The Future Will Be Different

Discussion
Oct 17, 2006

By Al McClain


At the recent National Grocers Association’s (NGA) Executive Conference, Andrew Zoli, who is futurist in-residence for Popular Science and American Demographics magazines, outlined a future full of opportunity and complexity. Here is a sample of some of the trends he sees that will affect the retailing industry:


Demographic Transformation


  • While the world is on the road to a population of over 9+ billion, the rate of growth is slowing and population in parts of Europe and Russia is actually declining.

  • Urbanization is increasing – soon more people will live in cities than in rural areas.

  • In some developing countries, 70 percent of the population is under 30, while many developed countries have much older populations (e.g. Italy’s average age is over 50).

  • The U.S. will have the largest number of old people and young people in 2025. It will be hard for the smaller working population to provide resources to these groups

  • There will be a huge number of products designed to help boomers live longer.

Choice, Commoditization & Experience


  • Supermarkets are a sea of sameness, offering the “tyranny of choice” – 40,000+ SKU’s (of which many are near-duplicates) while consumers can pay attention to only 160.

  • Individual product choices and innovations often do not offer enough benefit to offset the time and trouble it takes consumers to figure out what the benefits are.

  • The older a consumer is, the more satisfied they are with fewer choices.

  • Companies need a chief “no” officer to simplify things, edit product choices, etc.

  • Staples is an example of a retailer addressing these changes by reducing SKUs, developing an “Easy Rebate” program, and conducting an annual competition for best consumer innovations.

The Rise of Ambient Intelligence


  • Technology will be embedded everywhere, such as “functional packaging” where a package of pills can actually email you to remind you to take your dose or another container to tell you how ripe the fruit is inside.

Green Goes Mainstream


  • Environmental trends are moving from conservation to sustainability to “ecovation.”

  • LOHAS (Lifestyles of Health and Sustainability) products will sell a lot more in the future as older consumers embrace “green” and as they think about their legacy. Young people will embrace the trend, as well.

  • LOHAS consumers are willing to pay a 20 percent premium.

During the Q & A, Mr. Zoli said that the trend will not necessarily be to smaller stores but that consumers want retailers to present a better-edited assortment and help guide them to the products they want via simplified signage and directories.


As part of a panel discussion that followed, Al Plamann of Unified Western Grocers suggested that changing consumer demographics might actually call for more products, not less.


Tom Zaucha of NGA said that he was taken with the magnitude of the change that Mr. Zoli forecast and sees opportunities for entrepreneurs in the industry that have a good understanding of what consumers want on store shelves.


Dick King of Associated Food Stores-Retail noted there are not enough skilled younger workers to accommodate the industry’s needs and there will be a need to rely more on older
generations.


Discussion Question: What do you see as key opportunities for retailers and manufacturers based on Mr. Zoli’s outlook?

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

11 Comments on "The Future Will Be Different"


Sort by:   newest | oldest | most voted
Harry Price
Guest
Harry Price
15 years 7 months ago

Mr. Zoli’s comments are somewhat predictable. What will mold the consumers’ buying patterns will be predicated by new technology which will provide faster more significant information regarding pricing and selection. Those retailers that can carve out their own loyalty programs – establishing a stable customer base in conjunction with this technology – are more likely to succeed. The cell phone will be the integral component in this transformation.

Gene Hoffman
Guest
Gene Hoffman
15 years 7 months ago

Everything in life will continue to evolve based on changes in economics, demographics, personal pleasures, social mores, technology, philosophies, politics and whatever. The key opportunities for retailers and manufacturers will begin with staying in tune with the early nuances that the ever-changing marketplaces will continually send.

If a neighborhood starts to transcend from one ethnic, economic or social characteristic to another, early focus should be on serving the wants and needs of the new consumers. That will revise and perhaps reduce the number of SKUs involved from neighborhood to neighborhood. But in a global sense the total number of SKUs should increase. Innovation, technology and management insight in combination will be the driving forces in creating and distributing different products productively in the revising world of future commerce.

Race Cowgill
Guest
Race Cowgill
15 years 7 months ago

A large scale study last year (I can provide details to those who are interested) said that experts’ predictions are no more accurate than chance when predicting the future — no one can predict the future, not even experts. I know this is fun to do, and I also recognize the value of light-heartedness; I’m not sure how much we can really get out of this kind of speculation, especially when there are so many urgent issues in retailing to attend to.

Al McClain
Guest
Al McClain
15 years 7 months ago

Regarding David’s point, I think the conundrum is that the increasing diversity of shoppers leads retailers to think that they need more and more SKU’s to satisfy a diversity of tastes while we are learning that shoppers may prefer smaller stores and an edited assortment. So, the answer would seem to be stores that are individually tailored to the demographics of their local trading area.

