Retail renewal: what shoppers want now
A ’retail apocalypse’, which has ravaged malls in the US and the UK, is surely on its way to SA. What’s to be done?
A decade ago, building a profitable mall was a fairly simple exercise. As long as you got the location, size, layout, parking and access routes right, you had retailers and shoppers in the bag, so to speak.
No wonder mall owners are feeling wistful.
Consumers’ wants and needs — and thus their shopping behaviour — have changed so dramatically that mall owners and retailers across the globe are facing what many refer to as a "retail apocalypse".
In the US and the UK hundreds of retail chains have filed for bankruptcy, crippling many formerly thriving malls. In SA, the situation may be less pronounced, but industry players here are also grappling increasingly with how to convince cash-and time-strapped consumers to continue visiting their stores and malls, stay longer and spend more.
Theresa Terblanche, a divisional director at Broll Property Group, says that in SA changing shopping behaviour will be driven by technology and rising living costs. "Local shopping centres and retailers need to up their game if they want to avoid a similar wave of store closures, consolidations and downsizing to that in the US and the UK," she says. "Being innovative and looking at emerging trends and implementing them will now be more important than ever before. Simply offering a place to shop isn’t going to cut it."
In a research report titled "The Evolution of Retail" Terblanche highlights a few key trends that retailers and mall owners need to consider.
The rise of Gen Z
Forget about millennials. The most important future generation of shoppers is Generation Z, those now aged between 10 and 24. In SA, Gen Z represents around 26% of the population. Many are influencers. It is a tech-savvy, digital generation that has never known a world without cellphones, social media or the internet. These consumers are more driven by values, morals and ethical conduct, as well as concern about environmental impact, than the generations before them.
The key to attracting and retaining Gen Z consumers is authenticity and originality.
The advent of experiential shopping will be supported by two trends: people spending more money on personal experiences rather than on accumulating possessions; and technological advancements.
Experiential retail blurs the lines that separate online and brick-and-mortar shopping by offering in-store product testing and a more personalised shopping experience. It can be linked to leisure and entertainment, as in the case of Magnum’s pop-up ice cream stores that allow shoppers to create their own ice cream variety. Or it can simply be a more convenient buying experience. For example, sportswear and apparel giant Nike has merged digital and physical retail to create "omnichannel" stores. These are digitally integrated shops where customers can use their smartphones to scan the barcodes posted near mannequins to build a virtual try-on list, choose size and colour options and have items automatically sent to a change room.
Consumers will gravitate increasingly towards retailers that offer the opportunity to skip queues as instant scan-and-pay checkout systems become available. In this case in-store cameras and sensors track customers and monitor the items they pick up, adding them to a virtual shopping cart and charging shoppers automatically via an app when they leave the store.
Endless aisle shopping
Some retailers are reducing their physical brick-and-mortar stores in exchange for larger warehouses, which saves costs on rentals and supports in-store online shopping. The trend is also known as "endless aisle shopping" and provides consumers with access to an unlimited inventory via retailers’ digital shop fronts. This has also given rise to "showroom" stores. In these outlets personal stylists help customers try on outfits physically, but the store keeps no stocks. Instead, items bought online are delivered to shoppers’ homes.
Transparency and sustainability
Consumers, especially millennials and Gen Z, want to know more about where products were sourced and how they were manufactured before they make a purchase. Retailers and brands, whether these relate to food or apparel, will have to become far more morally aware and transparent in their business practices and supply chains if they want to capture the loyalty of the new consumer.