Changing consumer shopping tastes and expectations are quietly transforming the retail industry.
Shoppers increasingly crave instant gratification, one-of-a-kind merchandise and are cozying up to the idea of borrowing goods versus buying them.
As a result, the shopping model of the near future is poised to look radically different from just a decade ago, and retailers that don’t keep pace with changing tastes are setting themselves up for a rude awakening, at best, or extinction, according to Bashar Nejdawi, president of Ingram Micro Mobility, North America, a provider of technology and supply chain services.
For one, “In five years, consumer electronics stores as we know them today won’t even exist, and the same rings true for our favorite apparel brands,” he told Forbes.
“Technological innovations and a hyper-connected world have significantly influenced consumer behaviors and expectations. As a result, retailers are faced with a scary reality: change or become obsolete.”
Nejdawi detailed what he pinpoints as the three seminal consumer expectations fueling this shift in the retail landscape: instant gratification, borrowing and customization.
Instant Gratification
“Companies like Uber, Grub Hub, and Amazon have forever changed the way consumers think about service and how they go about their daily lives. They are no longer willing to wait for a taxi on the corner without knowing when it will arrive or trust the restaurant that promises delivery within 45 minutes. Instead, consumers want as much information at their fingertips as possible and as soon as possible.
“It’s becoming increasingly more common for retailers to rely on their supply chain partners to become the system of record for their inventory. Retailers will send their data to the third party logistics provider or link their POS [point-of-sale] system with them in order to provide an up-to-date, holistic view of what’s immediately available on store shelves, thus satisfying the consumer’s need for immediate access to information. As such, retailers must be able to deliver an intuitive experience in stores and online or they will lose customers’ loyalty.”
“What happened to the Boomers’ American dream of owning their first car or home? Today, we ‘Rent the Runway,’ ‘Zip car’ ourselves to and from the grocery store, and ‘Netflix NFLX +2.12%’ our shows. We want to own very little in order to consume more. Take the car for example: according to the AAA Foundation for Traffic Safety, cars purchased by 18 to 34 year olds fell almost 30% between 2007 and 2011.
“In the electronics space, we are seeing mobile device rental programs skyrocketing. Consumers ask themselves why they should pay $600 for the latest device when it’s going to become outdated within 12 to 18 months. Instead, they are opting to lease it for a minimal cost in order to get the next hottest gadget faster.
The borrowing culture begs the question: ‘How can retailers possibly handle the constant influx of product and get it in and out of consumers’ hands quickly enough?’”
Customization
“In addition to wanting to know as much about products and services as possible and having the ability to quickly exchange an older model, consumers also want to ensure products are tailored to their individual lifestyles and preferences. For example, miAdidas allows consumers the ability to create their own shoes online with personal designs, pictures or logos. Retailers of the future will need to ensure that their supply chains are also evolved enough to handle the demand for custom orders.”
What Will The New Retail Model Look Like? Selling ‘Experiences’ Over Products
“Apparel retailers are light years ahead of the curve when it comes to who is more successfully building a new retail model that addresses these new consumer demands. But there is massive potential for consumer electronics retailers and other verticals to step up and meet the challenge. Imagine walking into your local Best Buy BBY -0.2% and seeing winter jackets on the show floor. In today’s retail climate this might look out of place, but the electronics retail store of the future will also sell smart apparel — picture a winter coat with a built-in smart watch.
“Additionally, stores of the future will emphasize selling experiences and lifestyles over products. Think about how revolutionary it was when Fleet Feet Sports allowed consumers to run down the street in a pair of shoes to experience the fit and feel. Now apply that idea and kick it up a notch: picture visiting a consumer electronics store to solve your health and fitness needs. Sales representatives can outfit you with a fitness tracker that reads your oxygen levels and heart rate to test your performance and wellness on an in-store obstacle course. Although consumers are testing out the product, they are also getting a glimpse into what their experience would be with that product in their day-to-day lives.
“Another great example of the retail model of the future is to provide value-added services attached to a product. For example, if a consumer is buying a new phone then the retailer should automatically offer in-store classes to train the consumer on the device.”
To see the original article please visit: http://www.forbes.com/sites/barbarathau/2015/02/10/a-look-at-the-retail-model-of-the-future/
