Thought the last decade brought about some dramatic changes in the way consumers shopped and retailers went to market?
Well, hold on to your hats. The last 10 years will look like a cakewalk compared with what the next decade has in store, according to industry experts. The bottom line is that dramatic change now is an important part of retailing, and there are no signs that it is slowing down. Conversely, change just is going to speed up.
As we enter a new year and a new decade, DSN asked a range of experts, including retailers, analysts, officials at CPG companies, wholesalers and industry associations, to prognosticate about the year ahead, as well as about developments they expect to unfurl over the course of the next decade. The consensus is that the environment will be as challenging as ever, but smart and innovative companies will find ways to prevail.
On the pharmacy side, the industry sees a continuing evolution toward pharmacists offering a broader range of healthcare services and working more closely with other professionals in the healthcare system. This will be aided by advances in technology that facilitate the sharing of patient information to improve outcomes.
Technology also will help consumers play an increasingly active role in their own care, as they monitor their own health with wearable devices and leverage information available online.
“Because of all the information that is out there, consumers are going to make decisions in an informed way,” said Jocelyn Konrad, chief pharmacy officer at Camp Hill, Pa.-based Rite Aid. “When they recognize that they may have to pay more for some of the unfortunate things that come with chronic illness, whether that’s surgery or additional medications, I think people will start to make better decisions, and we’ll be right there partnering with them to provide some of the solutions to help them stay healthier longer.”
Technology also will continue to impact other areas of the store as consumers continue to gravitate toward online shopping, and retailers seek to create better omnichannel experiences that keep consumers engaged.
Consumer interest in health and wellness only will increase in importance throughout the store as shoppers seek out functional foods and beverages and other products that address both their physical and emotional well-being.
Retailers and their supplier partners that address these consumer needs effectively will be well-positioned for the year ahead and beyond.
Chuck Cerankosky, analyst, Northcoast Research
Chuck Cerankosky, an analyst who follows several publicly traded food and drug retailers at Cleveland-based Northcoast Research, said ongoing economic growth will play a key role in the industry’s performance in the year ahead.
While the strong economy and low unemployment levels have helped drive consumer spending and have encouraged shoppers to trade up to more expensive purchases, Cerankosky said that these consumers might also be more likely to dine out, shifting their spending from retail groceries to restaurants.
“What’s interesting when you are talking about these staple retailers, such as supermarkets and drug stores, is that if consumers are making more money, I don’t know if they buy more bananas and more bandages,” he said. “You are more likely to gravitate toward dining out and big ticket discretionary merchandise, which I think has been a big challenge for some retailers.”
Such retailers as Costco have thrived amid the economic expansion, he said, because of their mix of higher ticket discretionary merchandise, offered in a treasure hunt format that encourages impulse buys among those that can afford them.
Traditional food and drug retailers, such as Kroger, meanwhile, “have been working awfully hard to get their comp-store sales to 3%, or even to 2.5%,” he said.
Looking at the decade ahead, Cerankosky said an eventual softening of the economy could lead to reduced consumer demand for home delivery — an added expense for consumers that also is costly to retailers. “In an economy where people start to part with certain luxuries, delivery could be one of them,” he said.
One potential outcome could be bifurcated pricing, he said, in which retailers, rather than calling attention to the fees that they charge for delivery, offer a discount to consumers for picking up products themselves.
In the near term, however, Cerankosky said he expects ongoing expansion of home delivery and buy online, pickup in-store services. “That has a lot of attraction for many, many people,” he said.