How will U.S. retail evolve by 2020?

The Lempert Report
February 05, 2013

A diverse marketplace will be more consumer-centric and hyper-competitive.

How will U.S. retail evolve by 2020? A diverse marketplace will be more consumer-centric and hyper-competitive. Stores and suppliers that lead will be the ones that leverage more “complex operational, financial and brand models,” and master new technologies, global approaches, and the use of information. So concludes the Retailing 2020: Winning in a Polarized World report issued by Kantar Retail and PwC. The study projects dollar-sales compound annual growth rates in many channels will accelerate once the current decade passes its midpoint, and creates distance from the recession that continues to roil consumers. For 11 distinct retail channels on average, this will be 4.3% until 2015 and 4.7% the rest of the decade. However, the consultancies expect supermarkets to post growth rates below these retail averages—a 3.8% annual advance until 2015 and 4.2% thereafter until 2020. Value discounters will advance 7.9% annually until 2015 and 7.4% thereafter until 2020. Wholesale clubs will gain 6.3% annually until 2015 and 5.9% thereafter until 2020 The growth for supermarkets will be more robust than supercenters and mass: Supercenters will move ahead each year by 3.4% on average until 2015 and 3.1% thereafter until 2020. Mass will decline by a negative 1.4% annual rate until 2015 and a negative 0.5% rate thereafter until 2020. No physical-store channel comes close to the growth heights projected for the non-store retail sector. Kantar and PwC project a 14.7% growth for online merchants until 2015 and 11.7% thereafter until 2020. The study describes a “new efficiency” that will characterize leading retailers by 2020. They’ll have four key skills: * Realize and quantify opportunity vs. simply seeing hard costs associated with change * Understand lowest potential cost, and how a changed landscape could further lower costs * Understand total value chain productivity * Stop doing unproductive work and reimagine new ways to execute