media update’s David Jenkin was in attendance at the Protea Hotel Fire and Ice, Melrose Arch, on Thursday, 3 August, to hear all about it.

Blood on the retail floor

Consumer mindsets have been changing for a number of years already and it’s only becoming more apparent, facilitated by developments in technology. As a result, locally and abroad, “there is blood on the retail floor,” as Chang described in his opening remarks.

Stuttafords, which finally closed only two days prior, is far from alone. The trend of shuttered stores and empty malls has been sweeping across the United States, he said, with established chains like Macey’s, JC Penny, and Urban Outfitters (to name a few) all downsizing or going under.

In South Africa especially, there is a very difficult climate for retail at present. “We have an extreme hourglass economy,” he said, “So your one percent is really getting exponentially richer, your poor are getting destitute and the middle class is being squeezed and squeezed. Disposable income has all but evaporated.”

While South Africa is in a technical recession, in terms of the global context, Chang referred to a McKinsey report which shows that 70% of households within developed economies all saw their earnings drop in the past decade. The millennial generation, he said, is being described as the new urban poor. “So you’ve got this young demographic who are meant to be shopping who don’t have the money to do that.”

A different way to shop

The timeline of the imagined future is getting shorter and shorter, he said, referring to some of the radically futuristic concepts, such as a mobile store in Shanghai currently in beta-testing, which consumers can summon on the roadside with their phones. It’s indicative of the on-demand and digitised direction in which retail is moving, while conventional malls are losing their lustre. While malls traditionally functioned like public squares, places of gathering, consumers simply aren’t doing everything in one space anymore.

E-commerce, although still small in South Africa, is affecting retail, changing the way that consumers interact with shopping spaces. They do price-comparisons online, then go to a mall to make the purchase but with no browsing or incidental shopping involved, which means the department store model is out of date. As online retail provides far fewer jobs than brick-and-mortar shops, and only in major metros, it ultimately leads to job losses, job displacement, and empty malls.

“Essentially, what people are saying is that we’re looking at a market correction … we’ve got too much retail space.” Out of 2 082 shopping centres in Africa, he said, 1 950 are in South Africa. However, the boast of ‘my mall is bigger than your mall’ is no longer so wise.

Changing consumer mindsets

A phenomenon to keep an eye on is that of transient ownership, he said. “People are understanding the concept that you don’t need to actually own something to be able to experience it.” From occasion wear to bike sharing, consumers are sharing more and buying less and the concept it catching on rather quickly.

However, brand loyalty is also becoming transient and consumers are no longer ashamed of buying fake products at a fraction of the price. “People don’t really care anymore – I’ve got the look, I want that, it’s a bit transient, it’s a trend, and I’m really happy not to have to pay R14 000 for it.”

The megatrend of individualism driving mass customisation is pervasive, with consumers wanting more tailored goods and services. Chang described it as a backlash to homogeny and globalised brands that are too much of the same. 

Consumers also want less stuff and more stories, he said, seeking immersive and transformative relationships with brands rather than just transactional relationships. He advised retailers to consider offering something that doesn’t need to be owned.

The future

The hybridisation of online and offline will define the future of shopping, and this is already taking shape in different ways. “They’re saying people don’t want an online, offline experience, they want a no-line experience, a complete integration of online and offline – a seamless way of doing things.”

The ‘click and collect’ approach is being put to use by Amazon and Walmart where shoppers order their groceries online and then pick them up without having to get out of the car. Another option is to have goods brought to consumers wherever they are using a smartphone’s GPS.

Technology like automated inventory robots are being tested in Germany, demonstrating far greater efficiency than human staff, and RFID chips working with beacons in stores add another level of engagement with shoppers.

As much as Amazon is dominating futuristic retail trends, Chang says that his money is on the Chinese firm Alibaba as the business model that will ultimately succeed. Their seamless and fully integrated ecosystem represents a fundamental shift in doing business which fits hand-in-glove with the Gen Z mentality, he said.

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The numerous avenues of disruption in retail was the topic of a recent two-day conference. Read more in our article, Eight lessons for retail marketers ahead of the changing shopper landscape.