SAN JOSE, Calif. -- Multi-channel retailing is poised to gain paramount importance, with reliance on a single channel making it virtually impossible for retailers to gain a competitive edge in the tough environment, according to market research firm Global Industry Analysts Inc. (GIA), which has released a report entitled "Non-Food Retailing Industry: A Global Outlook."
A multi-channel retail format enables retailers to combine the synergies of traditional retail stores with other retailing formats such as mobile stores, online stores, catalogs and convenience stores, it said.
Retailing is the final step in the supply/distribution network, which establishes the connection between consumers and the actual manufacturer of the product. Retailing is primarily classified as store based (grocery and nongrocery) and nonstore based (vending machines, home shopping, Internet retailing and direct selling). Retail business was traditionally operated either by family-run stores or by regionally targeted stores.
Presently, the marketplace is dominated by large multinational conglomerates possessing huge financial resources, San Jose, Calif.-based GIA said. Foray of multinationals into the retailing business has made the industry extremely competitive. Price of products, location and ambience offered by the stores are some of the factors that play a vital role in helping retailers gain competitive advantage in the dynamic environment.
As was the case with most of the major industries, the retail industry, particularly the nonfood retail industry, was also pressurized by crumbling consumer/business confidence and frugal spending patterns during the 2007-2009 recession period, said the report. The market nevertheless recovered in the year 2010 with developing countries spearheading the resurgence in consumer spends. In the upcoming years, retailers will increasingly combine the brick-and-mortar shopping experience with the electronic retailing experience. Against this backdrop, the importance of multi-channel retailing will rise, said GIA, and single-channel retailing will become harder to sustain against competitive pressures.
GIA said it expects that the global nonfood retailing industry will reach $9.7 trillion by 2015.
The report said that for the industry emerging from the aftereffects of recession, cost is expected to play a major role influencing the overall profitability of companies in this space. It forecasts that significant investments will be sunk into enhancing the flexibility of supply-chain management systems, building strong customer relationships and into integrating e-commerce with regular business operations.
Another major trend engulfing the retailing environment is the rising popularity of online retailing. With the rise in Internet usage, fixed and mobile broadband penetration, and innovations in easy online payment systems, online shopping is now a commonly adopted practice by modern time-crunched consumers.
In the present scenario, the Internet is emerging into a major platform for information retrieval be it, products, brands or prices; therefore, leveraging the web to shore up retail sales is evolving into a critical strategy of every retailer, according to GIA.
The retail arena has witnessed the emergence of a new breed of exclusive online retailers called e-tailers, and not to be left behind in the race, traditional retailers have also embraced the Internet in a major way by offering online catalogs and shopping options. Also, consumers are deftly blending the use of magazines and the Internet to plan purchases.
Exposed to technology, younger consumers are informed shoppers who compare prices online and in magazines. Also, online retailers offer unique product varieties, which are often unavailable in traditional brick-and-mortar outlets. Given, the growing popularity of online shopping, online marketing programs such as promotions through email and mobile messaging are gaining in importance.
The Internet as a retailing avenue additionally gathered popularity during the 2007-2009 recession, which turned most consumers cost conscious. Average online spending per buyer witnessed increase in the past few years, a trend that is expected to continue. In next few years, GIA expects video commerce integration into online shopping to increase. Use of interactive videos for product promotion, as well as to provide general information would also increase, providing users with an interesting online experience.
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