NRF panelists: Consumer power to skyrocket

Home News NRF panelists: Consumer power to skyrocket

NEW YORK—Retail leaders from throughout the nation and abroad recently gave their views on the outlook for retailing in the National Retail Federation (NRF) convention session, “Consumer 2020: What Lies Ahead for the Retail Industry,” presented here.

Moderated by Alison Paul, vice chairman and U.S. retail leader for Deloitte, the session included Cathy Green, president of Food Lion Family; Andrew Higginson, chief executive of retailing services and group strategy director for Tesco; Peter Sachse, chief merchandising officer of Macy’s and chairman and CEO of macys.com, and Ira Kalish, global director of Deloitte Research.

The panel discussed the challenges retailers will have to face in the next 10 years in:

  • rapid advances in today’s technology
  • consumers’ growing interest in sustainability and corporate responsibility
  • globalization
  • the accelerating growth of social networking
  • the aging U.S. population, and
  • the heightened importance of private-label products.

What will make these challenges a major focus for retailers, the panel said, is the fact that consumers—through the Internet and social networks—now have easy access to more information on products, services and companies than ever before.

Through social networking, “consumer power will increase,” Kalish said. “They can get and share information and be part of a community.” The panelists agreed this information sharing will be largely about products, but will also include information on retailers’ initiatives in sustainability and corporate responsibility.

Regarding globalization, Green said it will be “important to retailers’ strategy and concept development.” Yet because retailing remains essentially a local business with merchandise assorted to local tastes, “we will need to make it all locally relevant.”

The major opportunity from private label is in giving dealers a new way to differentiate themselves. “It’s a way for retailers to increase consumer choices while controlling the retailer’s brand,” Higginson said.

Today, Paul said retailers are “multi-store, multichannel, multi-geography and multi-challenged.” Those challenges include shifting demographics, sustainability, corporate responsibility and the fast pace of change in technology.

The past decade, Kalish said, was characterized by a global economy that saw massive growth in consumer spending followed by a housing crisis and a near collapse of the global financial system. Looking toward 2020, he believes the global economy will be characterized by disproportionate growth of consumer activity in the emerging world. “There will be a rapid rise of the middle class in those countries, and if governments fail to support those transitions, economic crises could follow. An aging population in the affluent world will create a higher dependency ratio. As the working population starts to decline, there will be a larger tax burden to pay for the retirees, as well as the need for people to work longer. And older people tend to spend less on goods and more on services, which has clear implications for retailers.”

The hot markets for growth in the coming years, he said, include India, the Middle East and Africa. He noted that India may be a tough market for retailers to break into, but it is worth it because its consumer activity may outpace China’s in the coming decade.

As far as technology and social media, Kalish said the way consumers interact with you and each other is permanently changed. “The social revolution has taken place and it’s not going to go away. It means ultimate power for consumers. They can vet information and share information in a way they never could before. For companies, it’s a huge challenge. It means that traditional marketing methods don’t work anymore—the trust and authenticity of social trumps traditional marketing.

Looking ahead, he concluded, “2020 will be very different from 2010. We’ll have an environment in which retailers will have to directly engage with consumers in a way they haven’t before. They’ll have to go where the money is—the big, emerging markets. They’ll have to lead and build brands, and do that by listening to their customers.”

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