There is a big shift happening in consumer buying that is also affecting the previously strong Outdoor Performance Market. Matt Powell, VP/Industry Analyst – Sports at The NPD Group, states, "25% of the malls will be closing in the next 5 years!" In addition, brick-and-mortar stores are closing in record numbers (9,000 store closures this year alone), while online sales continue to grow. Even the past strongholds in the Specialty Sports Business and the Travel Business are being challenged in today's evolving environment.
According to Powell, there is an urgent call for traditional retailers to change with the times. What's driving these changes? According to Powell, the Millennials and Gen-Z generations now represent more than Â½ the population of the U.S., and the buying power is in their hands. Disposable income for consumers is also decreasing. Powell says that the average consumer currently spends 60% of their income on basic necessities, leaving less money to buy anything else.
For Millennials and Gen-Z's all shopping is a social experience. For these savvy shoppers, the shopping experience must be easy, unique and personal. They grew up with the Internet and are hungry for information on everything. They research products before spending their money. They are early adapters and look for quality. They will pay a higher price for an item that is unique, has visible technology and can be customized.
Contextual marketing is one way that online businesses are attracting the younger generations, and involves using targeted advertising based
on search key words and recent Internet browsing behavior. The log of users' wish lists and itemized transactions form a social network that can inform and guide others in a timely, personal and contextual manner for others shopping for a product or seeking a service. Another approach is the use of Geo Targeting, which is delivering different content to a website visitor based on his/her geographic location. Both contextual marketing and Geo Targeting allow online websites to create personalization and a sense of community in the shopping experience.
Although the traditional way of in-store buying may be dying, there is optimism in the market that all is not gloom and doom. Since Millennials and Gen-Z's use their cell phones constantly, Powell emphasized that the Internet needs to be brought into the stores.
In addition, brick & mortar retailers must also make shopping an experience that is social, easy and fun; build a sense of community by taking a stand on social issues; elevate the quality and knowledge of the sales associate; and, use loyalty programs for customers to personalize their shopping.
"Maintaining a passion for your business is also important," explains Powell. "The need for retailers is to change the way they do their business, and to bridge the consumer divide. The new model needs to be a social experience and a collaboration of 'winning together'!"