The Rapidly Evolving World of American Retail

Comments Off on The Rapidly Evolving World of American Retail
The Rapidly Evolving World of American Retail

The retail industry has gone through several disruptions since the early 20th century.  First, neighborhood corner stores owned by local proprietors were disrupted by supermarkets and by large urban department stores with mail-order catalogues.  Then, those retailers were disrupted by shopping malls located in the suburbs. 

Next, the malls were disrupted by discount chains, big-box retailers, and warehouse clubs.   As a result, of the 10 largest retailers in the U.S. in 1990, only 4 remain on the list.1

Now, the greatest disruption to ever hit retailing is starting to take shape.  E-commerce and mobile-commerce technologies are changing consumers' shopping habits and posing a serious threat to the survival of bricks-and-mortar retailers who fail to adapt to the new reality.

Until very recently, a shopper's decision on whether to purchase an item on a store shelf was based on its price, relative to his or her memory of prices at competing retailers; and on his or her perception of the brand quality, which was instilled through mass advertising campaigns. 

Smartphones In the Shopping Aisle

Today, however, all that has changed.  Thanks to the ubiquity of smart phones, shoppers can now:

  • Look up the item on Google to see product reviews from experts and other consumers.
  • Compare prices for the same item at a vast number of online retailers.
  • Take a photo of the item and receive a text from Amazon with links to matching items for sale on its site.
  • Post a question about the product on social networks like Facebook to ask family members, friends, and other contacts for their opinions.

Because smartphones are equipped with GPS, leading marketers are using geotargeting technologies to send personalized promotions—such as a coupon for a product that shopper has just walked past.

E-commerce has been growing at 18 percent per year over the past decade, and now represents 8 percent of total retail sales.  As technologies evolve that enable smartphones to be used for in-store payments, mobile-commerce is growing even faster.  In 2011, it made up just 3 percent of e-commerce sales, but it is expected to increase to 15 percent by the end of 2013.

To anticipate what consumers will want to buy, retailers are increasingly relying on algorithms and predictive modeling to crunch purchasing data and make suggestions based on what individual consumers and their peers previously bought...

To continue reading, become a paid subscriber for full access.
Already a Trends Magazine subscriber? Login for full access now.

Subscribe for as low as $195/year

  • Get 12 months of Trends that will impact your business and your life
  • Gain access to the entire Trends Research Library
  • Optional Trends monthly CDs in addition to your On-Line access
  • Receive our exclusive "Trends Investor Forecast 2015" as a free online gift
  • If you do not like what you see, you can cancel anytime and receive a 100% full refund