Millennials will drive sales, often online, as Boomers spend less and retailers shape new strategies for the next decade.
By 2020, marketplace shifts underway now will be firmly in place. predict IBM and the New York University Stern School of Business in a white paper, Retail 2020: Reinventing Retailing-Once Again.
Four factors that drive the transformation—consumer behavior, technology innovations, demographic changes and economic conditions—could lead to e-commerce sales at $500 billion in the U.S. by 2020, up from $200 billion today, says the report. It also says Amazon alone could reach $100 billion in sales by 2015—and this online sales surge is “forcing traditional retailers to rethink their value propositions and embrace multichannel retailing as the only way to survive.”
The report urges retailers to reposition because “today’s consumer is calling many of the shots. The Internet has provided transparency, information and options that enable consumers to shift demand rapidly to retailers and brands they prefer.”
Moreover, Millennials will be in their late 30s by the start of next decade—in a stark lifestage comparison with Boomers, who’ll be revving down their retail spend due to older age (60s and 70s), financial hurt from the recession, and their focus on healthcare and retirement plans.
Therefore, retail success or failure will hinge on how well stores connect with the approximate 80 million Millennials who “value quality over quantity, have a real passion for social causes, and have grown up using the Internet for everything,” say IBM and NYU.
The report further suggests that retailers quickly prepare to:
The Lempert Report sees new aggressive initiatives by Amazon, Google and others that accelerate the need for retailers to reshape their strategies. Merchants will also have to meet Millennials where they’ll be in seven short years—caring not only for their developing families, but also for many of their aging Boomer parents.