Written By: Gargi Sarma Gargi Sarma
The retail industry is going through a significant global upheaval in an era of quickly shifting consumer preferences and technological breakthroughs. Retail evolution is not merely a global phenomenon; particular geographical dynamics, cultural subtleties, and economic variables all play a significant role in shaping it. Understanding the distinctive growth of retail across various countries is essential for building effective strategies and staying ahead of the competition for merchants trying to succeed in this dynamic environment.
Figure 1 shows the number of digital buyers worldwide from 2014 to 2022. The number of digital buyers has grown steadily over the past eight years, from 1.66 billion in 2014 to 2.3 billion in 2022. This represents a compound annual growth rate (CAGR) of 8.6%.
The growth of digital buyers has been driven by a number of factors, including:
Increasing internet enetration rates
The rising popularity of smartphones and other mobile devices
The growth of e-commerce
The convenience and affordability of online shopping
The growth of digital buyers has had a significant impact on the retail industry. Retailers are increasingly investing in their online presence and developing omnichannel shopping experiences that integrate online and offline channels.
The COVID-19 epidemic caused a 2.9 percent decline in worldwide retail sales in 2020 as observed in Figure 2, but in 2021 those sales increased by 9.7 percent. Global retail sales were expected to increase from roughly 23.7 trillion dollars in 2020 to roughly 27.3 trillion dollars by 2022.
The retail landscape in North America is evolving, with a rising focus on seamless omnichannel experiences. Brick-and-mortar merchants are incorporating digital technology to improve customer engagement due to the emergence of e-commerce giants and the growing appeal of mobile purchasing. The goal is to give customers a seamless, unified buying experience across online and offline channels. To meet the changing needs of tech-savvy customers, retailers are using tailored marketing tactics and sophisticated data analytics.
North America has seen a particularly strong shift to e-commerce, with online sales expected to make up over 20% of all retail sales in the country by 2022 (Statista). As a result, there are fewer brick-and-mortar establishments now, especially in conventional retail centers.
Nonetheless, physical stores continue to play a significant role in North America's retail market, and a lot of merchants are modifying their layouts to better suit customers' shifting demands. For instance, a lot of stores currently provide omnichannel shopping experiences, which combine online and offline platforms.
The expansion of experiential retail is another significant trend in North American retail. Rather than just selling goods, this kind of retail focuses on giving customers rich and interesting experiences. Concept stores, interactive showrooms, and pop-up stores are a few types of retail experiences.
North American retail evolution examples include:
The number of brick-and-mortar retailers has decreased as a result of Amazon's ascent.
The expansion of omnichannel shopping options, including Walmart's "Click and Collect" service, which enables online ordering and in-store pickup for customers.
The rise of experiential retail ideas, like the interactive experiences and individualized shopping services offered in Nike's House of Innovation stores.
In Europe, a focus on sustainability and customized customer experiences is driving the evolution of retail. Retailers are promoting sustainable products and eco-friendly activities as a result of consumers' growing awareness of environmental challenges. Retailers are investing in technologies that provide customized shopping experiences due to the increased demand for individualized products and services. Retailers are adjusting their methods to reflect the values and interests of socially conscious European consumers in response to the emergence of ethical consumerism.
Compared to North America, Europe has a more dispersed retail market with a larger range of retail forms and a higher dependence on independent, small businesses.
On the other hand, Europe is seeing a sharp increase in e-commerce, and many merchants are making investments in their online businesses. Over 15% of all retail sales in Europe in 2022 came from e-commerce (Statista).
Another significant trend in European shopping is sustainability. Customers are calling for more and more goods and services to be created and provided in an environmentally friendly manner. As a result, recycled materials, renewable energy, and ethical sourcing are receiving more attention.
European retail evolution examples include:
The expansion of internet merchants like Zalando and Asos, are already significant in the European fashion industry.
The growth of cheap stores like Lidl and Aldi, which have surpassed traditional supermarkets in market share.
The growing emphasis on sustainability is evidenced by the fact that many stores currently provide recycling programs and sustainable product lines.
Rapid technical advancements and an unparalleled surge in e-commerce are transforming the retail industry in Asia. E-commerce is now a major factor in the area, thanks to the widespread use of mobile devices and rising internet penetration. Retailers are utilizing social media and the potential of digital platforms to reach a large client base, particularly in developing nations. To further appeal to tech-savvy Asian consumers, there is a surge in tech-driven innovations, like virtual reality shopping experiences and AI-powered customer support.
Due to expanding middle classes and rising wages, the retail sector in Asia-Pacific is among the fastest-growing in the world.
China currently accounts for more than half of worldwide e-commerce revenues, while e-commerce is expanding quickly throughout Asia-Pacific (eMarketer).
