One-Size Retailing Not in Our Future

By Brent Felgner -- Home Textiles Today, 5/21/2007 12:00:00 AM

New York —

Big-box merchants will consolidate into a "global retail oligarchy" while cookie-cutter specialty store chains begin to disappear from the landscape over the next decade or so, replaced by a series of formats defined by geography and customer base, a leading retail authority predicted.

In presentations by the consultancy TNS Retail Forward at its annual Strategic Outlook Conference, it was clear that size will not equate to success by 2015. Expectations by aging Baby Boomer, Gen-X, and Gen-Y consumers, combined with emerging technologies and global markets, will force retail's evolution.

"The day of the 1,000 stores being rolled out that looked exactly the same no matter where they were, no matter what the customer looked like — that day is over," said Elaine Pollack, evp of Retail Forward.

"Chain size is going to top out at lower store counts and specialty retailing will be reincarnated," she said, asserting, "It will become most successful by being closest to the customers that it serves. The new specialty mega-retailer is going to be all about a portfolio of concepts."

Some of those trends seem apparent now in pockets of the marketplace. Wal-Mart's still-unproven Store of the Community concept is an effort to address individualized pockets of demand. Abercrombie & Fitch has been testing and adapting a number of formats — including Hollister and Ruehl No. 925 — as it addresses more specific niche markets.

Even Bed Bath & Beyond's experiments over the last few years with Harmon (Face Values) and Christmas Tree Shops, as well as its breakout from a narrow range of store sizes, would seem to offer further support of the trends.

Not to be discounted is the $7.1 trillion in buying power controlled by Boomers, according to a MetLife study cited by Retail Forward senior vp Lois Huff. That is seven times more buying power than Gen-X and Gen-Y combined. One looming result: dramatic declines in softlines spending as Boomers age. Home goods and consumables will see less dramatic falls later, predicted Huff .

Aging Boomers will seek smaller, closer and easier shopping formats, she emphasized.

Younger generations' rising influence, meanwhile, will yield rising demands for more individualized — or at least more carefully thought-out and defined — product development and marketing. And new media already offer the ability to respond in kind. In essence, the consumer will become a co-creator of many of the products they purchase.

"The next growth stage for many retailers is really going to be all about segmenting their business, localizing their business, and being able to focus on that newness of one," Pollack said.