last word
Retail Outlook
by Erinn Morgan

1. Mood tuning. Trend forecaster Faith Popcorn says the consumer of the future will redefine "retail therapy." Already beginning to expect purchases to help them adjust their feelings, they will soon be tweaking moods with biologically enhanced purchases like clothing infused with neuro-chemicals—eveningwear will promote confidence, whereas work gloves will encourage perseverance.  

2. Women on top. American Demographics reports women's rising economic clout since 2000 has "kept consumer spending up despite a recession, stagnant wages for men, and weak labor-force growth." This will have profound implications on consumer spending growth.

3. Trimming the middle. U.S. population numbers show a growing great divide. The Census Bureau reports that 5.4 million more people lived in poverty in 2004 than in 2000. It also found a 16 percent increase in the number of consumers earning $90,000 or more.

One result? Middle-of-the-road retail is fast disappearing.

4. The big boom. Though boomers (26 percent of the population) are on the verge of their retirement, they have delayed every life stage transition along the way and are likely to do the same with retirement.

American Demographics projects that in the next 10 years boomers will add 9 million workers aged 60 to 69 and at least $400 billion a year to consumer spending.

5. E-commerce rules. "We saw a 22 percent increase in online retail sales in 2005 over 2004," says Scott Silverman, executive director of shop.org, an arm of the National Retail Federation. "We will continue to see double-digit growth over the next five years."

6. Brick and mortar. Many consumers use stores as showrooms, browsing for what they want and then ordering at home online. But bookstores, for example, have positioned themselves beyond books—as spots for browsing, meeting, and having coffee. Future savvy retailers will offer value beyond merchandise.

7. Sorry service. While studies show that customer service is important, it is often ignored in retail. Some predict a future of no-service locations with low prices on one end and high-service, high-priced product on the other.

8. Retail consolidation. Retail will see more mergers in the coming years. On the flip side, there will be a wave of small-to-mid-size businesses springing up in the next five years. The consensus is that these new ventures will thrive.