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An Understanding of the Specialty Retail Industry: Market Trends, Technology, and Solutions

March 14, 2024

Katie McCann

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Competition is steep in the retail world, no matter which sector the business operates in. The specialty retail industry was born out of this high level of competition, giving businesses the chance to further differentiate themselves by specializing in certain products and services. For example, consumers needing clothing may choose to visit Pacsun, while those looking for a new pair of shoes may choose Foot Locker.

Today, understanding market trends and technology advancements can make all the difference for a specialty retail store’s bottom line. Learn more about market trends, technologies, and solutions tailored for businesses in the specialty retail industry.

Current State of the Specialty Retail Industry

In the United States, the specialty retail market size has grown by 12% between 2022 and 2023, with earnings projected to increase by 12% per year. Globally, the market is likely to reach $42725.74 billion by 2031. Industry analysis indicates that a significant portion of this growth can be credited to the change in consumer habits during the COVID-19 pandemic.

Niche markets are the target of specialty retail businesses. This translates to countless retail establishments that offer specially curated products and services. These businesses often employ staff with extensive product and service knowledge, making specialty retailers a go-to destination when specific consumer needs arise.

Key players in the specialty retail industry include:

Adidas
Best Buy
CVS Health
Express Scripts
Fast Retailing
GAP
H&M
Home Depot

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‍Business Intelligence for Specialty Retailers

Specialty retailers can shift the way they monitor their business with the assistance of DTiQ. Providing 24/7 customer support, DTiQ’s business intelligence platform and services can all be accessed from an integrated mobile app, making it possible to monitor operations from anywhere. DTiQ specializes in loss prevention solutions, giving businesses the ability to:

Access intelligent video systems and powerful analytics
Detect suspicious activity
Identify staff training needs
Prevent theft

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‍Emerging Market Trends in the Specialty Retail Industry

Specialty retail trends are pointing toward continued industry growth, though investors fear that the rate of progress is historically lower than in previous years. That’s why specialty retailers, from wholesalers and distributors to brick-and-mortar and online-only stores, need customized plans for their business. Implementing these plans can help them weather industry ups and downs while improving their operational infrastructure and efficiency.

However, there are so many different trends beyond growth and loss prevention to keep an eye on to fully understand the specialty retail space.

Luckily, you don’t need to spend hours digging to find all of them — we rounded up the top trends to keep an eye on below.

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‍Technology Innovations Transforming Specialty Retail

If they aren’t already, specialty retailers must utilize data and technology to keep up with the transformational innovations hitting the industry. This is crucial to have an understanding of the following.

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Enhancing In-Store Experiences with Technology

Specialty retailers that add additional techniques and strategies in-store and technologies can make for an unforgettable guest experience. Some ideas include:

Interactive displays
Augmented reality experiences
Mobile payment options
Self-checkout systems
Personalized offers

Outside of technology there are other trends that you should consider when operating specialty retail stores and chains.

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‍Steady Overall Growth

Given the current specialty retail market size, data suggests steadfast growth for the industry as a whole. Earnings for specialty retailers in the U.S. have increased by 25% per year over the last three years, with an 8% per year growth in revenue over the same timeframe. Additional boosts are anticipated from changing consumer behavior and greater disposable income. ‍‍

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‍Shifting Demographics

Consumer profiles are always changing, and today’s landscape looks even more promising for the specialty retail industry. For instance, credit availability is more widespread than ever before, enabling virtually any income level to qualify for a store card. Urbanization is also increasing at a faster rate during the COVID-19 recovery period when many are prioritizing relocating back into crowded metro areas.

The evolving consumer landscape presents both challenges and opportunities for specialty retailers. Adapting to changes in credit accessibility, strategically locating stores in urban areas, and enhancing online offerings can help specialty retailers align with shifting consumer profiles and capitalize on the promising trends in the industry. ‍

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U.S. Competition with International Brands

The specialty retail market in the U.S. is not only competitive among American-owned and -operated businesses, but international brands, as well. Asian-Pacific countries like India and China are prime examples of the international competition faced by American retailers today.

Specialty retailers must remain mindful of this international competition as they strategize ways to maintain their competitive edge. To effectively tackle the challenge of potentially cheaper alternatives for buyers, specialty retailers should consider the following strategies: ‍

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Embrace Innovation and Differentiation

Innovate your product offerings and in-store experiences to stand out in the crowded marketplace. Differentiating yourself through unique products, exclusive collaborations, or cutting-edge technology can justify higher price points and attract discerning customers. ‍

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Enhance Customer Engagement

Build strong relationships with your customers by offering exceptional customer service and personalized experiences. Engage with your target audience through social media, loyalty programs, and feedback mechanisms to create a loyal customer base that values your brand beyond price considerations. ‍‍

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‍Optimize Supply Chain and Inventory Management

Streamline your supply chain operations to reduce costs and improve efficiency. Implement advanced inventory management systems to minimize overstock and stockout situations, ensuring that your product offerings are always available and competitively priced.

