Retail Traffic
Wright: Traditional Retailers Can Thrive by Blurring Channels

Wright: Traditional Retailers Can Thrive by Blurring Channels

The internet and mobile shopping continue to transform the retail sector. Customers can comparison-shop on the fly, looking at a product in a store, but then acquire it from another retailer through their smartphone. This is leading to less loyalty from shoppers to particular retailers and channels. And there’s no sign the trend will abate.

To survive, retailers will have to continue to adapt. But there remain keen advantages to having brick-and-mortar locations. The savviest retailers can exploit these networks by, say, allowing shoppers to buy goods online and then pick them up in stores. That can happen more quickly than getting something delivered.

Jon Wright, head of global retail research, Euromonitor International will present at a session entitled Reinventing Retail and the Future of Shopping at the ICSC Retail Real Estate World Summit being held September 11 through September 14 in Shanghai, China. Wright will talk about the adoption and evolution of technology and best practices on what will keep stores successful in an area where consumers are increasingly buying products online and through mobile devices.

Wright sat down with Retail Traffic to discuss some of the trends shaping global retailers today.

Retail Traffic: What does the overall retail picture look like from your vantage point?

Jon Wright: Overall retail is growing globally. It’s not quite back to the pace of growth pre-2008. But it’s getting back to that 4 percent to 5 percent growth rate.

What we’re seeing is also a big split between emerging markets and developed markets. Emerging markets are growing faster than developed ones.

In addition, there is a lot of channel blurring occurring as customers are shifting between channels quite a lot. They have little loyalty to particular retailers and channels when making purchases.

We’re also seeing greater growth in grocery retailing generally. But there are pockets of growth everywhere, depending on price points. The luxury sector is a big growth point, especially in the Far East.

RT: Talk about the channel blurring that’s occurring and how retailers are responding to that trend.

Wright: Retailers are driving it this way. You look at consumers shopping across channels and not necessarily buying things in one place or one type of store.

Consumers have the ability to price compare. And they can use technology to move through various retailers and various channels quickly. … Retailers do attempt to push the benefits of shopping in stores for certain … but in terms of maintaining loyalty, they are offering consumers the ability to shop anywhere at any time on a broad array of products. has done very well. And now we’re seeing store-based retailers reacting to these trends as well. … Wal-Mart really woke up to the opportunities of internet retailing and using smaller stores as pickup points for products. They have the ability to roll out this strategy on a global basis, including in developing markets.

Do you see growth accelerating in the retail sector?

Wright:The four percent-to-five percent range is a base scenario. We can’t move too far away from it at the moment. As you look at the macroeconomic scene globally, the positive outlook is minimal. You’re really looking at specific regions—Asia/Pacific and Latin America, for example—as driving growth. But even there you have some headwinds in the form of inflation.

Things trending to the downside seems more likely. That could come through a continued slowdown in Europe feeding into other markets and dragging them down as it goes.

Increasingly, retailers seem to be competing across borders. It’s no longer about U.S. retailers competing with each other, but [they’re] also looking to gain market share internationally. And other retailers are looking to the U.S. How do you see the trend of globalization playing out?

Wright: There is no getting away from it. We’re only at the midpoint of this trend at the moment. For example, Tesco CEO Terry Leahy points out that the products Tesco sells are available in 100 countries, but the chain only has stores in 13. … Not every retailer can be in every market. But they will explore markets wherever they can maintain a good pace of sales.

For a grocery store, you have to be a top two or three chain in a market to survive. In other sectors, there’s more room. In apparel, there are a lot of chains that want to grow on a global basis and add stores in order to build brand awareness and sell products.

And this has all been accentuated by the Internet. Retailers have used the Web to set up retailing arms in markets where they don’t have stores. They ship globally. And then they can see who is shopping for their products online. … You can learn where people are buying your product and then explore setting up a physical presence.

RT: During the recession, many chains focused on tightening their supply chains and inventory management. Has the improvement in this part of the business made it easier to go global?

Wright: I don’t think the two necessarily go hand-in-hand. … The improvements in the supply chain allow retailers to react quickly to trends and make it possible to offer consumers value on an ongoing basis. But it doesn’t necessarily affect your store footprint.

RT: Are there particular retail sectors that are globalizing more quickly?

Wright: Apparel and footwear travels the most easily, as do luxury goods. … Luxury travels very well because consumers are buying into an idea of a brand. … So we’re seeing luxury chains grow exponentially in the Asia Pacific, Latin America and the Middle East as well. … In addition, IKEA is a retailer that has expanded globally using the same product everywhere. It doesn’t matter what market you’re in. Consumers buy into that brand. … It’s only product areas affected by strong local preferences where it becomes harder to expand globally.

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