One thing business owners can count on is change. As time marches forward, innovation sparks technological advancements, which can alter consumer behavior.
Here are 10 trends shaping the retail landscape, according to the L.E.K. Consulting team, which counsels companies on strategic issues through analytical analysis. Managing directors Robert Haslehurst and Jon Weber discussed the trends last week in a webinar, “The New Face of Retail: Retail and Consumer Trends Reshaping the Landscape.”
Some of these trends are nothing new but they still have a big impact on how retailers do business. While your company may not be able to leverage every facet, it’s always prudent for business owners to be aware of what’s affecting the market.
10 Consumer Trends Worth Noting
1. The U.S. has an hourglass.
People in the high- and low-income brackets are spending more, while the number of mid-level earners decreases. Businesses should focus product and service offerings on one end of the spectrum, or possibly both.
2. American demographics are changing.
Baby boomers are aging, and the U.S. is becoming more ethnically diverse. According to L.E.K., 76 percent of U.S. population growth is coming from Hispanic and Asian households.
3. Consumers are smarter than ever.
L.E.K. referred to this as the era of “uber consumers.” Consumers now have instant access to reviews, pricing information, and competing products and services. All of this information raises customer expectations. For example, the majority of consumers expect to have the ability to view in-store inventory online.
4. Smaller and focused is better.
The key takeaway from here is: “Bigger is not always better.” Specialized companies do well now. Look at camera manufacturer GoPro. They focus on creating the world’s most versatile cameras. Besides complementary accessories and software, they sell one thing – cameras.
5. Creating unique personal engagement is expected.
With mounds of data and new tools, retailers can offer experiences unique to each individual based on things like transaction history, stated preferences, and demographic information. Think about Amazon’s algorithms that show products you might be interested in based on your browsing history or past purchases.
6. The line between in-store and online experiences is blurring.
Some customers research and shop exclusively online. Others will research online and go into the store to buy, while another group start online, go into a store and return online to purchase. There is no one specific route customers take to purchase a product.
7. Engagement with traditional media declines.
Newspaper and print magazine circulations are decreasing, along with broadcast television ratings. The flip side of this, though, is that digital media presents new opportunities for brands to engage customers.
8. Retail channels are shifting.
Groups that are growing including fast fashion with international retailers like Zara and H&M, off-price retail stores such as TJMaxx and Ross, and mass merchants/clubs like Costco. What channels are suffering? Department stores, since their suppliers are going direct to the customer through websites or brand name stores. Speaking of…
9. Brands are going direct to consumers.
Some companies are opting out of selling through larger entities completely, while larger businesses like Nike are making their website more commercial or opening outlet stores. Don’t forget that companies can now also leverage Amazon’s massive network to bring awareness to their products.
10. Businesses are expanding globally.
Attempting to capitalize on “macroeconomic tailwinds,” large entities like Wal-Mart and Tiffany & Co. are looking overseas to increase the bottom line.
Bottom line: If you own a B2C company today, staying on top of and aware of consumer tastes and trends are more important than ever before. As our world changes at a rapid pace, your ability to forecast the needs and demands of your customer base becomes even more critical. This is especially so if you are contemplating approaching potential buyers for your company. Having a well documented/advertising plan will give them confidence that your business is prepared and positioned for the future.
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