Executive Briefings

Retail Industry in Transition to 'Wall-less' Omnichannel World, Study Finds

The retail industry may be transitioning to a "post-modern" consumer-centric era triggered by the speed of technological advancements, globalization and hyper-competition, both online and offline, according to a new report from PwC US and Kantar Retail, titled Retailing 2020.

According to Retailing 2020, successful retailers will need to transform themselves to grow in an increasingly polarized world of greater channel fragmentation that will result in greater non-store retail growth and smaller retail formats. In addition, retailers will need to cater to a future retail landscape, driven by income polarization, where income classes will define retail channel dynamics resulting in a disproportionately large impact in the future development of the U.S. retail marketplace by 2020.

"As we enter an increasingly complex retail landscape with accelerating competitive pressures and digital shopping options, retailers will need to prepare for a wall-less omnichannel retail world, one where shoppers will come to expect a seamless brand experience online, in-store and across multimedia touch points," said Susan McPartlin, PwC's US retail and consumer industry leader. "This multi-format portfolio combined with the proliferation of small, urban, alternative retail formats will pave the way for future growth, dismantling the mass homogenization and scale assumptions that propelled two decades of retail growth."

According to the report, the U.S. retail industry will have entered the post-modern period by 2020 with the end of the growth of "Supercenters" being a large change across the retail landscape. Non-store retail, driven by online today, and mobile and tablet commerce in 2020 is expected to be the fastest-growing retail channel. Large chain retail growth through the decade is anticipated to remain very close to the early 2010s recessionary rate, with one-third of large chain growth projected to come from online sales. Discounter channels will capture larger growth while food, drug and mass channel retailers are expected to face a tougher growth environment through 2020.

In its analysis of shopper behavior changes, Retailing 2020 finds that the older generation, having lived through several recessions, is more financially conservative than the younger generation. By 2020, this generational difference is creating two mega-cohorts - the "over '50s" and "under '30s" - dividing the U.S. into two distinct shopping nations.

"The demographic and income gaps between shopper segments are expected to widen creating more shopper segments with different expectations for product offerings and shopping experiences," said Bryan Gildenberg, Kantar Retail's chief knowledge officer. "Retailers must do away with the "one size fits all" approach and consider the ever-diverging needs of both the "have" and "have-not" consumers to remain viable in the future. Forward-thinking retailers should diversify format portfolios, test smaller footprints and offer niche products targeted to specific shopper segments."

According to the report, by 2020 the speed of technology innovation will further transform the retail landscape. Retailers will leverage the use of "big data" to gain a deeper understanding of individuals.

For more information and to download an electronic copy of Retailing 2020, contact PWC US or Kantar Retail.

Source: PwC US, Kantar Retail

According to Retailing 2020, successful retailers will need to transform themselves to grow in an increasingly polarized world of greater channel fragmentation that will result in greater non-store retail growth and smaller retail formats. In addition, retailers will need to cater to a future retail landscape, driven by income polarization, where income classes will define retail channel dynamics resulting in a disproportionately large impact in the future development of the U.S. retail marketplace by 2020.

"As we enter an increasingly complex retail landscape with accelerating competitive pressures and digital shopping options, retailers will need to prepare for a wall-less omnichannel retail world, one where shoppers will come to expect a seamless brand experience online, in-store and across multimedia touch points," said Susan McPartlin, PwC's US retail and consumer industry leader. "This multi-format portfolio combined with the proliferation of small, urban, alternative retail formats will pave the way for future growth, dismantling the mass homogenization and scale assumptions that propelled two decades of retail growth."

According to the report, the U.S. retail industry will have entered the post-modern period by 2020 with the end of the growth of "Supercenters" being a large change across the retail landscape. Non-store retail, driven by online today, and mobile and tablet commerce in 2020 is expected to be the fastest-growing retail channel. Large chain retail growth through the decade is anticipated to remain very close to the early 2010s recessionary rate, with one-third of large chain growth projected to come from online sales. Discounter channels will capture larger growth while food, drug and mass channel retailers are expected to face a tougher growth environment through 2020.

In its analysis of shopper behavior changes, Retailing 2020 finds that the older generation, having lived through several recessions, is more financially conservative than the younger generation. By 2020, this generational difference is creating two mega-cohorts - the "over '50s" and "under '30s" - dividing the U.S. into two distinct shopping nations.

"The demographic and income gaps between shopper segments are expected to widen creating more shopper segments with different expectations for product offerings and shopping experiences," said Bryan Gildenberg, Kantar Retail's chief knowledge officer. "Retailers must do away with the "one size fits all" approach and consider the ever-diverging needs of both the "have" and "have-not" consumers to remain viable in the future. Forward-thinking retailers should diversify format portfolios, test smaller footprints and offer niche products targeted to specific shopper segments."

According to the report, by 2020 the speed of technology innovation will further transform the retail landscape. Retailers will leverage the use of "big data" to gain a deeper understanding of individuals.

For more information and to download an electronic copy of Retailing 2020, contact PWC US or Kantar Retail.

Source: PwC US, Kantar Retail