Societal structure is evolving, transforming shopping trips along the way. Planning for the future, brands and retailers must be prepared to cater for an older, poorer, more divided society, shopping for smaller baskets and more frequently.
In anticipation of our annual future of retail report, Global STEIP, in September, we are previewing some of the dramatic changes retailers and suppliers can expect as they prepare for future disruption.
Older shoppers, smaller households and more convenient formats
Societies across the globe, especially in developed markets, are undergoing dramatic demographic changes that affect the way people live and shop. One of the most evident trends is ageing.
Globally, the old-age dependency ratio (measuring the ratio of seniors to the working population) will rise from 11% in 2000 to 18% by 2030, with drastic increases in North America and Europe, where the rate will roughly double to 33.7% and 37.4%, respectively.
The speed and magnitude of that change is already forcing governments to expand income redistribution, decreasing spending power among burdened middle-class taxpayers. This will accelerate income polarisation and drive demand for affordable quality products and no-frills replenishment missions, fulfilled via a combination of discounters, neighbourhood full-range grocers and ecommerce.
Given the inherent visibility and shelf space challenges of these formats, brands will have to compete for listings by driving consumer engagement, providing appropriate ranges, pack sizes and price points, tailored to the various targeted shopper segments, while demonstrating commercial benefits to retailers.
As an ageing society looks to battle mobility restrictions, urbanisation rates are also rising. Over the next five years, half a billion new urban dwellers will emerge around the world, increasing demand for proximity, convenience and immediacy. Influenced by such modern lifestyles, average household sizes are declining globally, with 15% of the world's 2 billion households (around 300 million) already consisting of a single person. Combined, this drives demand for easy, convenient or pre-portioned food, as well as small pack size in H&B and Household categories.
Shopping trips become more frequent, while basket size decreases
With frequent small-basket trips on the rise at the expense of bulk and weekly stock-up missions, hypermarkets will see their global share of food retail fall from 20.0% to 16.6% in the next five years. This in turn will put more pressure on physical shelf space, turning brand visibility into an increasingly scarce commodity.
|The most successful suppliers will adapt product development, retailer partnerships, and channel strategies to evolving consumer preferences and shopping trip changes. To bulletproof their future, suppliers must:|
- Prepare for a future dominated by small-box and ecommerce, with diverging shopper missions in a socially divided market, and a growing prevalence of smaller, more frequent shopping trips.
- Diversify brand portfolios to meet the unique needs of different shopper groups and drive relevance for retailers who are making increasingly tough choices regarding shelf space allocation.
- Ensure visibility and work with retailers to create engaging in-store touchpoints, while small formats expand, putting pressure on big-box as important facilitator of product variety.
- Manage brand visibility online as ecommerce spreads, driven by busy lifestyles and congestion in urban areas.
- Cater to new shopping missions by adapting products and packaging for on-the-go or convenient consumption.
- Position themselves as solution providers for ageing consumers via health-focused products and services, as well as social elements.
If you’re making your annual plans, we can help. Our Retail Market Monitor tool and global insights help you to align to retailer priorities, follow the growth, and adapt to coming disruption. For support, contact firstname.lastname@example.org