Keynote speaker Rick Gallagher, National Retail Federation (NRF) VP, gave a sobering yet, in the end, hopeful presentation during GERS' Retail World 2002 event, held here last month. He listed the six "mega-trends" in the current retail environment and elaborated on how they are shaping the future for small retailers.
According to Gallagher, the six mega-trends are as follows:
- Uncertainty. The Sept. 11 terror attacks redefined what uncertainty means to most Americans. Gallagher illustrated the impact of Sept. 11 by citing retail stats. Eighty stores and $700 million worth of inventory and fixtures were lost in that one day alone in New York. And the continued element of uncertainty has overshadowed the stock market ever since. "Small scale, everyday terror would result in a fall in consumer confidence that would create a 1 percent fall in GDP, or $105 billion annually," Gallagher said, quoting the International Monetary Fund.
- Changing Demographics. One in 10 U.S. consumers is foreign-born, he said, and "They are bringing a whole new idea of?what the shopping experience means." Gallagher suggested that the only way for retailers to understand all types of customers is to hire a diverse staff.
- Consolidation. "The big get bigger," he said, knowingly stating the obvious. In terms of discount and value retail power players, such as Wal-Mart (at No. 1), eight companies account for more than half of all sales. As for home centers, only two—you guessed it, The Home Depot and Lowe's—account for more than half of all sales.
- Globalization. Wal-Mart not only triumphs in terms of U.S. sales, but also worldwide, claiming 2.7 percent of global retail sales. Home Depot (No. 4), Kmart (No. 7), Sears (No. 9) and Target (No. 10) also place in the Top 10 worldwide retailers.
- Low-Price Mania. "One of the things we've seen, even before the recession of last year, is that no one wants to pay full price for anything," Gallagher said. Retailers who focus on high-quality service and upper-end merchandise are finding it hard to compete, he observed.
- Technology. Constantly advancing, the last trend on the list "is in many ways a response to the other things on the list," Gallagher said. "Technology holds the opportunity to anticipate and react to the mega-trends facing retail," he said.