Retail topics: Notes from the National Retail Federation meeting
Among the overarching themes we encountered during this week’s annual convention of the National Retail Federation in New York were the globalization of retail, retailers’ desire to make themselves into brands as important as those on the products they carry, and the overwhelming role that technology is playing in the sector. The trade show portion of the convention filled the entire top level of the Javits center, and it seemed as though 90% of the booths were devoted to either back end or store level technology.
Some notes and impressions:
*”Retailers need to be more than throughput channels,” said Richard Hyman of Deloitte, in an examination of the global retail environment. In other words, customers, when they go home, need to be as cognizant of the store they visited as the product they bought. “Branding is no longer just the domain of the supplier,” he said, saying that they must show “differentiation, relevance, and focus.” Retailers’ total orientation much change, he said, from being supply-led to being demand-driven, as consumers are presented with so many options on where to shop. How many merchants are tied up with issues of supply chain management, when they really should be looking at “demand chain management” of how to reach, react to, and service their customers’ wants and needs.
Hyman said that the Top 250 global retailers – topped by Wal-Mart, Carrefour, Metro and Tesco — accounted for $3.76 trillion in aggregate sales in 2009, or 25% of all global retail. But he cautions that the growth rate of the largest 250 retailers has slowed significantly in the past three years, while that of smaller retailers is now higher. The U.S. now accounts for 20% of global retail spending, Japan and China 10% each.
For the period between 2009 and 2014, he reported, retail sales in developed markets are projected to grow 21%, less than a third of the projected 66% growth to be seen in developing markets. Growth in developed markets has peaked, Hyman said, citing continued overcapacity of retail selling. He noted the growth of online retailing, but said that “Online has added to capacity, but not to demand.” Of particular note: Amazon is now the 35th largest retailer in the world.
In response to our question, Hyman said that private labels and exclusive will “play a more significant role than ever before…. Consumers don’t care who owns the brand; they care about the experience.”
*Matthew Rubell, Chairman-CEO-President of Collective Brands (Payless Shoes), on sustainability and corporate responsibility as an operating and marketing issue: “You have to have an overlay of doing things the right way as a company, so they can find other reasons to buy” at your store.
*In a forward-looking panel on “Consumer 2020,” Ira Kalish, Global Director of Deloitte Research, pointed to a number of factors that retailers and their suppliers must keep in mind. The population in the affluent world is aging – not only in rich countries, but also in China. That will not only affect the kinds of products for which there are opportunities. As they age, consumers are likely to spend an increasing percentage of their money on services, rather than products, so brand owners and retailers should be thinking in that direction.
Kalish also says that with the growth of social networks and other consumer technology, the “trust and authenticity” of a brand that communicated among peers will “trump marketing messages” created by brand owners, “so businesses must participate in that conversation.”