So far in his new column, ToyNews' Inside Trader, Steve Reece, has looked at the future of toy products and marketing, now he looks at retail and how it will evolve.
We can look back to see the nature of retail has changed immensely in the past ten to 15 years, with the impregnability of the High Street reducing. I love the retail experience (I should qualify that by saying I love the shops I like, not the ones I get dragged into by my wife), and I understand what it takes to get product on a shelf (harking back to stacking 20kg boxes of soap powder as a management trainee at Makro many moons back). I therefore really want to be able to state that the future is golden for High Street retailers, despite the tribulations of today. And in a way I believe I can.
Whereas once the critical elements for retail success were great products, streamlined and tightly managed operations, customer service and delivering footfall into store (via promotional activity or aspirational environment), we now have an extra success factor.
Embracing change and opportunity has already become key, and this trend will continue. Those retailers willing to revolutionise their approach and deliver a multichannel offer will gain ground and those who choose to stay in the past risk becoming obsolete.
Those retailers slow to embrace e-commerce have largely paid a price already, as completely new generalist and specialist retailers have established themselves online and forever stolen market share. While we must maintain perspective about today’s situation, in that 70 per cent plus of Brits now shop online, internet sales still ‘only’ make up ten to 15 per cent of retail sales today. So we certainly can’t dismiss the majority of current sales via physical retail, especially not for toys where trialling / try me in-store can be so effective in driving sales.
Nevertheless, online share of total sales is increasing and will continue to do so for years to come.
One particular reason why the trend for online will continue is the exponential growth of smartphone penetration and use of mobile devices for transactions. ‘M-commerce’ will be THE biggest growth trend for retail in the next five years. Smartphones are expected to make up as much as 90 per cent of mobile phone sales within the next five years, while the major credit card companies are preparing for a future where mobile device payments replace plastic credit cards.
Mobile devices are nearly always within reach of the owner, meaning there are many more opportunities to purchase at a whim, without consideration or while being influenced by peer groups, and in the case of toys – pestering kids.
If you are in retail and are not embracing this trend, beware. Mobile friendly e-commerce sites will begin to significantly outperform non-mobile ready sites, and be in no doubt that new retail empires will be built on this platform.
The final trend arises out of my contention in last month’s article that the long ignored interactive potential of TV will be embraced with gusto in the years to come, much to the benefit of some toy retailers. ‘T-commerce’ is already with us, albeit via hooking a TV to the internet.
As the UK moves from patchy broadband to super fast fibre optic cables, the opportunity to browse and transact on our TVs at the speed the consumer demands becomes possible. The nature of TV and the technology at play means there are significant barriers to entry at first, and existing TV networks will be the gatekeepers of the coming retail revolution, until someone launches a truly open platform.
In the meantime, expect early movers to clean up.
Steve Reece is a leading brand marketing and product development consultant in the toy and games industry.