Smartphones set to rule over retail sector – Bullring owner
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.
This is the conclusion of a new report The Reshaping of Retail produced by retail consultant Conlumino on behalf of retail property company Hammerson, owner of Birmingham’s Bullring Shopping Centre.
The report expects average annual growth in retail spending of 2.4% between 2013 and 2022, an improvement of the 1.9% achieved over the past decade. By 2022, retail spending will have reached £377bn, up 26% on current levels.
However, the rate of spending growth remains well down on that achieved through the 1980s and 1990s, and concludes 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.
The report’s key findings suggest that consumer mindset will shift from ‘Careless Consumption’ to ‘Considered Consumption’. Considered Consumption is an emerging mindset for shoppers, which is less impulse driven and more about selective purchasing.
Retail spend will be up 26% to £377bn by 2022 as discretionary spend is expected to rise again with the over 55s expected to contribute towards 62% of retail growth (£46.7bn) by 2022.
By next year, 69% of consumers are expected to use three or more channels to shop and by 2020, mobile spend is set to be £53.9bn of direct and indirect sales, compared with £2.9bn today.
However, the retail failures witnessed during the past two years will continue and the report predicts overall store numbers will decline by a further 10% by 2020.
The role of the store will still remain key with a greater share of retail sales informed by online research.
David Atkins, Hammerson chief executive, said: “Considered consumption reflects a consumer who is less concerned with the pure acquisition of products, and thinks more about what they are buying,.
“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 £54bn – 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%. 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 said: “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.”
Mr Atkins added: “While such dramatic change in retail will inevitably present challenges to some, there is also a huge opportunity for those retailers which anticipate and meet the changing needs of customers.”