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Long-Term Retail Trends: Analyzing Four Major Concerns

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Identifying long-term retail trends gets a bit easier with the four components we identify in this lesson. You'll learn about the impact that customer needs and behaviors, demographics, and disruptors/accelerators have.

Identifying Trends

How can we explain the shift from brick-and-mortar video rental stores to mail-order rentals to kiosks to streaming? In just two decades, the entire look of the movie rental industry has changed. Where once you had to go to Blockbuster, hope to find an available movie and return it before late-fee charges kicked in, you can now click a few buttons on a smart-equipped TV and stream any movie of your choosing in a matter of moments.

Identifying these trends is important for the strategic planning of retailers. Without it, retailers will go the way of Blockbuster, once known for thousands of retail locations to bankruptcy in just a few years' time.

Looking at long-term trends is even more important for the sustainability of a retailer both today and in the future. A company that plans to be around in 10, 15, or 20 years must look at the four major components for identifying long-term trends, both individually and together: customer needs, demographics, customer behavior changes, and disruptors and accelerators.

Analyzing Concerns

While customer needs may change independent of any other factors, viewing them alongside demographic changes or disruptors entering the market can give retailers a more complete view to predict potential shifts in retail trends. For example, changing demographics may create behavioral changes brought about by an outside influence (known as a disruptor or accelerator). Understanding each of these components is critical for retail longevity.

Let's take a look at each one.

Customer Needs

Many long-term trends in retail begin with a change in customer needs. That means that customers are adapting in terms of what they expect, not only in their purchasing decisions, but in customer service and experience as well.

For example, while customers may have once needed a portable CD player to listen to favorite songs while working out, today most customers rely on much smaller mp3 music players or even their smartphones. Companies that are still trying to sell portable CD players have not adapted to the needs of a changing consumer base.

Retailers must continually adjust to changing consumer needs by stocking the right items at the right price at the right time. They need to also keep an ear to the ground to stay aware of customers' changing expectations. Then, it becomes easier to adapt as necessary to keep consumers happy.

Demographics

When we're talking about demographics, we're talking about identifying characteristics that can be used to segment and compartmentalize consumers. That includes things like age, race, ethnicity, martial status, income earnings, and more. What that means for retailers is that they can readily distinguish their Baby Boomer customers from their Millennial customers and determine which audience they appeal to in order to make strategic decisions that best serve their audience.

Common demographic trends that retailers are dealing with today include an aging population, an increase in minority groups, and a shift in what a ''traditional'' household looks like - for example, more households run by single men or women with children under their roof.

That last category has inspired many retailers to think of solutions for busy households that don't have time to shop for groceries or navigate busy shopping malls. How, exactly? Many grocery stores now offer a pick-up option or delivery within a certain radius after a customer picks their groceries online. Many large retailers also offer 15-minute parking near the front of the store for consumers in a hurry to pick up an online order.

Customer Behaviors

Both customer needs and demographics play a role in the third trend, which is customer behavior changes. Aging customers may no longer be able to get to the grocery store with ease. Younger consumers may want to pick up a purchase quickly rather than navigate store aisles. Today's consumers prefer experiences to buying stuff, so creating an atmosphere that accommodates those behaviors would be a smart move for a retailer. Saks Fifth Avenue in New York City has adjusted its style for changing customer behaviors by installing things like interactive kiosks and phone charging stations throughout its space.

Customer behavior changes can be attributed to a number of factors:

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