Lesson2

Emerging Trends in Retailing

Twenty Emerging Trends:

1. Discounters will steal a march over the food retailers.
Wal Mart has already become one of the leading food retailers and the trend of every-day-low-pricers entering into food retail arena has now become a major threat to the supermarkets.

2. The responsibility of managing inventory will shift up the value chain towards the manufacturers.

3. Assembly of the final product will move down the supply chain and as close to the customer as possible (owing to the increased need of mass-customization).

4. Preponderance of web driven sourcing.
Retailers will use Systematic and Spot sourcing from the many B2B sites to meet their requirements of core merchandise as well as peripherals.

5. Grocery e-tail will be dominated by physical retailers who would extend their offering by having a web presence. The primary source of fulfillment of a web order will be the store rather than a dedicated warehouse (like Tesco’s model).

6. High use of W-LANs in store.
Wireless LANs will be the predominant media of information/data exchange in a store. This in turn, would enable things like:

• Mobile POS terminals
• Mobile information kiosks
• Better store space management

7. Aisle checkouts.
Checking out will not be restricted to long queues at POS. Each SKU will be checkout-enabled and it would be possible to scan it at the aisle/rack where it is stored. This will immensely reduce the check out time at cash counters.

8. High use of advanced communications technology like ATM, Frame Relay by retailers.
This would be necessitated as the retailers would need to exchange huge volumes of data/information with their suppliers and service providers so as to ensure better customer service levels.

9. Supermarkets and discounters will rely on thin client technology whereas specialty retailers who need a higher level of customer interaction and information sharing would continue to rely on fat clients.

10. Resurgence of Mom & Pop stores.
The friendly neighborhood mom & pop stores are going to come back to the fore as the customer is going to become increasingly time starved.

11. The wave of globalization will be led by mergers and acquisitions as the fast changing retail landscape will not give time to any retailer to establish an independent presence in uncharted territory.

12. Emergence of value-adding intermediaries who will act as a single point of contact between the consumers and sellers. They will be privy to the complete customer profile and will not only aid the consumer in making an informed decision but would act proactively to suggest the latent needs which are pending fulfillment. Hyper mediation is the next wave.

13. Digital music is going to become the predominant form of music distribution as it allows for mass customization and guarantees immediate fulfillment of need. Initiatives like SDMI will be hard pressed to come up with a secure mechanism for file transfers.

14. Hand held devices like mobile phones and PDAs would become a predominant media for net access and transactions as they would bridge the gap between desire and action (accessible anywhere, unlike now when one has to go to a PC for fulfillment).

15. Banner ads will not ensure click-throughs, and will eventually be overtaken by affiliate programs.

16. Syndication will rule the roost. Shopping malls on the net will abound giving shoppers the same “virtual” experience that they have in a physical mall. As a corollary, shopping malls are going to install (on-site and off-site) dedicated Internet kiosks offering consumers a virtual tour of their mall and allowing transactions.

17. E-books will be limited in scope and will be soon be passé. Physical books will retain their place.

18. Selling games on the net will be the opportunity of the future. With multi-mode net access becoming a reality, gaming will transcend the eponymous game parlors and PCs and would become a “do-anywhere” activity.

19. Increasing returns hypothesis.
The customer reward for shopping on a site/store would keep on increasing with the frequency of shopping on that site/store. With customer acquisition costs ten times as much as customer retention costs retailers will go all out to increase the “stickiness” factor.

20. Time from net to the door will keep on shrinking thanks to the continual increase in efficiency of delivery service providers. The recent distribution success of Amazon – FedEx in distributing Harry Potter’s Goblet of Fire in three hours is the shape of the things to come.

The trends to follow in the future:

• The Indian Organized retail sector will grow up to 10% of total retailing by 2010.
• No one single format can be assumed as there is a huge difference in cultures regionally.
• The most encouraging format now would be the hyper marts.
• The hyper mart format would be further encouraged with the entry of the TNCs.