Each year every Dane on average gets more money to spend. Over the past 15 years we have only experienced financial progress and growth and therefore many shops and centres have experienced golden days in the past years.
Danish consumers have by far had their basic needs covered and have many means available to them, which they can more or less freely choose to use on new clothes, more vacations, a new car, a summer house or a trip to a restaurant. What they shop for and when they go shopping depends on time, lack of time, mood, the time of the year, coincidence and atmosphere.
Now and in the future, stores, pedestrian streets and shopping centres are and will be battling to attract consumers, their attention and their time in order to sell their products. In this article I will assess the challenges that they are facing over the next 10 years.
When consumers go shopping for groceries for the home they – regardless of age and sex – go to the usual shop, which sells products of a good quality at reasonable prices. This is a very tedious affair and many just want to get it over with as quickly as possible. It is much more fun to surf the Internet than to visit the local supermarkets. But it has to be done and even though buying over the Internet is increasing, the main part of grocery shopping still takes place in stores.
Consumers are much more diverse when it comes to buying clothes and other products. Approximately half buy what they think they need and the other half buy something they just saw and felt like buying at that moment. So there is already a big market for sudden impulses and desire to buy, if the store, the products and the surroundings make you want to buy. The trend is presently that the younger a woman is, the more she shops just because she feels like it, and the older a man is, the more he shops out of necessity.
The free young people and the seniors in the next 10 years
Over the next 10 years a large group of the free young consumers will be between 20 and 30 years old. We call them the free young people because development shows that the young generation does not start to think seriously about children, a home and other commitments until they are around 30 years old and we expect this trend to continue over the next 10 years.
In this consumer group the eldest have grown up with mobile phones and PCs as their technology and the ones that are a little younger called “the digital natives” are the first web-generation. They love to shop and be together with others while they do it. They also want to get their hands on the latest new technology and try it. They want more entranceways to the store, both physically and virtually, and text messages are the most used means of communication. Because they have grown up with the Internet, they are always updated on prices and products in the market. They are skilled shoppers with great experience from the teenage years.
The family group consisting of 30 – 44-year-olds becomes significantly smaller due to the small 1980’es year groups. However, this group will also expect that new technology will help them around stores and centres and that it is integrated in the new baby monitor. Just as the younger consumers they will expect big screens, GPS services and unlimited access to the Internet everywhere.
The other big group of consumers is the seniors. They seek quality, personal service, specialty stores and the possibility of enjoying life in wonderful surroundings. Some have Internet access, but the use is limited to i.e. ordering trips and searching for specific information. They still prefer to see and touch a product. Especially when it comes to technological products they have a great need for help in choosing the right product and help in operating i.e. the big screen, when they come home.
Challenges for the shopping centres in respect of consumers
Fremforsk’s study of consumer groups and shopping arenas in 2007 showed the following:
Young people between 16 and 25 years love shopping centres with products, good music and atmosphere. The large shopping centre is their recreation centre, where they hang out with their friends, eat, go to the movies and buy things. Young people request sports, fitness and the like, which would give the shopping centres and shopping streets life around the clock.
The families approximately aged 30 – 44 find the shopping centres practical when the children are with them. There is a large range of products and you can walk around and shop regardless of how the weather is outside. The most important thing is that the children are happy. However, they choose the shopping streets and specialty stores when they are shopping alone, because they find that they offer better products than the shopping centres.
The seniors find the shopping centres boring and tedious. Some of them go there anyway, but call for more exiting and inviting surroundings, an atmosphere that makes you want to be there, to eat in, shop and be with friends and spouses in. They desperately call for qualified and dedicated shop staff, who can provide personal service.
Stores and shopping centres are facing major challenges in attracting different groups of consumers, since their needs and wishes are very different.
Surroundings, atmosphere and infrastructure
Since the future is characterised by the battle for the consumers, it is a great challenge for shopping centres and shopping pedestrian streets to create an exiting and inviting atmosphere. The gray and boring glass and steel or dress rails with sale-signs does not appeal to customers.
There is a need to think creative and find other ways to attract the consumers.
Such initiatives could be:
An integration of the community, i.e. by having a weekly vegetable and delicatessen market around the boring and cold steel case that sits on the bare parking lot.
Having local artists taking turns in working, exhibiting and selling their art in the centre.
