Top five retail trends for 2012
National Retail Federation President Matthew Shay counts down this year’s top opportunities
The retail industry has seen its share of ups and downs over the past five years. And as consumers begin to slowly claw their way back from the depths of the recession, retailers are responding – looking for new ways to grow their businesses and opportunities that will help them leap past the competition. As companies strive to understand the new consumer, we expect a variety of trends to move the industry forward this year. Here's a countdown of the top five:
Continuing to invest in mobile
The speed with which mobile has transformed retail is staggering. In just a few short years, QR codes, cutting-edge apps, and the ability to search for product information, reviews, or even just store locations – all from a mobile phone – have had an enormous impact. A recent Shop.org survey found that nearly half of retailers have an optimized mobile site or smartphone app, with 16 percent planning to increase their investment in mobile technology
Retailers, social media and mobility
Though mobile retailing has come a long way, there are still plenty of growth opportunities. Retailers view mobile commerce not as only a sales driver, but also as a way to engage with a specific audience. When it comes to where mobile ranks as a priority for retailers, the NRF Foundation's 2011 Retail Horizons report found 69 percent of retailers identified mobile commerce as a top strategic initiative, up 28 percent from 2010. I have no doubt that when the 2012 report is released, we'll see those numbers continue to grow.
Embracing the emergence of millenials
For a significant portion of consumers, the challenging economy is becoming accepted as something of a norm. Born between 1982 and 2000, Millennials are a generation raised on high-speed Internet, cell phones, digital music and instant messaging. They're massive multi-taskers who simultaneously use Web-based search, social networking and gaming sites, wikis and personal blogs.
Millennials are savvy shoppers who expect more value for their dollar. They're not afraid to spend, but they expect more than a good deal. Retailers this year will be challenged to not only satisfy this generation with price and selection but also find ways to keep them engaged.
Making the best of a tough economy
Troubled times spark innovation. Despite the slow economic recovery, retailers have found ways to make do with less, present their shoppers with savings and promotions, and even create mobile and Web platforms that have successfully engaged a new group of customers.
With consumers once again focusing on necessity purchases, such as gas and food, retailers have been developing ways to create emotional connections with consumers and make discretionary purchases feel like necessities. Apple's iPhone is one of the best examples.
This year, retailers will find ways to differentiate themselves beyond just price. We expect more focus on value – bringing together service, merchandise quality and even selection in the purchasing decision. These types of initiatives demonstrate that retailers are listening to consumers and making the most of the challenges presented by tough economic times.
A recent Shop.org survey found that nearly half of retailers have an optimized mobile site or smartphone app, with 16 percent planning to increase their investment in mobile technology.
Expanding Abroad to Find New Markets
Adjusting to the new consumer will continue to be a challenge for retailers as US shoppers still weigh needs versus wants more than they did pre-recession – using coupons, comparison shopping online for the best deal, and being extremely value-driven.
Increased competition and tighter spending in the US have sent a rising number of retailers abroad, hoping to grow by moving into markets where shoppers spend more freely. China, Latin America and India have all become very attractive markets for retailers.
Throughout 2012, retailers will continue to adapt and adjust their brands and operations to fit with different cultures. Through store openings and brand expansion, US retailers are opening their arms to international shoppers like never before. Domestic and international expansion was another strategic initiative for retailers last year, as one-quarter of respondents in our Retail Horizons report said global expansion would be a major focus for their company. This seems to be moving into 2012, as more retailers than last year have begun shipping internationally from their US headquarters. Some retailers, including Best Buy and Amazon.com, have also created opportunities for international shoppers by offering bilingual websites.
Shrinking Average Store Footprints
One of the biggest trends is actually, well, small. The combination of changing consumer shopping behaviors and hard-to-pass-up real-estate opportunities has created an opportunity for many traditional stores. Over the past few years, some large retailers have decided to forgo the hundreds of thousands of square feet they are typically known for and instead opened smaller stores – and consumers are responding quite favorably.
Target is now using smaller footprint locations in Boston, New York, Philadelphia, Baltimore and Washington. Wal-Mart Express stores are significantly smaller than their typical supercenters. Retailers are adapting to urban settings and optimizing their real estate portfolios, which create an opportunity for businesses to connect with the people in their stores on a daily basis.
I expect many great changes for retail in 2012 and look forward to seeing other trends emerge as creative retailers develop new strategies, fresh methods of engagement and get to know today's new consumers.
Bio: As President and CEO of the National Retail Federation, Matthew Shay is the top executive of the world's largest retail trade association and serves as the chief advocate for an industry with more than 1.6 million US companies.
Retailers, Social Media and Mobility
In the book Branded! Bernie Brennan and Lori Schafer show retailers how to get inside customers' heads and highlight superstars of the social world, including:
Starbucks, with over 12 million fans on Facebook and the No. 1 social brand.
Zappos, whose culture is its brand, has 1.7 million followers on Twitter.
Wet Seal, an innovator in teen engagement through its Outfitter social network.
Macy's, using its digital hub to engage customers across all channels.
JCPenney, embarking on a digital transformation through open culture.
Pizza Hut, with its award-winning "killer" iPhone app and ubiquitous Tweetologist.
Best Buy, with visionary leadership for "The Connected World."