Frost & Sullivan predicts that in twelve years’ time retailing will have been transformed by globalisation and an average personal connectivity that will be much higher that it is today.
Market analysts at Frost & Sullivan predict that by 2025 global online sales will represent 19% of all consumer purchases, worth a total of $4.3 billion. According to their study Bricks and Clicks: Next Generation of Retailing, this compares with online sales that accounted for only 5% of the world’s total in 2011. Frost & Sullivan is of course not the only consultancy to have noticed the profound changes which have already impacted and are set to transform retailing in the years to come, but the two analysts who authored the report, Archana Armanath and Archana Vidyasekar, point to three ‘mega trends’ that will have to be taken into account in any forecasts. They argue that social trends, growing urbanisation, and the increasing overall connectivity among the population are the major factors that will drive the retail industry to reshape its structure.
Urbanisation and connectivity
The Bricks and Clicks report points to the growing connectivity and convergence among the world’s population, enabled by the number of mobile devices in use, coupled with the planet’s galloping urbanisation, as two key trends. Frost & Sullivan estimates that by 2025 there will be over 50 major metropolises worldwide, of which 35 will be ‘megacities’, and each inhabitant will own an average of five connected devices. Lack of space within cities will force stores to reduce in size by 15 to 20%, and buying methods will be transformed with the use of sensors and through greater interplay between bricks-and-mortar stores and their digital incarnations. The analysts also looked at the use of emerging technologies, including geolocation services based on Foursquare, purchasing using Augmented Reality at Wal-Mart and fashion company Diesel’s use of holographic imaging.
Among the social trends that Frost & Sullivan thinks are likely to change the face of retailing, Generation Y is sure to have a big say. The analysts estimate that the world will by 2025 play host to around 2.4 billion digital natives, who are already used to the ways and habits of online commerce. The future will also be about targeting customers better, with the emergence of a middle class in India and China numbering some 1.5 million people. The age and gender of the customer will be further important factors, given that by 2025 one customer in ten will be 65 or over, and one out of three people in active employment will be a woman.