Stamford, Connecticut based Daymon Worldwide today released its eight ‘Global Retail Trends Predictions for 2014 and Beyond’ to help retailers address the contradictory, challenging realities facing the industry in 2014, dubbed “The Year of Retail Contradictions.”
“Retailers across the globe are facing a more fascinating, challenging business landscape than ever before,” said Carla Cooper, CEO of Daymon. “We understand that decision-makers in our industry are dealing with contradictions that are hard to reconcile. These include trying to successfully serve the different needs and preferences of both the large aging population and the tech-enabled Millennial group; managing physical stores while tending to the explosive growth of non-store based retail; and meeting consumer needs for convenience in products, services and formats that allow them to quickly get what they need while also enjoying the customized retail experiences they’ve come to expect and demand. Each of these challenging realities will have tremendous impact on the retail landscape in 2014.”
Each trend was identified through the lens of Daymon’s Global Trendwheel, a proprietary tool that tracks 72 consumer Microtrends across 8 Megatrends that impact global retail success. The 2014 trends include:
- Big vs. Small: The Redefinition of the Hypermarket/Supercenter (Megatrend: CULTURAL ECOLOGY) – In the coming year, we’ll see a notable shift from the hypermarket/supercenter culture we’ve seen in the last decade to a retail landscape where smaller formats prevail, including dollar stores, convenient superstores, express stores, discounters and small specialty stores.
The supercenter is not going away, but these smaller formats will become real category killers, stealing share from the supercenters and mass merchandisers that have triumphed in recent history. This is driven by increasing urbanization, a rise in smaller households, and consumers’ changing notion of convenience. There will be more pressure on bigger formats in the US and globally to create compelling reasons for shoppers to visit.
- A Sharing Retail Economy (Megatrend: CONSCIOUS RAISING) – Consumers have figured out that owning bulky, rarely used items is both expensive and unsustainable, resulting in a growing number of sharing, renting and reusing options at retail that will play out in retail concepts and experiences.
For example, Rent the Runway allows consumers to rent designer dresses and accessories for short periods of time. Another service, Rentwant, connects users with peers, to rent items not constantly being used. This trend will have significant implications for global retailers in fashion, home improvement and office supply, who must adapt and respond.
- The Muddled Middle (Megatrend: CURRENT-CY) – The Middle Class is changing, with contrasting implications globally. In the US, there’s a shrinking Middle Class, creating an even greater gap between the rich and the poor. Retailers with low-price positioning, such as discounters like Aldi or Dollar Store, will grow along with more premium retailers and specialty stores with a differentiated proposition, like Whole Foods.
Retailers without a clear position are at risk of becoming less relevant and losing traction. Consumers are already shopping multiple stores in a high-stakes ‘share of wallet’ game. In emerging markets, by contrast, the Middle Class is growing with tremendous spending power, presenting new opportunities for retailers and brands.
- The War on Obesity Escalates (Megatrend: B-WELL) – When childhood obesity rates stopped rising in the U.S. earlier this year, it was headline news. Very soon, we’ll see companies and governments begin to take even more aggressive steps to promote healthier diets, from the rise of high-quality “cook and assemble” meals to stricter guidelines such as ‘NO GMOs’ becoming the cost of entry in retail.
Employee wellness programs also will become the norm. With an increasingly food-aware culture, consumers recognize that obesity is the gateway to other illnesses and the soaring cost of healthcare, so this trend will continue to be front and center in 2014.
- The Kitchen Has Left the House (Megatrend: ALWAYS ON) – With shopping trips being more mission-based and less about stocking up, grocery stores will become the kitchen themselves. With the continued growth of QSR, snacking as meals and component cooking like heat-and-eat (versus scratch cooking) on the rise, how consumers cook and eat will look very different in 2014, including when and where they do it.
Retailers will need an even closer relationship with their customers in order to provide relevant solutions to meet this growing trend.
- Local Becomes ‘Personal’ – (Megatrends: YOUniverse, ALL FOR ONE) – The idea of “locally-sourced” products will change from foods and products sourced in the immediate area of each market to offerings available throughout the broader community, city, state and country. It will be more about personal interaction, authentic experiences and interest versus just geography.
In 2013 we saw retailers meet the needs of consumers by offering and marketing locally-sourced products to more visibly support local and regional businesses, and to assure shoppers about food safety. For example, Waitrose opened its farm shop in the UK to the public, with an emphasis on locally and regionally-sourced food. Increased Internet connectivity helps consumers regularly engage in global conversations about ideas, products and preferences extending “local” beyond the boundaries of the USDA definition of “less than 400 miles from its origin or within the State in which it was produced” to include strangers from around the world with whom a personal connection is made. Think of concepts like Etsy or Pinterest followers.
- Retailers Amplify Branded Experiences (Megatrend: JOYment) – The idea of experiential retail is nothing new, but with the amount of cross-channel shopping and the projected growth of E-commerce, brick and mortar stores will be forced to provide shoppers with even more unique experiences, and not just in flagship locations.
We’re already starting to see this play out in retail with Lululemon’s Experience Lab in Vancouver and Anthropologie’s soon-to-be-launched lifestyle village in Devon, PA, complete with retail, hotel and foodservice. For grocery, food theater like cooking demonstrations and sampling must become a greater part of the shopper experience.
- A New Way to Service the Aging Population (Megatrend: YOUniverse) – The growing aging population is going to have a key impact on many markets, especially in countries like the US and Japan. In 2014, we’ll see global retailers take a new spin on reaching this demographic by developing products and solutions to help them maintain their active lifestyles. Think leisure travel, fitness centers, and classes for both life enrichment and fact-sharing.
Many global retailers are already starting to meet the needs of aging consumers, with more products, services and in-store assistance such as slower escalators and ergonomically-friendly shopping carts, etc. The Baby Boomer generation views the “Golden Years” as a time of opportunity, renewal and self-actualization, and don’t want to be considered as “old people.”