Bill Robinson
Guest
Bill Robinson
15 years 7 months ago
Retailing will be pervasive thanks to technology that blurs the distinction between physical stores and consumer connectedness. Retailers will find more and more niches to build out highly specialized assortments that appeal to customers tired of dreariness of mass marketing. As a result, independent stores, especially downtown and on the web, will surge in popularity , not as general merchants, but specialists offering uniqueness, relevance and rewards. Mass merchants will slowly strangle themselves robbing their souls as they wring the last dollar out of their suppliers. Millions of robotic store workers will find better jobs where they’ll have time to address people’s needs. Web-merchants in partnership with UPS and FEDEX will trump mass merchants on efficiency and cost. As always, innovation in retail will come from outside. Good merchants will be watching the innovators and will quickly adapt to changing consumer needs and tastes. For the others, who have “figured it all out,” there’ll be lots of room in the retail graveyard outside of town built on the site of an abandoned regional mall.
Laura Davis-Taylor
Guest
Laura Davis-Taylor
15 years 7 months ago
All of the factors mentioned will affect our shopping future but the new technologies will be enablers — not answers — to address new consumer demands. We have to remember that technology is not a solution…it’s what we do with it that matters. As the analogy goes, it’s not the gun, it’s the bullet! This post was refreshing to see. We have spent too long not being proactive enough about individual consumer wants and needs and these trends will continue to “push” retailers to respond. The concept of behavioral merchandising is likely to help, as established retailers start utilizing data to serve up relevant messaging to relevant people about relevant products in the right store locations. Thanks to dunnhumby’s tireless efforts with Tesco UK with this concept, more and more top brands are embracing the potential benefits of it. If we can only tie better customer service into the equation, we may have a real answer to the challenges that still face us to simply make the store experience easier for our customers. I love… Read more »
David Zahn
Guest
15 years 7 months ago

I found the analysis to be wedded to somewhat outmoded criteria. For instance, “0ld is not what it once was” – 50 does not denote time for the rocking chair now, but time for increased activity now that the “kids” are out of the house. As for rural vs. urban differentiations – I doubt that there are the same lifestyle differences there may have once been. Rural does not mean backwoods any longer.

Maybe I missed the point here, but we are led to believe that we need to strip down our assortment because there is way too much duplication – then in the next breath we have someone stand up and say we need MORE assortment. I don’t get it.

Charles P. Walsh
Guest
Charles P. Walsh
15 years 7 months ago

I agree with Len Lewis comments that “Nothing that Mr. Zoli said is all that unusual” or I might add, unpredictable.

I disagree with Mr. Zoli’s conjecture that there is too much choice in retail and that consumers are demanding “less.” There already exist formats in which constrained selection is offered, such as Clubs. Demand has a remarkable ability to define and impact supply and if such an attitude were to develop you can bet that it retail will follow pretty quickly.

I do believe that Mr. Zoli’s underlying message is a good one, that change is a constant and being attuned to such change and adjusting or getting out in front of it is the hallmark of the successful retailer. This alone will distinguish the face of retail in the next 50 years just as it had the last 50. Sam Walton and others were attuned to such changes and were successful in exploiting it and the age of discount retailing was begun.

Suman Mohanty
Guest
Suman Mohanty
15 years 7 months ago
It would be interesting to ask how these trends are related to each other. There are going to be demographic changes. While some will be within the various ethnic groups (more of the young and old), the relative composition of the groups will also change. An increasing number of retailers realize the need to address the Hispanics and Asians. Demographics will have a significant effect in how consumers adapt to their new decision making process, whether it’s buying groceries or holiday packages. For example, most Asians are known to prefer simplicity, yet any Asian festivity involves preparing a far greater number of menu items than a Westerner would for Thanksgiving or Christmas. Likewise, many Asians who don’t suffer from obesity might still be indulgent to have an Indian or Chinese version of the pizza (which they already do back in their countries) than say many Americans who are very calorie conscious, to check the greater weight gain and obesity issues they face. So, is there more revenue and profit to be made from addressing the… Read more »
Len Lewis
Guest
Len Lewis
15 years 7 months ago

Let’s not forget that these are the same people who, 50 years ago, predicted we’d all have flying cars and personal robots to do the drudge work and free us for more intellectual pursuits. I’m still waiting.

Nothing that Mr. Zoli said is all that unusual. But in one way or another they all provide opportunities for retailers. One of the big ones in my mind is the new urbanization. It’s going to require new types of stores, products, sizes and different packaging.

I would point to Al Plamann’s comment that consumer diversity means an opportunity to broaden the field of fire in terms of products and services. There are few places in the U.S. where this is more evident than in California.

Mark Lilien
Guest
15 years 7 months ago

Some retailers are already taking action on key demographic and lifestyle trends: (1) they hire the undocumented when they’re faced with labor shortages (2) drug store chains are building new locations to serve the graying of America (3) Whole Foods and branded organics are expanding quickly to serve LOHAS consumers. The Chief “No” Officer position is still a rarity, though, since most retailers and many manufactured items are still getting more and more complicated. Steve Jobs maybe the best Chief No Officer so far, since Apple products tend to be very easy to use. More and more marketing campaigns, web sites, products, and procedures are running in the opposite direction. Great design looks simple, even if its creation isn’t.

wpDiscuz

Take Our Instant Poll

Which will have the most impact on the retailing industry over the next 10-20 years?

View Results

Loading ... Loading ...