50 per cent off, 60 per cent off, 70 per cent off? In 2011, the answer will lie in engineering real value into products and services in the first place, carefully and inventively adding value during promotional periods, and constructing new, more creative (and fun) ways to grab a bargain – such as allowing shoppers to club together to get a better deal. Retailer reference: Apple
4. Authenticity (and Fauxthencity) – The old model in retail was to come up with a winning retail concept and stamp it out in “cookie-cutter” fashion. To a lot of shoppers today, that’s just plain boring. (“If you’ve seen one shopping centre, you’ve seen them all…”) Consumers in 2011 will increasingly look for distinctive, “real” retail experiences. Brands that have a genuine history and a compelling story to tell will win and they will be rewarded even more if they vary their retail fit-outs. And if you don’t have a tale to tell? Well, that’s where “fauxthenticity” comes in – make one up! Retailer references: Ralph Lauren’s RRL & Co, Madewell, Aesop
5. Vintage Retail – You can already see this trend emerging with vintage (great term for secondhand) collections in Top Shop London and Sportsgirl here and it will gather momentum in 2011. Used will be huge. In Japan (often a window into the future), Kinji is a major (and cool) pre-loved clothing chain, and Book Off is a massive secondhand books, manga and CD retailer with 866 stores across the country. Retailer references: Levis Vintage, Book Off
6. Store as Experience Centres – Online is devastatingly effective as a transaction medium. It’s a fast, efficient way to browse, compare and purchase. But it can’t compete with physical retail when it comes to delivering an experience. Retailers will need to invest more in creating “experience centres”, which should be always high-touch, often high-tech and designed to get talked about, like the Apple Stores all over the world. Retailer references: National Geographic London, Selfridges London, Anthropologie US and UK
7. This Time it’s Personal – The trend to customisation of products and services has been gathering steam for a couple of years and it’s definitely one to watch. In the Nike Store in Harajuku Tokyo earlier this year, I estimated that 60 per cent of the shoes and apparel on sale were customisable. And when I visited Anya Hindmarch Bespoke in London, the whole concept was oriented towards tailored product – such as handbags and keepsake boxes. As Hindmarch says; “The idea (is) that something has your name on it – not mine.” Retailer references: Nike (especially their concept store 225 Forest), Anya Hindmarch Bespoke
8. Return of Premium – Luxury retail is coming back. The difference this time is that you can’t just slap a logo on something and expect it to sell. If a brand and its products are well-considered, well-crafted, designed to last, have a story to tell and are represented in a stunning physical space then consumers will connect. Retailer reference: Louis Vuitton, Hermes
9. Constantly Connected – Once upon a time, the web was a tool you accessed from a computer on a desk or your lap. These days, smartphones make the web accessible from the palm of your hand, wherever you are, whenever you want it. And the trend is growing rapidly for shoppers to price check and purchase from their mobile phones in stores. The Wall Street Journal reported recently that on the Friday after Thanksgiving a year ago, shoppers using their mobiles in stores accounted for a mere 0.1 per cent of visits to retail websites. This year it was 5.6 per cent, an increase of 50 times. Watch this screen. Retailer reference: Red Laser
10. All Kinds of Commerce – The future is in allowing your customer to purchase when and where she wants to. That will include traditional (instore) commerce, e-commerce, m-commerce (mobile), f-commerce (facebook), s-commerce (social) and v-commerce (video-enabled, eg. YouTube). Retailer Reference: French Connection You Tube channel
11. Considered Consumption – This phrase sums up the Post GFC consumer we will face in 2011 and beyond. The days of mindless consumption are gone, and with them the promise of endlessly rising comparable store sales. The consumer we will deal with in 2011 really thinks about what she is buying, making “mindful choices”, selectively seeking out deals, and trading down unless she sees real value in what she is purchasing. That will present a challenge for retailers, but as always, those with a distinctive offer and clear customer value proposition will triumph. Retailer reference: Audi
That’s my list. What’s yours? What do you see as the most important retail trends for 2011?
The New Year will be an exciting time for New Retail. And I for one can’t wait.
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