CHICAGO -- In considering the outlook for retailing over the next eight years, the consultants and researchers at TNS Retail Forward found one overriding trend that will take a toll on retailers: a growing generation gap between aging baby boomers and what the researchers call the Digital Generation, that is, consumers 25 years old and younger.
The bright spot, as reported during TNS Retail Forward's Retailing 2015: New Frontiers conference in Chicago last week, is that the convenience-store industry is one of the six channels of retail that will weather [image-nocss] this period well with above-average sales growth.
We forecast over the next five years a 5.2% increase in average annual retail sales, said Al Meyers, senior vice president of TNS Retail Forward; however, Meyers predicted e-commerce (with 27.7% growth), supercenters (10.2%), consumer electronics and appliance stores (6.5%), warehouse clubs (6.4%), drug stores (5.4%) and c-stores (5.5%) will come in above average during that same time period.
Most of the challenges retailers will face in coming years will relate to a need for retailers to change the way they think about serving the consumer, according to Lois Huff, another senior vice president with the Columbus, Ohio-based research firm.
Much of retailing has grown up with [baby boomers], said Huff. Now they're entering a new phase, and it isn't going to be nearly as attractive to retailers.
She noted that as boomers hit 60-plus years of age, they'll likely move into smaller households, turn their buying power to health and general welfare issues, and be more open to do it for me services rather than buying products for the home and doing the installation work themselves.
We do need to take new retail approaches. and we have to do it in a very aspirational way, Huff said, a way that recognizes that people make their purchases based on their aspirations.
Adding to the coming trouble spot is an issue of basic dollars and cents. According to Huff, baby boomers account for $7.1 trillion in buying power, a whopping seven times the buying power of Generations X and Y combined.
The big-spending boomers are going to go away, she said, and that's going to be a shock to our system. We're going to need to replace it.
That challenge presents itself in the way the younger generations are learning to shop. Because they've grown up with computers and the Internet, they're not going to accept it's not in stock or we don't carry that product as an answer. Instead, retailers will need to develop new ways to reach these consumers, wherever they are. They're going to have to give the consumers [the tools] and then stand back and let the consumers do what they want with them, Huff said, which is hard for many retailers and manufacturers.
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