Eye On The Industry. What’s In Store For Retailers In The Coming Year? 7 Predictions for ’07. Second City Style Fashion Blog

December 5, 2006 • Fashion

By Susan Reda, Executive Editor of STORES

Mark Twain once said, “Prophesy is a good line of business, but it is full of risks.” STORES humbly offers seven predictions for 2007.

1. Bringggg. The Future’s Calling

Cell phones will be the “it” technology of 2007. Retailers will tap their power to text-message shoppers, conduct contests and process payments, and new applications are likely to cement the cell phone’s status as the most significant electronic consumer device in history.

More than 200 million Americans and some 2.5 billion global consumers own cell phones, and Gartner research suggests that one billion phones will be sold annually by 2009. That’s a lot of technology in the hands of the consumer.

What’s next? A company called GPShopper is harnessing the power of the cell phone to drive on-the-go shoppers into local stores. Consumers enter the name of the product they want, along with their ZIP codes. The mobile device then displays a photo and description of the item, local availability, store locations, phone numbers and maps. More than 30 million products are already available.

Keep an eye on Google, too: It’s introducing a version of its Gmail service that can run on any phone with Java software. That translates into computer-like response times for viewing e-mail on a cell phone.

2. Cheap Is The New Chic

Fast-fashion will be all the rage in apparel circles, and woe to those retailers stuck in yesterday’s tired routine of ordering fashion items six months before they’re scheduled to hit the shelves.

Not sure what fast-fashion is? For some it’s about delivering high-end collections at affordable prices (think Target’s Go International series or H&M’s exclusive collections by Karl Lagerfeld, Stella McCartney and Viktor & Rolf). For others, it is defined by the retailer’s ability to deliver fresh, of-the-moment design at low prices. Whether a trend turns up on the runway, on the streets or on the Internet, the masters of fast fashion — like Topshop in the U.K. and Spain’s Zara — produce items in less than six weeks.

MNG by Mango, another Spanish chain, recently landed in this country, and Topshop plans to launch a New York flagship as early as next spring.

3. Demographics Assume Greater Power

Immigration, aging Boomers and a host of other demographic shifts will be shaping and reshaping the retail landscape for years to come. Retailers who set their sights on micro-merchandising and micro-marketing will triumph; those who run with the herd may find themselves getting trampled.

Case in point: Hispanics. The nation’s Hispanic population grew by almost 1.4 million between July 2004 and July 2005, with much of the growth coming from births rather than immigration. Then there are the nation’s 76 million Baby Boomers, the oldest of whom turned 60 this year. They continue to flex their enormous spending power, but there are signs that they’re spending differently than they have in the past, with greater emphasis on health, wellness and experiences and a reduced focus on accumulating “things.”

Don’t ignore Gen Y — more recently dubbed Digital Millennials. This demographic group is expected to top 100 million, due in part to immigration patterns, and its impact will change the face of retail — challenging companies to find new ways to connect, speeding product to the shelves and customizing their interactions with it. Retailers that become part of this group’s social network will be the ones to watch in ’07 and beyond.

4. Green Is The New Black

Americans’ appetite for organics is growing beyond food and into fashion. A new generation of designers and branded manufacturers are creating good-looking eco-fashion products. 

American Apparel built its business with a sweatshop-free message and a socially-responsible business plan, then launched a line of organic T-shirts. Recently, Fair Indigo debuted its “style with a conscience” message, assuring buyers that workers were paid fair wages for the products being sold.

Even time-honored retail companies are catching the green wave. Levi’s began selling $150 organic jeans last month; a $60 version is planned for 2007. Wal-Mart added organic T-shirts to the mix of back-to-school products offered a few months back.

5. Economy Hits A Speed Bump

Higher food prices, a slowing housing market, fluctuating gas prices and interest rates that are slowly creeping upward will make for a challenging business environment in 2007. NRF is predicting that industry retail sales will rise 4.5 percent in 2007, down from the 6.5 percent anticipated when auditors finally close the books on 2006.

What’s at the root of the decline? A combination of a subdued employment situation, a housing boom that seems to have gone bust and an economy dancing precipitously on the edge of inflation. A substantial downshift in net additions to the employment rolls occurred in the second half of ’06, and the unemployment rate is expected to move higher in 2007. Headlines announcing factory closings also are beginning to temper shoppers’ outlook.

Consumers’ high debt load and negative savings rate are likely to prompt more belt tightening. That’s especially true now that the nation’s once-booming housing market has slowed substantially. Eighteen months ago, Americans were refinancing at lower interest rates and pulling cash out of their homes to travel, buy expensive cars or tackle a major home improvement. The shift downward is slowly but surely affecting the psychology of the consumer.

6. New Rx For Supermarkets

The traditional supermarket business has grown stale, and if executives
don’t find ways to freshen this segment quickly, 2007 will be another
year of paltry profits.

Supermarkets are suffering from an identity crisis. With fresh food
specialists like Whole Foods, Wild Oats and a plethora of organic
newbies stealing a portion of shoppers, discount operators like
Wal-Mart, Costco and Target peeling away a portion of the shopper base
and specialists like Stew Leonard’s, Trader Joe’s and Wegman’s keeping
a firm hold on their loyal shoppers, traditional supermarkets are
struggling to hold onto a shrinking share of market.

7. Smart Money Is On Retail Technology

Retail success is about finding the sweet spot. Doing so requires
business intelligence — predictive analytics that allow you to distill
key customer information from a sea of data, capture missed
opportunities and smooth out sales anomalies. The challenge for
retailers will be choosing the right BI application for their unique
business needs, and then using it efficiently to drive business
performance, hone customer centricity and lift sales beyond the
single-digit realm. For those who choose wisely, 2007 could be a very
good year.

The same may be said for those who deploy technology that improves the
customer experience — whether that’s a speedier checkout, a
web-enabled kiosk or a cart-mounted shopping device that puts the
customer in charge. Contactless payment technologies are especially promising.

See the Top Ten Summer 2016 Trends for Women Over 40

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