It's no surprise that the retail sector has been the unwilling beneficiary of the effects of the economic downturn.
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Over the past several years, retailers have experienced a series of sluggish sales, unmet expectations, and declining bottom lines.
The one bright spot on the retail scene was the 2010 holiday shopping season. In-store sales alone reported an increase of 3.8% over 2009 numbers, the biggest gain since 2006 and a sign that economic recovery may be just around the corner.
But today's retailers are also waking up to the reality that they can no longer afford to cross their fingers and wait for an economic rebound. While the economy receded into negative territory, other factors were at work, transforming consumer experiences. Many of these factors are rising to the fore in 2011 retail trends and driving short-term retail strategies.
- Mobile device shopping. Mobile device shopping will be big business in 2011 and for the foreseeable future. As consumers increasingly use mobile devices during in-store shopping experiences, retailers will be forced to compete with store-based and online retailers on price and value. If a consumer can be the same product for less money online, they'll put your product back on the shelf and make the purchase online.
- Social networking. Retailers and manufacturers were once the primary marketing resource for shoppers. But today's consumers distrust brand messaging and instead, turn to online social networks for buying advice. Combined with smartphone technology, social networking sites like Facebook will gain influence in product messaging in 2011.
- Consumer-to-consumer sites. Many consumers are doing an end run around retailers and are buying products directly from other consumers. E-bay and other consumer-to-consumer sites make it easy for shoppers to trade products on the secondary market, underscoring the need for retailers to emphasize value-added business models.
- Clothing & apparel prices. Prices will increase marginally in 2011, making it necessary for retailers to adapt to life in a higher pricing environment. Rising cotton prices and overseas labor costs mean that apparel retailers will be hit the hardest, but inflationary pressures could impact pricing for all U.S. retailers.
- Pop-up stores. An abundance of vacant retail space will translate into even more pop-up stores in 2011. Pop-ups give retailers opportunities to test new business models and markets. They also put increased pressure on local retailers; it's easy for these stores to close because pop-up retailers rarely intend to remain in the market long-term.