‘Age of Consumption’ heralds new opportunity in retail, says report
The rise of smartphones and an ageing population will drive faster retail sales growth over the next decade, but only those retailers which succeed in remaining relevant for tomorrow’s consumer will benefit.
That is the finding of a new report, The Reshaping of Retail, produced by retail consultant Conlumino on behalf of retail property company Hammerson.
The report expects average annual growth in retail spending of 2.4 per cent between 2013 and 2022, an improvement of the 1.9 per cent achieved over the past decade. By 2022, retail spending will have reached GBP377bn, up 26 per cent on current levels.
However, the rate of spending growth remains well down on that achieved through the 1980s and 1990s, and retailers will need to be on top of their game to thrive in what the report calls the age of “Considered Consumption! over the decade ahead.
“Considered consumption reflects a consumer who is less concerned with the pure acquisition of products, and thinks more about what they are buying,” says Hammerson chief executive David Atkins. “It makes it vital for retailers to have a strong, differentiated brand, offer “must have” products, and engage more frequently with their customers to give them a reason to visit their stores”
With an ageing population, much of the growth will be driven by older shoppers, meaning the over-55s will contribute nearly two-thirds of retail growth over the next decade.
The report also predicts that mobile devices will account for over a quarter of retail sales by 2020 - some GBP54bn - partly through direct sales and partly through customers using their devices to research purchases in store or on the move.
While stores will retain a vital role, overall store numbers in the UK will decline by 10.3 per cent. Increasingly, retailers will focus their expansion towards major cities and destination shopping centres, which offer larger stores, good accessibility and a better choice of restaurants and cafés. Stores will have to evolve, with their role in highlighting brand awareness, showcasing product offers and facilitating click and collect purchases growing in importance.
Neil Saunders, managing director, Conlumino says: “Hammerson’s report reveals that Britain needs to rewrite the retail rules. Retailers must differentiate their ranges, engage more frequently with consumers and adapt their business model to a slower growth environment if they are to inspire, excite and compel shoppers in an era where consumers are calling the shots.”