Euromonitor International is pleased to release its latest retailing research. The outlook for the global retail industry remains positive. The growth of the global retail industry is expected to be 15% from 2016 to 2021. This is mostly driven by Asia Pacific, which is expected to account for 40% of growth in the next five years. Here are the five key trends that are expected to define the industry’s evolution to 2021.
Convenience leads innovation in retailing
Customer demand for convenience will be further perpetuated by advances in e-commerce and technology. Global socioeconomic and demographic trends will also contribute to rising demand for convenience amongst an increasingly urban and aging populace. For example, the global urban population is expected to grow by over 30% from 2015 to 2030. Furthermore, by 2030, those over the age of 45 will account for over a third of the global population. Both trends will contribute to rising consumer demand for convenience offerings by retailers. Retailers that can add convenience to consumers’ daily activities at the right price will be the best positioned to succeed.
The evolution of modern grocery continues to mirror broader societal trends
Trends like stagnant income growth in the developed world and urbanisation continue to play themselves out in the segment of retailing that is the most beholden to popular demand. The two highest growth channels in modern grocery, discounters and convenience stores, reflect consumers that are obsessed with maximizing the value of their time and money and the growing importance of smaller-format food stores that are easier to reach and navigate. With expected compounded average growth rates (CAGRS) of over 5% for each channel from 2011-2016, compared to 2% for forecourt retailers and less than 3% for hypermarkets, it is clear that consumer shopping preferences are changing in tandem with their lifestyles.
Online marketplaces continue to experience growth
Marketplaces are continuing to experience growth, playing a major role in the future of both small and large businesses online. Online retailers that host third party merchants are the leaders of internet retailing and are continuing to gain share. Amazon, Alibaba’s Tmall, and eBay’s marketplaces will account for US$365 billion in sales worldwide in 2016, good for 31% of all internet retailing sales. Third party marketplaces enable all types of retailers and technology companies to take advantage of the growing e-commerce and m-commerce markets through existing infrastructure that is already trusted by shoppers. Despite challenges that marketplaces face, like the fight against counterfeit goods and overall quality control, they are expected to continue becoming a larger portion of all online sales.
Retailers prioritize omnichannel proficiency
Omnichannel retailing is a channel-agnostic approach that offers a seamless shopping experience across all physical and digital channels. As shoppers seek access to retailers and brands at anytime, anywhere, and through any device, retailers are prioritizing achieving omnichannel proficiency. Internet retailing accounted for 9% of global retail sales in 2016 and that figure is expected to rise to 13% in 2021. Furthermore, mobile internet retailing accounted for 44% of internet retailing sales in 2016 globally, and the figure is projected to account for over 55% of internet retailing sales in 2021. Customer demand for omnichannel shopping is unlikely to slow down, and retailers operating in different regions of the world will need to overcome the technical and branding challenges of seamlessness to become truly omnichannel.
Off-price models drive growth within apparel retail
Off-price retailers that make use of excess supply to sell name brands at a reduced cost to consumers have seen a great deal of growth in the past five years, with worldwide sales over of over US$200 billion in 2016 and a five year sales CAGR of 7% from 2011-2016. Along with fast-fashion retailers, these brands have brought the value-seeking trends to apparel retail and have disrupted a number of long time apparel specialists and department stores in the process with their attractive deals and treasure-hunting atmosphere.
For additional insights into the future of retail, download our “What’s New in Retail: Emerging Global Concepts in 2016” report.