Online commerce will go out of fashion, and retailers will learn to sell emotions, not products
Why do we need stores when everything can be bought online? Why waste time on lines and traffic jams? And why should retailers overpay for rent and keep extra staff? With the birth of the Internet, these questions began to seem rhetorical. It seemed that the only question was when stores would disappear forever - in five years, ten, twenty? However, an amazing fact: it is now, when the Internet is available to almost everyone, that traditional retail has learned not only to refute rumors of its death, but also to convincingly answer all these "whys".
Many believe that the image of retail that we encounter every day, shopping or simply driving down the street past familiar storefronts, is unchanged. But this is an illusion. Retail as we know it is less than a hundred years old. Modern shopping centers, hypermarkets, shopping carts, credit cards, parking lots, discounters, food courts, and many other attributes of modern retail appeared no more than a hundred years ago, and for the most part in recent decades. Life is changing, and so is retail. And in a couple of decades, it will change no less than in our memory.
New technologies that penetrate our homes, help us at work and in everyday life, transform our lifestyle and behavior, will also change retail, turning it from a distribution channel into the most important part of the lifestyle of the person of the future. Let's try to guess how this will happen.
Retail in America is not at all the same as retail in Western Europe. The French retail industry differs from that in Germany. Yet, similar processes have been underway around the world in recent decades, and they continue to shape the development and transformation of retail.
But the changes within retail itself have been even more fundamental. Markets have become global. In parallel with retail itself, a ramified and powerful infrastructure has grown to support it. Production is now organized with such intensity and efficiency that some retailers can launch simultaneous sales in dozens of countries (like Apple) or change collections every two weeks (like ZARA). There are now many more such global companies, and they will be the ones leading the upcoming evolutionary and revolutionary changes in retail.
All these changes, in a sense, have programmed the emergence of a completely new generation of consumers. Now they are the ones changing retail - A new audience that wants something new. Previously, the most important thing for shoppers was finding a product on the shelf that matched their specifications and price. The shopper of the future is a person accustomed from birth to quickly navigate a sea of information, a person far more experienced and sophisticated than their parents. They prefer to buy with maximum convenience, spending a minimum of time and effort. But at the same time, they want much more from retail. They want a retail environment that matches their style and lifestyle. New consumers come to the store not so much to buy, but for positive emotions. Retail is adapting to these consumer impulses: inventing new store formats, organizing interior spaces differently, and beginning to develop a host of additional services, including entertainment. We see this in children's retail, sporting goods stores, and the design of shopping centers. Two long-term trends are already noticeable in developed markets. On the one hand, standard hypermarkets and supermarkets are reducing their space, while the number of small stores, including specialized ones, is growing. Manufacturers are increasingly becoming retailers themselves. Branded mono-brand chains — H&M, Apple, Top Shop, ZARA — are winning new market shares, while multi-brand chains are stagnating or retreating. For example, Woolworth's, a famous retail chain with almost a century of history and eight hundred stores, left.
On the other hand, we see another trend — the movement of huge stores towards the mini-shopping center format, with the maximum expansion of product categories and the introduction of new services. The shopping centers themselves are moving further and further away from the image of an "indoor market." Their goal is become a multifunctional and comfortable space for shopping and living.
If you are interested in seeing firsthand how the appearance of retail will change in the coming years, pay attention to Asia. This is where the biggest and most dramatic changes are taking place. There, domestic demand is growing rapidly and a mass middle class is forming. A second "golden billion" is being born, which in terms of consumer activity will soon be able to — why not? — surpass the residents of America, Europe and Japan.
Colossal spacious shopping centers, places not for utilitarian shopping, but for spending time with the whole family, huge stores, mass and sophisticated entertainment, restaurants with cuisine from around the world — this is all Asia. Giants of the computer industry, consumer electronics and automobile manufacturing have emerged from Korea, Taiwan and China. Perhaps in twenty years, Asia will give birth to new retail leaders who will begin to conquer the West, like their colleagues from other industries. While retail is lagging behind, it's following the history of the automobile industry: American manufacturers remained in America, Europeans conquered Asia, and the Japanese—both Europe and America. The Japanese are already making a mark on global retail. Are we waiting for Korea, China, and India?
Online technologies have revolutionized the consumer market. Anyone with a home computer can now order and pay for goods delivered to their home without ever leaving the house. But a revolution of equal magnitude is looming. Thanks to the widespread use of wireless and mobile internet and cheap tariffs, consumers can be online almost constantly. In developed countries, almost everything is ready for retail to move online. Almost—but not everything.
First and foremost, this growth is being driven by developing markets, where millions of new square meters of retail real estate are being built and more and more jobs are being created. But even in most developed countries, online trading does not exceed 5-10% of total retail sales. And its share is growing rather slowly. Despite all the convenience and benefits of online shopping, something is missing.
For the second and final online revolution in retail to occur, not only gigantic investments in new infrastructure are needed - we need to change the mentality of the mass buyer accustomed to going to the store. Most likely, in the foreseeable future, retail will move towards a mixed, multi-channel sales model, combining the store space with the information and trading space on the Internet. And the method of purchase will be chosen by the buyer himself.
The choice will, of course, be influenced by pragmatic factors: price, speed and convenience of obtaining information about the product, the ability to communicate with consultants, additional services. But emotions will be no less important - The level of comfort and pleasure from shopping, the ability to perform familiar shopping rituals, and the need for visual and tactile contact with the product.
This path of development poses very difficult questions for retailers—primarily about the balance between offline and online. Their answers to these questions will change the very concept of a store.
In the coming decades, the stores we go to will be completely transformed. Let's try to imagine what the grocery store of the future will look like.
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