By implementing these strategies, specialty retailers can not only compete effectively against cheaper alternatives but also thrive in a global marketplace where differentiation, customer engagement, and operational excellence are key factors for success. ‍

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Increased Demand in Certain Product Categories

As environmentally friendly technology evolves, the demand for electric motorcycles has been increasing. Additionally, bicycles are also spiking in demand, especially in countries that are improving infrastructure (i.e. repaired city streets with new bike paths). ‍

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Investments in Research, Development, and Technology

Specialty retailers are realizing the potential of investing in market research and development (R&D), gaining insights into opportunities for market share growth. Businesses are also leveraging omnichannel retail technological advancements and specialty retail solutions to keep up with the always-changing landscape. ‍

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Data Analytics and Personalization

Utilizing data to personalize customer experiences is the key to staying competitive in the modern specialty retail industry. By collecting statistics about consumer behavior and preferences, businesses can implement targeted marketing and recommendation systems. Tactics like these are used to make consumers feel seen and heard, ultimately connecting them with the products or services they seek. ‍

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Supply Chain Solutions

The last thing any retailer wants is to run into supply chain issues when demand is at its peak. There are several solutions available to help businesses with supply chain initiatives, such as:

Streamlining supply chain processes for improved efficiency
Warehouse management and inventory optimization
Adopting sustainable practices in the supply chain ‍

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‍Inventory Management and Forecasting

Businesses should develop best practices for managing inventory in specialty retail. Implementing demand forecasting models, as well as strategies for reducing stockouts and overstock situations, only helps to safeguard the retailer against unnecessary losses. ‍

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Customer Engagement and Loyalty Programs

Outlasting the specialty retail competition comes down to building strong customer relationships. Companies should consider designing effective loyalty programs and rewards to encourage repeat business. Retailers should also find a means to collect customer feedback and utilize the insights for continuous improvement. ‍

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Cybersecurity and Data Privacy

The threat of cybersecurity attacks is all too real in today’s online marketplace. Specialty retailers must address any challenges they have with data security, striving to protect the sensitive information of both the organization and their valued consumers. For example, implementing secure payment processing systems can keep credit card information out of the wrong hands.

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‍Sustainable Practices

The sustainability movement is here to stay, so specialty retailers need to figure out how to harness its power. Today’s consumers are more likely to seek out retailers with sustainable, eco-friendly practices and sourcing. Aside from putting sustainability into practice, all initiatives should be clearly communicated and included in marketing plans.

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‍Omnichannel Retailing in the Specialty Retail Industry

The concept of omnichannel retailing is not new, but it holds more significance in today’s specialty stores industry than ever before. This approach involves selling goods and services in more than one place. For example, a brand may have multiple department stores, list items for sale on its website, or make transactions through social media pages. Some other examples of omnichannel retailing include:

Unified Shopping Cart: Allow customers to add items to their shopping cart regardless of the channel (online, mobile app, or in-store) and access it from any platform.
Buy Online, Pick Up In-Store: Enable customers to buy products online and pick them up at a physical store, promoting convenience and reducing shipping costs.
Ship-from-Store: Use store locations as fulfillment centers to expedite online orders, particularly for products that may not be available in a centralized warehouse.
Mobile Apps: Develop a feature-rich mobile app that provides a seamless shopping experience, with personalized recommendations, easy mobile payments, and location-based services.
Subscription Services: Offer subscription-based models where customers can receive products on a regular basis, promoting customer loyalty.

No matter which omnichannel retail approach is taken, it’s crucial to provide consumers with a seamless shopping experience across all channels. For each physical or digital touchpoint, retailers must engage consumers in a consistent, coordinated manner. Doing so can lead to increased conversions, improved brand loyalty, lower cart abandonment and return rates, and other benefits.

To develop an effective strategy for integrating online and physical stores, it all begins with data from every channel. Businesses need to find out everything from consumer preferences and demands to industry trends, providing the insights to make the best operational decisions possible. For retailers that don’t know where to start, outsourcing omnichannel management or investing in a trusted solution can prove to be wise options. ‍

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Conclusion: Specialty Retail Industry

As we conclude our exploration of the Specialty Retail Industry's evolving landscape, it's evident that staying ahead of market trends and leveraging technology is essential for success. Specialty retailers are facing unprecedented challenges and opportunities, from shifting consumer preferences and increased competition to the transformative power of technology.

To witness firsthand how DTiQ's cutting-edge solutions can revolutionize your specialty retail operations, we invite you to take the next step. Book a demo with us today and embark on a journey toward operational excellence. Our experts are eager to showcase how our technology can transform your business.

Ready to unlock the full potential of your specialty retail venture? Contact Us now to discuss your specific needs, challenges, and aspirations. Together, we can create a roadmap to success in this exciting and ever-changing industry.

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An Understanding of the Specialty Retail Industry: Market Trends, Technology, and Solutions

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