China has already overtaken the US this year as the world’s largest food and grocery market, and in 2013, the Asian giant is expected to surpass Japan as the world’s largest luxury goods market, acording to the report. In addition, by 2016 China will be the world’s largest retail market.
The report, Retail 2022, predicts that the US will be the next largest market at US$4.5 trillion, followed by India (US$4 trillion), Japan (US$1.6 trillion), Russia (US$1.5 trillion) and Brazil (US$1.2 trillion).
In a decade, said the report, the Indian market could be comparable to that of Western Europe.
From a retail perspective, the opportunity is already well established in emerging markets. The “big four” global retailers—WalMart, Carrefour, Metro AG and Tesco—have a burgeoning presence in China. Other key markets, like Brazil, Vietnam, Indonesia and India, remain the focus of much attention.
Online commerce in the form of ecommerce, mcommerce and scommerce, is expected to account for one-third or more of sales in markets like the UK and the US, compared with around 10 per cent now. Although emerging markets have further to go, the rate of growth is even more rapid, said the report. Last year China reported that online business-to-consumer transactions increased by 53.7 per cent to reach US$123.2 billion.
Furthermore, mobile commerce will be a mainstream means of shopping by 2022, as more consumers make impulse purchases directly on mobile platforms. Scommerce, led by investment in traffic drivers such as Pinterest, will add a further dimension to virtual shopping. By 2022, bargain-driven technologies such as Groupon and mysupermarket will have merged and expanded into sophisticated sites tailoring and personalising the best offers for consumers, it said.
Despite the rise of online commerce, bricks-and-mortar stores will not disappear by 2022, but will play a very different role as the retail landscape evolves, predicted the EIU.
With mobile commerce embedding showrooming (the trend of checking out goods in person, but making the actual transactions online), stores will continue to act as a channel for consumers to see, touch and try out goods.
Stores should avoid going the Best Buy route of replacing item barcodes with Best Buy-only codes to prevent shoppers from easily comparing prices online, said the EIU, as it may alienate customers. Instead, experts and the EIU recommend that luxury retailers should move to merge physical and online stores into an overall strategy with an immersive brand experience for shoppers.
The multi-channel approach has not be lost on online retail giants Amazon and eBay and both are taking steps toward building physical operations, noted the EIU. “eBay has experimented with pop-up showrooms in key shopping locations, partly to generate publicity and partly to test interest. Amazon has taken a further step in adapting, by setting up “lockers” to appeal to click-n-collect consumers.”
Smaller retailers will be the hardest hit by this transition, said the report. But as mass-retail stores start to thin down, smaller independent businesses may benefit from footfall once again.
“The opportunities for retail over the next decade and beyond are enormous,” Jon Copestake, chief retail analyst, Economist Intelligence Unit and author of Retail 2022 commented. “But where the future markets will reside and the way in which we will buy goods will change dramatically. Retailers will need to evolve to adapt to this new landscape.”
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