Susan Dickenson

Analysts discuss trends, challenges, strategies for 2015

Last month in Chicago, analysts at TNS Retail Forward's Strategic Outlook Conference discussed how changing demographics will soon challenge retailers and suppliers to rethink the way they do business.

Lois Huff, senior vice president for the research and consulting firm, was one of several analysts who described the impact of the aging and emerging shopper segments leading up to the year 2015 and how those shoppers will interact with retailers and products.

While there are many variables to contend with, Huff stressed the point that U.S. retailers and suppliers are in for a shock as the aging baby boomer population, and its $7.1 trillion in buying power, enters retirement. The fastest growing demographic group between now and 2015 will be those aged 55 and older. This is typically the age at which spending starts a dramatic decline and dollars shift from products to services, Huff said.

Spending on apparel is expected to take the first and biggest hit, followed by home goods and consumables. The U.S. Department of Commerce and TNS Retail Forward have forecast a drop in sales growth for most store categories with the exception of office supply, shoe, discount department and book stores.

Home furnishings store sales, which grew at an above-average rate of 6.5% during 2001–2006 are expected to slow to 4.7% over the next five years. Furniture store sales are forecasted to remain steady at 4.3% for 2006–2011, a tenth of a percent over the 4.2% sales growth the category experienced from 2001–2006.

The aging boomer segment is one of two influential buying bulges along the U.S. population's age curve, with the second being the 25 and younger set — the Digital Generation. In sum, the extremely different needs and mindsets of both groups will redefine the specialty retailer based on who it serves instead of what it sells. In a word, it's all about niche — identifying, marketing to and serving a narrowly defined and very selective group of shoppers.

If Huff and her associates are correct, we're going to be hearing a lot of this word. And if niche-retailing concepts take hold, we'll see it in things like smaller, more specialized stores; individualized shopping experiences; more limited editions, customization, retailer private brands and manufacturer exclusives; alternative market routes such as temporary, portable selling venues and inventory-less stores; and strategies that create and build lifelong relationships with the customer.

Driven partly by the changing needs and aspirations of the aging boomers, partly by the mindset of the maturing Digital Generation ("everything is interconnected, anything goes, everything is available and nothing is private"), partly by a booming Latino population, and partly by technology developments that will provide "perfect information" on demand for shoppers, a lot of the niche tools and processes are already taking shape. Huff and TNS Retail Forward President Tom Rubel discussed a few, among them:

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  Miniaturized components and improved wireless technology that promise to overload retailers with information in the form of customer data, metrics and analytics to help them identify trends and master their niches.
• Mobile devices to enable in-store, location-based advertising.
• More pre- and post-shopping information channels thanks to the growing power of Web sites like Kaboodle, Daily Candy and Stylehive that give shoppers a place to recommend, pan and discover new products and sources.
• Interactive opportunities for product customization as the shopper becomes the designer — such as mykleenextissue.com where consumers design their own Kleenex boxes; Threadless.com, where the consumer may design and submit a T-shirt idea, have others evaluate it, then market it on the Web site; and CrowdSpirit.com, which "aims to start a revolution in manufacturing by creating the first electronic products driven and inspired by customers' wishes & expectations."

It doesn't take much imagination to see how these tools and ideas could be applied in the home furnishings marketplace.

For many home accents retailers, none of this is news. While finalizing the entries for our 50 Retail Stars list (see page 20 to look at this year's selections), we were reminded once again of the tremendous amount of creativity and innovation many of you are using to stay ahead of the curve.

Let us know how it's going — send news of store expansions, openings, closings, relocations, celebrations or anniversaries to me at susan.dickenson@reedbusiness.com, or visit my blog at homeaccentstoday.com to comment.

Posted by Susan Dickenson on June 1, 2007 | Comments (5)