A message to any retailers struggling to meet their customers’ needs: if you’re finding this tough in today’s competitive climate, by 2028 you could be in all sorts of trouble. Today’s consumers may seem discerning and informed, but in 20 years’ time, they won’t even compare. By then, shoppers will expect more convenience, more information and more entertainment. In short, as Deloitte head of retail Tarlok Teji puts it: “They’ll want everything.”
One of the reasons for this is demographic shifts. The X, Y and Z generations will have grown up, and they will be better informed and far more opinionated than consumers of previous generations.
Interesting changes in consumer lifestyles will also have taken place by 2028. Sustainable development charity Forum for the Future, supported by Tesco and Unilever, carried out in-depth research for its Retail Futures report, which looked at the major trends likely to affect the retail sector. The report predicts two extremes of consumer behaviour. On the one hand, there will be a revival of home and community life as more people work from home. But, at the other extreme, people’s busier lives will lead to more frequent shopping and more demand for convenience and flexibility.
In terms of what people buy, personalised products will be one of the main trends to emerge in the next two decades. For instance, instead of buying standard size 10, 12 and 14 items of clothing, female shoppers will be able to request that garments are adjusted to suit their body shape. And, rather than just the standard-issue cereal packet, consumers will be able to choose a packet sized specifically for their family’s needs.
Part of this shift will result from consumers’ rapidly growing power. Teji says: “Twenty years ago, the power balance was with the global brand manufacturers. Then we saw retailer concentration increase in the UK. This shifted the power to the big multiples, but now the power is shifting to the consumer, enabled by the digitalisation of the information age,” he says.
But personalising products and services requires data. Forum for the Future chief executive Peter Madden believes this will mean retailers become far more consumer-oriented. “Retailers will be gathering much more information about what consumers want and how they want it,” he says. As a result, customers are likely to build far more trusting relationships with specific brands than at present and be far more willing to invite that retailer into their lives.
Virtual shopping worlds
So what about stores? Will they even exist? There is a view that the need for a physical location to purchase goods will become obsolete, largely because of the growth of the internet. Director at strategic research consulting firm Lighthouse James Edsberg says: “They will be purely experiential, creating the incentive and catalyst to buy.”
But others disagree. The Future Laboratory director Tom Savigar says: “Fundamentally, consumers are human beings. They like going into a place that’s social and that will always be there. People will still like shops.”
Nevertheless, the experience offered on the high street will probably be nothing like that of today. Shoppers will most likely buy their essentials on the internet, but head to the high street for the more emotional purchases. Madden says: “I envisage a world where the basics are delivered automatically from a bulk warehouse when people run out.” In this scenario, the delivery of everyday staples to people’s doorsteps would be triggered by electronic messages sent automatically to retailers from cupboards and fridges. But, importantly, Madden adds: “People will want to shop as a leisure pursuit.”
The difference between high street shopping today and in 2028 is likely to be that shoppers will come to view it as a pleasurable activity, rather than a habit or necessity. The provision of retail theatre will not just be the ideal, it will be requisite – be that chef demonstrations in supermarkets or regular catwalk shows in fashion stores.
By 2028, retailers may also find they have to offer far better value to consumers – not necessarily in terms of price, but in terms of service. Madden explains: “All companies will be trying to engage in a more service-oriented way – more will be trying to build a relationship with their customers.”
Savigar agrees. “Increasingly, we can expect to see concierge-style services,” he says. “The average middle-market consumer will want something more – it will have to be that you come to a shop for a reason.”
Although this scenario may seem a long way off, retailers need to think about these issues now. Tesco community and government director David North says: “It is simply good business practice to anticipate change and prepare for it.”
Teji agrees. “It is about putting the stepping stones in place to make the change,” he says. “Consumers are already very fussy about where they spend their hard-earned cash, so retailers need to understand the trends so they can be ready to respond when those trends become mainstream.”
Retailers’ thoughts are, perhaps justifiably, more preoccupied with current trading. But staying ahead of trends and spotting unfilled gaps in the market can often equate to cash in the bank.
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