US Insights

Retail's reconfiguration 2015-2020

Bryan Gildenberg

Chief Knowledge Manager

Retail 03.16.2015 / 09:20

clothes hanger

A "users guide” to the coming era in retail we call “The Great Disruption"

Welcome to Kantar Retail's collection of predictions for 2015 and beyond - a series of forward-looking ideas that we hope act as a sort of "users guide" to the era in retail history we have identified as "The Great Disruption." That disruption starts with the catalysts causing it, many of which are rooted in the macro landscape. This is a world which is predictably volatile - catalysts for change are going to cause frequent and significant disruption… and if this is known, building an organization built to cope with disruption might be the best possible strategy.

Our predictions around these catalysts are global in scope and far-reaching in nature - we view the drop in oil prices as temporary and not altogether positive (even in the US). Europe's economic platform causes disruption both in Europe and abroad as it forces a change in how retailers manage and organize themselves and also drives the major European retailers to globally retrench. The macro-picture predictions in China focus on a core theme that will repeat throughout the predictions - the big ideas that were the strategic guide for early 2010s strategy are still big; they are just not as big as they used to be, and (more importantly) increasingly complicated and polarized. China is still growing, but that growth will require just as much of a granular approach and thinking as any other major market will.

Within this Great Disruption, Kantar Retail sees a major strategic repositioning coming, captured within our strategic framework called REconfigure Retail. The predictions in our report are organized around the four major areas we think are most important to suppliers and retailers trying to win in this new world:

REimagine Value. Our predictions here tackle:

  • Views on price-based value evolving into a far more dynamic and personalized world.
  • The increasing importance of non-priced based value (particularly to higher income shoppers).
  • Value-based products and supply chains will be a big strategic choice for many of the world's largest retailers - be it organic grocery or sustainably farmed cotton for apparel.

REinvent Format. The idea of "fewer bigger" permeates our format predictions:

  • Discount remains one of the most significant store-based growth platforms, but discount is becoming increasingly globalized and more complex in mature markets such as Europe. A number of our predictions chart the future growth and development of discount as it evolves.
  • Small formats are predicted to continue driving growth across Asia.
  • Large stores are forced to radically reconfigure their value proposition. In particular, we predict the continued integration of big-box retail and immersive technology, big-box retail and healthcare, and big-box retail and wholesale/foodservice.

REengage Shoppers. Here our predictions focus on the "big" themes, and we find out that many of these continue to polarize as well:

  • Many of our predictions focus on the continued polarization of the Millennial audience and in particular their adoption of "moneyed behavior."
  • We also look at the techniques companies will use to reach these new shoppers and the core complicator here, which is personalized communication (which ties back to personalized value as well). This will cause the future to be about addressable targeting and attribution-centered results measurement.
  • Shopper marketing as a discipline will continue to blur mightily between digital/mobile marketing, search marketing, and classic brand marketing - and that the end result of this may be the end of some of the frameworks we have historically used to understand shopper behavior. In particular, we predict we are moving to a "post-category," "post decision tree" world for understanding shopper behavior.
  • We also think that retailers will more aggressively diversify to look at new customer types (like small businesses) and new shopping trips (like quick-service restaurants).
  • All of this suggests our core prediction for the future of shopper marketing - the world of "Above the Line" and "Below the Line" is going away. There simply is no more line.

REtool Commerce. The line disappearing has enormous predicted impact on the commercial models being used by retailers to evaluate their success.

  • In particular, store productivity will become the fundamental conversation-starter between successful suppliers and successful retailers.
  • Genuinely understanding shopper optimization both in-store and online will be critical, as well.

These predictions and the REconfigure REtail framework are useful guides to navigating the disruptive retailing landscape. This was a team effort - we had over 40 Kantar Retail team members from around the world who offered their perspective on the Great Disruption - making this one of the most collaborative, global, and interesting pieces we've ever done.

Enjoy the read and have a great year.

Source: Kantar Retail

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