SCORE

Today, it's estimated that at least 40% of consumer brands sell directly to the consumers in some manner. If retailers think business is tough now just wait until the full impact of new technology coming down the Pike reaches them. Imagine how different the market would look if Nike had sensors embedded in a new pair of shoes which record directly to Nike and to the owner when they have worn out. Nike, for example has made it abundantly clear that it intends to grow its direct-to-consumer business by at least 250%.

Who would have thought we could order Oreo cookies by just saying “Oreo” to Alexa from your home? And what of wholesale distribution, there was a time when retailers needed many sources of wholesalers to fill their shelves. Today, it is not only possible for brands to serve individual customers directly, eliminating the wholesaler and it's often preferred. As a product moves through the distribution chain, markups take place adding increased cost to the customer. Manufacturers are beginning to ask, “what for?” Could it be the age of the wholesale market ending?

What of the millennials impact to the future of retail? Is it the forerunners of its downfall? They’ve graduated from institutions of higher learning but with huge debt, approximately $30,000 or more per student. Home ownership in America and in many European countries is out of the question for them. Millennial’s incomes are lagging behind the national average for example, those under 30 are now less well off than their retired parent. What then of retail shopping experiences? I'm sure you've heard that millennials have no need for it or money plus they show little interest in physical shopping, they favor ordering everything from their smartphone…Don't you believe it, and research doesn’t support it.

Research within specific categories of merchandise suggests that 91% of millennials prefer to shop in physical stores versus online alternatives, 68% prefer physical electronic stores, 84% prefer shopping in department stores and 83% prefers shopping in discount and mass retailers. Yes, we have become increasingly chained to technology but the need to touch and feel will continue to be important. We have free music all about us and yet we will spend three days going to a concert sitting on the grass…why? We go not only to hear the music but to feel it, in a way become one with it. Make no mistake, millennials are big fans of physical experiences. Digital is what we have become but physical and instinctive is what we are, it's what we crave. Millennials need to detach from the Internet, escaping to reality if only for a while. This is powerful and will continue to grow.

About the Author(s)

Herb Carlson

Herb Carlson, a volunteer business counselor with SCORE’s Tip of the Mitt chapter, has a background as a business owner as well as in engineering, and is a former mayor of Petoskey

Former Mayor of Petsokey and SCORE Mentor
What is the future of retail?