#Keep it up full#

Three customer segments that will make disproportionate contributions to spending growth, for example, must fit squarely into retailers’ customer-driven strategies. Within a tepid overall market, however, there will be several pockets of strong growth. We believe that these projections are reasonable and that this slower growth rate is likely to extend well beyond the five-year time horizon, becoming the “new normal” (Exhibit 2). McKinsey analysis based on data from Euromonitor, Forrester Research, Kantar, and Moody’s. Indeed, most industry forecasts suggest that US retail growth over the next five years will average 3 to 4 percent annually, well below the 5 to 7 percent yearly growth seen in the decade prior to the recession. Additionally, rising social costs related to health care, taxes, higher education, and other areas will continue to stress disposable income. The rise of boomers, Hispanics, and millennialsĮconomic indicators do not paint a rosy picture for retailers: budget deficits are mounting, unemployment remains high, and the average consumer’s balance sheet-while improving-remains shaky, for it has taken more than five years to recover the $16 trillion in net worth US consumers lost from peak to trough in the recent recession. Each trend is powerful on its own, and collectively they will redefine what it takes to be a successful retailer. The trends that will matter mostĭrawing on our research and experience working with companies across the North American retail sector, we believe that five trends will have a significant impact on the industry: demographic changes, multichannel and mobile commerce, personalized marketing, the distribution revolution, and emerging retail business models. In this article, we discuss the major trends reshaping the retail landscape and the actions we believe retailers must take if they are to ride the wave instead of being swept away. ) That said, incumbent retailers can’t expect to stay successful by going about business as usual. Based on Forrester Research data and McKinsey analysis. (For instance, despite the e-commerce boom, brick-and-mortar stores should still account for approximately 85 percent of US retail sales in 2025.

#Keep it up full#

While it is true that powerful forces are at work in retail today, we believe their full impact won’t be felt for years. Please email us at: history also offers incumbent retailers some hope: industry shifts have actually tended to unfold slowly-over decades, in most cases-providing time to react. If you would like information about this content we will be happy to work with you. We strive to provide individuals with disabilities equal access to our website. Indeed, six of the ten largest US retailers in 1990 have since fallen from their positions as new winners, such as, Costco, and Walgreens, emerged in their place (Exhibit 1). Each of these shifts unfolded faster than the one that preceded it, and each elevated new companies over incumbents. Within the past century, local corner stores gave way to department stores and supermarkets, then to suburban shopping malls, then to discount chains and big-box retailers. There is historical precedent for this kind of upheaval, which recasts the industry’s winners and losers. Our view is less dramatic, but we do believe that big changes are inevitable and that retailers must act now to win in the long term. Some predict that retail will change more in the next five years than it has over the past century and that the extinction of brick-and-mortar stores isn’t far off. These shifts have led a number of industry observers to forecast the end of retail as we know it. The way that consumers make purchasing decisions has dramatically altered: they stand in stores, using their smartphones to compare prices and product reviews family and friends instantly weigh in on shopping decisions via social media and when they’re ready to buy, an ever-growing list of online retailers deliver products directly to them, sometimes on the same day. The North American retail landscape looks quite different today than it did even ten years ago.