By Joe Skorupa
The days of the U.S., Europe and Japan producing 50 percent of global GDP are numbered. The cloud plus mobile plus social equals a new computing model. Death of POS as we know it. Consumerization of technology becomes a never-ending wave. Death of the retail task worker. Learn about these and other mega trends impacting retail.
This is my third blog about the recent NRF Big Show, which generated strong positive buzz that will echo through retailing for at least the first quarter of 2011 and hopefully longer.
One of the sessions I had a role in was “Ten Mega Trends that will Rock the Retail World,” which turned out to be a standing-room-only session. My role was to present fresh data and insight based on an RIS custom research report, “Resetting Store Priorities”,
which appeared in the December 2010 issue of RIS.
By the way, these are not the 10 mega trends noted in the title of the session. Instead they are pulled partly from it, partly from Steven Skinner’s slide deck and partly from my presentation. Here goes.
1. Globalization is rebalancing and returning to historical patterns.
Up until the early 1800s, China and India had a 50 percent share of global GDP, according to Deutsche Bank Global Market Research. For the last 150 years, however, this share steadily shrank until it hit 10 percent in the 1990s. But the share has now climbed to 20 percent and will climb much higher, probably back close to pre-industrial revolution levels. This means the share from the U.S., Europe and Japan will most likely shrink in half from a high point of 50 percent of GDP. The chart Skinners used, with a timeline that goes all the way back to the Roman Empire, is very dramatic.
2. The millennial “Sunday night/Monday morning” effect.”
When Millennials go to bed on Sunday night they have just spent the weekend living with their smart phones and digital devices. When they go to work on Monday morning they replace them with PCs and land-line telephones. They are not happy. They typically text instead of using e-mail. They frequently access social networks that are often off limits in corporate settings. Turnover is high, morale is low for this key demographic. Retailers need to close the digital skill set gaps and align corporate work with the fully developed digital skills of Millennials, who are today's economic and workforce engines.
3. Cloud plus social networks plus broadband plus mobility equals a new computing model.
The way we work will shift as retailers begin to embed the capabilities of Web 2.0, smart phones and social media into core retail functions, such as workforce management, store operations, merchandising and marketing. This paradigm shift will open up new methods and devices (especially tablets like the iPadf) for collaboration, crowd sourcing and the ability to tap into the viral nature of connect-anywhere networks.
4. Pace of Innovation will accelerate.
As communications platforms explode, such as Facebook, Twitter, Google and Web search, innovation inside and outside the retail organization will speed up. Today, smart phones operate on a six-month technology lifecycle. Mobile apps operate on a six-week peak lifecycle. New products, product lines, formats and concepts will emerge retailing in a rapid innovation-to-market timeline.
5. The mobile channel is transforming retailing.
Coupons and offers, especially in the mobile channel, have become more important to retailers than ever. In fact, coupons/offers are now the central force in marketing, and marketing departments are fast becoming the gravity center of retail merchandising operations. The rush to mobile apps, coupons and other functions/services engage shoppers the way they want to be engaged, drive shoppers to stores, and provide retailers with instant feedback.
6. Take the store to the shopper.
Online retailing made a huge comeback in 2010, while store comps slowly inched ahead. If this trend continues stores will suffer an expectation gap with shoppers when they enter the brick-and-mortar doors and leave behind their digital tools, such as recommendations, reviews, lists, research and comparisons. Plus, when shoppers enter the store they have to deal with associates who know less than they do. Physical stores need to be as fully empowered as online stores and connected to all online functions, especially purchase online and pick up in store.
7. Mobile POS signals death of traditional POS.
Shoppers don’t love self-checkout, but they prefer it to long queues or dealing with associates. Fixed POS is expensive and bulky. Mobile POS frees floor space for other purposes and converts associates from being cashiers to being sales assistants that provide new levels of customer service and incremental basket sales. In addition to unplugging the POS, new alternatives are starting to take hold – thin client, POS as a service, and replacing POS software with e-commerce platforms.
8. All-channel synchronization changes zero-sum game to win-win.
Shoppers want consistency of information and services across all channels and after achieving it (not an easy task) retailers need to use their new foundation to seize the opportunity to synchronize marketing and merchandising. Since the store is still the retailer’s greatest point of differentiation the act of putting it in a core position within a comprehensive, all-channel marketing plan will create a sales multiplier effect instead of the current effect of cannibalizing the store.
9. Death of the task worker.
How many task workers do you think there are in Apple stores, the most successful chain of stores per square foot on the planet? The answer is none. Poor store service is the number one irritant among Gen Y and Baby Boomer shoppers. Retailers need to automate redundant processes, redeploy those labor hours, and retrain the workforce to become better aligned with new shopper patterns and expectations.
10. Engagement-centric retailing takes hold.
A great deal of buzz today is about social media and Facebook. But what we are seeing now can best be described as social retailing 101. Many retailers are using “twinterns” to promote brand awareness and drive traffic to their Web sites. Few have comprehensive all-channel plans, processes and technologies. Soon retailers will shift to the next level up, which is engagement-centric retailing. This new level taps consumer and technology forces for interactive collaboration, one-to-one personalization and the ability to listen and learn what you need to know from both shoppers and your own retail workforce.