ADL: Retail branche awaits two demographic mega trends

11 March 2013

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.

ADL - Retail Megatrends

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.

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Lack of high street openings sees UK retail in precarious state

11 March 2019

Changes in consumer behaviour, particularly in favour of online shopping, are starting to take their toll on shop-fronts in the UK, while stagnant wages are hitting peoples’ willingness to go out for food and drink. As a result, the rate of closures is more than four times that for the same period in 2017, although largely reflecting of a lack of new openings.

The retail market has fallen under a cloud of uncertainty in the UK; consumer confidence has dipped, while wages have continued to malinger in negative territory. Retailers are also under pressure from disruptive technology, as consumer sentiment shifts to more online shopping and at-home leisure. While retailers have been able to weather the storm for the past years, transformations, low consumer spending and technology have begun to take their toll.

New analysis from PwC explores the current market conditions in the UK for retail shops, focused on net openings and closings. The market changes in the UK have seen the net closures to date hit 1,123 in H1 2018 across the UK’s top 500 high-streets. The rate of closures was considerably above openings for the first half of 2018, at 1,569 openings and 2,692 closures. Compared to H1 2017, more than four times as many shops closed than opened.

Openings and closures for retail industry

The study considered the most prominent areas to see a reduction in openings and net closures across the retail landscape. Overall, fashion stores were the hardest hit in absolute terms, with a total of 104 closures for H1 2018, followed by public houses and inns, which saw 99 closures in the same period. Electrical goods stores saw a net -44 decline, with a total of 8 openings for the period. Meanwhile charity shops were in a state of relative flux, with 80 openings to 117 closures. The firm notes that service sector shops, including estate agent, banks, recruitment agencies and travel agents, among others, too have begun the process of moving online.

Not all areas of retail saw closures, with coffee and ice cream shops seeing a small net increase in openings over all. Book stores – predictions of their total obliteration appear to have waned – saw a net 18 openings, while supermarkets drew the highest overall growth relative to closures, at 18 opened and 6 closed.

Regional figures for the UK

Not all areas have seen the same level of closures, with the Greater London area and the South East the hardest hit by the current wave of closures, at -268 and -197 net change, respectively, compared to -23 and -25 closures for the same period in 2017. The middle of England too saw considerable closures, with the West Midlands clocking a net -89, and Yorkshire and the Humber down -117 stores overall.

Commenting on the figures, Lisa Hooker, consumer markets leader at PwC, said, “Openings simply aren’t replacing closures at a fast-enough rate. Specifically, the openings across ‘experiential’ chains, such as ice cream parlours, beauty salons and vape shops, haven’t been enough to offset closures in the more traditional categories. Looking ahead, the turmoil facing the sector is unlikely to abate. Store closures already announced in the second half of the year due to administrations and CVAs already will further intensify the situation.”

Related: Artificial Intelligence offers $340 billion opportunity to retail sector.