Nonetheless, physical storefronts continue to play a significant role in Asia-Pacific's retail industry, and a number of companies are growing their brick-and-mortar presence in the area.
The expansion of social commerce is another significant trend in Asia-Pacific retail. Social media networks are used in this kind of commerce to link customers and vendors.
Asia-Pacific retail evolution examples include:
The emergence of JD.com and Alibaba in China completely changed the retail environment there.
The rise in popularity of social commerce sites like Xiaohongshu and Pinduoduo, allow users to shop online.
The introduction of novel retail ideas that integrate physical and virtual purchasing, like Hema Xiansheng.
The evolution of retail in Latin America is distinguished by a distinctive blend of conventional and contemporary retail strategies. Even if e-commerce is growing in popularity, traditional brick-and-mortar stores still have a big influence on how people shop. Retailers are embracing a hybrid approach that blends the individualized experience of physical stores with the ease of online shopping. Localized marketing tactics that speak to the varied linguistic and cultural backgrounds of Latin American customers are also becoming more and more important.
There are a lot of small, independent stores and street vendors throughout Latin America, which contributes to the region's highly informal retail environment.
Nonetheless, the area is also witnessing a sharp increase in e-commerce and the rise of big-box retailers.
The high rates of inflation in the region are one of the main issues that Latin American retailers face. Retailers may find it challenging to budget and plan ahead as a result.
The inadequate infrastructure in the area is another problem that might make it challenging to deliver goods to clients and move things.
Latin America's evolving retail landscape includes, for instance:
The growth of Latin America's biggest e-commerce site, MercadoLibre.
The growth of Walmart, the world's biggest retailer with more than 4,000 locations throughout Latin America.
Mobile payments are becoming more and more common; in Latin America alone, over 100 million consumers utilize Mercado Pago.
Middle East and Africa:
Rapid changes in the Middle East and Africa's retail landscape are mostly due to diversification and digital transformation. In response to a tech-savvy customer base, businesses are growing their digital presence as a result of rising urbanization and the middle class. Additionally, there is a growing tendency toward product diversification to meet the region's varied preferences and cultural quirks. In order to provide consumers throughout the Middle East and Africa with seamless shopping experiences, retailers are investing in cutting-edge payment systems and mobile-friendly platforms.
The expansion of e-commerce: according to McKinsey & Company, sales of e-commerce in the MEA are predicted to reach $1.9 trillion by 2025.
The growth of massive retail chains: Big-box retailers like Carrefour and Lulu Group International are establishing additional locations around the Middle East and Africa (MEA) to increase their market share.
The growing acceptance of mobile payments: M-Pesa and Fawry are two examples of MEA's mobile payment platforms that are gaining popularity.
In the MEA, examples of retail evolution include:
The development of Noon, the Middle East's biggest e-commerce site.
The growth of Carrefour, the biggest French retailer with more than 350 locations in the Middle East and Africa.
The rising use of mobile money systems like M-Pesa, which is utilized by more than 50 million individuals in Kenya.
Handling the Changing Retail Environment:
Retailers must modify their tactics when the retail environment varies geographically in order to meet the specific requirements and tastes of local customers. Personalized experiences, sustainability, and embracing digital innovation are critical components for merchants hoping to succeed in the cutthroat retail industry. Retailers should use a strategic positioning approach to leverage emerging possibilities and promote sustainable growth in the dynamic retail sector by keeping abreast of regional shifts in customer behavior and market trends.
The retail sector is undergoing rapid change due to a number of factors, including the expansion of e-commerce, the emergence of new technology, and shifting consumer preferences. Because every market is different, this transformation is also happening at different rates in different parts of the world.
The transition to e-commerce has been most noticeable in North America, where merchants are modifying their business models and store layouts to better cater to the shifting demands of their clientele. The retail environment is more dispersed in Europe, but e-commerce is expanding quickly there as well, and sustainability is becoming a major trend. The retail sector is expanding at one of the quickest rates in the world in Asia-Pacific, and new retail ideas, social commerce, and e-commerce are all flourishing. Large-scale retail chains and e-commerce are growing quickly in Latin America, yet informality is still a problem in the region. Along with the growing acceptance of mobile payments, large-scale retail chains are expanding their presence in the Middle East and Africa, where e-commerce is also growing quickly.
All things considered, the retail sector is rapidly evolving throughout the world. Long-term success will go to retailers who can meet customer expectations and adjust to a changing environment.
RapidPricer helps automate pricing, promotions, and assortment for retailers. The company has capabilities in retail pricing, artificial intelligence, and deep learning to compute merchandising actions for real-time execution in a retail environment.