Making living and virtual decorations on shop fronts and have creative architects work with creating a new front, new ways of using the walking and sitting areas, the use of light etc. in the centre.
Traffic between pedestrian streets and shopping centres may be a challenge, and here shopping centres and city associations must accommodate consumers. It must be easy to come to and from the shopping destination. A solution could be a bus that collects customers and drives them to the centre. If it is too troublesome to get to the store, many will instead elect to order the products via the Internet.
Function and predictability
The stores in the shopping centres and pedestrian streets are like small private lots that each store has at its disposal. It gives the consumers an impression predictability and lack of variety.
We live in an out of control world and we have gotten this out of control state of mind under our skin, and if we see the same store fronts month after month we will not want to go there anymore. Nothing new happens.
Therefore, changing store fronts, switching stores and the impression that the stores are working on making it better and more fun to be a consumer is a must for attracting customers in the future.
The major challenge is to create an atmosphere of variability and mobility. This can be achieved in many ways, i.e. by creating certain themes in all the stores in the centre or inside the centre itself. It could be a garden theme in April and a school theme in August.
It could also be the creation of sections for the individual consumer groups, i.e. a youth section with parties and colour, a family section with stores and activities focusing on small children and their needs. Finally, a nice wellness section for the seniors, where there is good food, quiet surroundings and older employees, who can give them the personal service both before, during and after the purchase of the products.
The future stores
Consumers often find the same products, goods and stores all over Denmark, and therefore it is essential to work on creating new stores, which accommodate several needs at once.
The fusion store is a concept where several stores and products are contained in one store. We already have some examples in Denmark like “Gentlemen’s Place” (barber shop with beer and cigars), “The Loundromat Café” (coffee and clothes washing) and “Fnac” in France, which is both a book store, café and a web workshop for book circles.
There are many untested fusion stores and much more work can be done to make it more fun to be a consumer, i.e. an online café/newsagent with a special selection of magazines for men and women, café and web-café at once.
As a sales channel the Internet is now and in the future an unconditional success. We know that especially men choose the Internet. They buy mobile phones, refrigerators and the holiday trip on the Internet, because it is often cheaper and also easy. Once you have made your payment the goods are quickly delivered right to your doorstep.
The Internet, the games, i.e. Warcraft and Counterstrike, Second Life and Poker are all activities where we are active ourselves in an exiting and challenging way. Therefore, many – especially young people – opt out TV and the boring shopping centres, because it is much more fun to move around in the virtual world with colour and action.
Despite the quickly growing Internet sale there are surprisingly few in the retail business that use the Internet actively in the sales process and for attracting customers. Since the young people love virtual reality it would be a good idea to create a fun virtual store as a counterpart to the physical store. That would attract young customers. Give them the opportunity to see the new products, try on the clothes virtually and get help in relation to which outfit fits their body best. That is an area, which the retail business should invest in.
Which centres and stores will win the battle for the customers’ attention and money?
The stores and shopping centres that understand that they have to focus on many areas in order to attract many different consumers and make them want to choose their shop over other shopping destinations.
Firstly, it is important to constantly work with understanding consumers, the different groups of consumers and their needs and wishes. This knowledge must be actively converted into products and services in the store or shopping centre.
Each store and centre must consider strategically whether they want to focus on one or more consumer groups in the future, since this demands very different things from products and services.
Improvement of the atmosphere, the surroundings, the infrastructure and the incorporation of mobility and variability by using art on the store fronts, switching stores, shopping themes, etc. requires great determination and close cooperation between the stores in the shopping centre or the pedestrian street.
There is no doubt that the destinations that understand cooperation to create an attractive environment, a changeable environment, will win over those who do not understand to cooperate and who choose to focus on their own store.
Finally, the shopping centres and stores that understand that they need to actively create many entranceways to the store and the products, i.e. via the Internet and in the store, and the stores who focus to understand the active interaction between the different entranceways to the store, will win.
The competitors are not only the other stores and centres, but also the Internet, trips abroad, music and culture, and therefore the retail business should study how and why they attract more and more customers.
The future winners in the retail trade will be centres and stores that focus on the variety of consumer wishes, and who understand to catch their interest and time in many different ways.
This article is freely based on Fremforsk’s studies and work with young people, consumer groups, consumer patterns and consumer arenas.
Published here, 2008
Head of Research