The year 2015 was exciting for retailers despite low market sentiments in the two major global economies – the US and the EU – with new consumer segment emerging as the next big shoppers. Focus of many retailers also shifted to tapping potential unconventional emerging markets that are seeing growing consumerism and aspirational expenditures. Be it the millennial who are more important than ever for retail or the Muslim consumers whose growth prospect is enormous, or the LGBT consumers who are becoming hard to ignore, this year saw many international brands reformulating their strategies to target these specific segments. Not just consumers, unconventional emerging markets such as Indonesia, Mexico, Colombia, etc. also saw many leading international retailers to take up notice of them, while markets such as Tokyo and UAE were further boosted by the tourism influx.
Fresh consumers changing the face of retail
Muslims: According to industry experts, Muslim consumers are predicted to account for 30 per cent of the world’s population by 2025, a clear indication that this consumer market can no longer be ignored by international retailers, though the approach has to be very cautious. Muslims, a global population of 1.8 billion and for whom faith shapes their consumption choices, primarily hold an estimated market share of US $ 2.1 trillion. A few mainstream brands have started adjusting their offers to reflect the needs of the Muslim community, but with an audience worth trillions of pounds, it seems well worth that companies search for the right ways in marketing to these consumers. To do so, American multinational retailer, Walmart has set up a supercentre in Dearborn in Michigan, which is primarily an area with one of the largest Muslim and Arab population in the country, while UK’s largest retailer, Tesco has more than 6,000 stores out of which 315 carry the Ramadan Promotion campaign, which is clearly working, as Tesco saw an estimated sales increase of £ 30 million.
Millennial: A recent report by Accenture plc indicates that the spending of the US millennial population, currently in their 20s and 30s will be more than double to US $ 1.2 trillion by 2020 and account for one-third of all US purchases. These free-spending consumers are changing the retail scenario and retailers are going all out to target millennials and convert them to brand loyalists at a young age so that they are able to maintain these consumers for life. Highly educated and globally connected, the millennials know what they want and can easily navigate the barrage of information online, and constitute a huge demographic with enormous buying power. British luxury fashion house Burberry was amongst the first to spot the millennials’ potential and today, Burberry is truly digital with two-thirds of its staff being under 30 and using social media to talk to each other and to its consumers.
Brands/Retailers in the Fray: GAP, A&F, AEO, Forever21, Zara, H&M, Target
LGBT: While millennials still rule the roost, a new segment of consumers is coming up, which is making many retailers to tweak their products towards their requirements – LGBT consumers. According to the findings of Nielsen Company, LGBT consumers spend more than their non-LGBT peers both at brick-and-mortar retail stores and online. Many retailers have started targeting them such as Target, which began selling greeting cards for same-sex couples and a line of gay-pride T-shirts, which was sold out in less than a month. Also, Macy’s Inc. uses gayfriendly graphics in some of its windows during Gay Pride.
Brands/Retailers in the Fray: Macy’s, JCPenney, Target
Retailers take notice of important markets
UAE: With a progressive economic outlook, the UAE is emerging as one of the sought-after destinations for international retailers and Dubai is the region’s leading retail destination, with the second largest number of global brands after London. The announcement of hosting rights for Expo 2020 has brought optimism to the UAE economy, creating jobs as well as driving the expansion of shopping centres, as the event is expected to attract 25 million visits, 70 per cent of which will be from overseas. These developments, combined with rising disposable income levels, have made the United Arab Emirates’ consumers more confident about spending.
Brands/Retailers in the Fray: Zara, M&S, H&M, Mango, NEXT, Promod
Tokyo: According to CBRE, the global property advisor, Tokyo is the world’s hottest city for retail expansion attracting 63 new retail brands despite mixed signals of the economy and an increase in sales tax of 8 per cent in April 2014. Amongst the major boost for Japanese retail market was the influx of tourists as many visited Japan as a shopping destination to purchase not only Japanese products but also imported products, which are now often cheaper in Japan than in their home countries. This trend is likely to continue, as the Japanese Government aims to achieve the ambitious target of 20 million foreign visitors per year by 2020, the year when Tokyo will host the Olympics.
Brands/Retailers in the Fray: Zara, Adidas, LV, Prada, Barney’s, Armani
Africa: The Global Retail Development Index by A.T. Kearney states that the Sub-Saharan Africa will be the big story in retail by 2040. Within Africa, Nigeria, Angola and Botswana are the nations that have made it to A.T. Kearney’s list, while Zambia, Namibia and Ghana are not far behind. Ermenegildo Zegna was the first luxury brand to open its doors to Nigeria in 2013 and continuously many more Luxury brands are making their mark in Africa. The A.T. Kearney report reiterates that Africa presents exciting opportunities that are just starting to open up, supported by rising household incomes, fast urbanization and a growing middle class.
Brands/Retailers in the Fray: Zegna, Gucci, Prada, Mango, Hugo Boss
Unconventional Markets: Few unconventional markets such as Indonesia, Mexico, Poland, Panama, Iran and Colombia are being vied by retailers due to their growing economies, rising incomes and young and expanding population. Though still at a nascent stage of development, their latent potential is worth exploring.
