Economic turmoil and technological advances are the two key factors that will reshape the retail landscape of the future. Retailers need to consider the current trends and the potential changes in order to craft a plan that would best help them maintain a sustainable competitive edge. By 2020, the millennials will be the main target market for today’s retailers. This group accounts for 80 million of the population, and they will be in their 20s and 30s by 2020. They have grown up in an age of information technology with constant advances. They are multichannel shoppers who research the product prior to making the purchase. Emphasis on product selection, and convenience, combined with low price will help influence where millennials shop.
In order to maintain a sustainable competitive edge in 2020, retailers need to understand the shopping habits and characteristics of their future target market and start tailoring their strategy to meet those needs. Retailers that invest in building their own exclusive brands will most likely have a competitive advantage over their rivals. Engaging in a conversation with customers will help retailers learn more of their wants and needs. Retailers should look into providing multichannel shopping and offering the same deals online as in-store in order to attract their tech savvy customers. As online competition increases, reducing retail space by either downsizing or closing unprofitable locations is crucial in order to reduce costs and maintain adequate returns. Retailers need to also invest in qualified associates who can provide exceptional customer service because millennials have high expectations of how they should be served in order for them to return to the store in the future.
As long as retailers have an in-depth understanding of their future target market, and can come up with a compelling strategy that will meet the needs of the millennials, then they will likely to have a competitive advantage.
What can we expect the retail landscape to look like in the future?
Based on these trends, how can retailers develop and maintain a sustainable competitive advantage?
Source: IBM, Thought Leadership Whitepaper, January 2012