The retail sector will in the coming two decades undergo a massive change in the demands from consumers. At the heart of the massive change lie two demographic megatrends. By 2030, the largest consumer base in the world will exist from ‘millenials’, followed by ‘greying baby boomers’ as second largest base. If international retailers want to remain successful in the marketplace, they will need to gear their products and services to these audiences. This can be concluded from ‘U-Channel Retail’ by Arthur D. Little.
In 2030 the millennials generation – broadly defined as the generation born between 1980 and 2000 – will have reached its peak consumption age. These consumers have completely different characteristics than the current largestconsumer base, a mix of several generations. “Millennial are highly technology literate, have high demands in terms of personalization and customization and are socially influenced” according to Arthur D. Little. As aresult, the retailers will need to align their products and services anddelivery method to the millennials. Elements such as convenience, ultra-personalization, authenticity and innovative communication models willbecome far more important.
Greying baby boomers
The baby boom generation will in the coming two decades enter a new phase: wealthy retirement. This will add new requirements to the services of retailers. Retailers will for example need to give more focus to demand from the elderly, such as product accessibility, information and signalling,visibility and product offering. The transition is not new, in Germany and the United Kingdom specialized supermarkets for pensioned and elderly people are already present. In Japan the first shopping mall for elderly people was opened this year. Yet the scale of the transition will mean that large-scale deployment and focus will be very important.
Two strategic business models
Next to the operational challenges which result from the demographic
transition, retailers will also for the first time in history face key
strategic decisions. As the largest two consumer bases will consist of two distinctly different audiences, retailers will need to simultaneously offer very distinctive business models or make a strategic choice for one of the two segments. In the year 2012 retailers will be able to service a large proportion of the most important consumer bases with one strategic focus. “By 2030, the consumer base will be a dual one, so retailers will need to balance between the comfort needs of greying baby boomers and the socially enhanced shopping needs of the millennials” according to the strategic advisory firm.