RETAIL TRENDS & PREDICTIONS2016/2017

In 2016, we saw more merchants venture into OMNICHANNEL RETAILING and try in-store marketing solutions such as beacons to enrich the shopping experience. Next year, we anticipate stores to double down on these strategies and continue to find ways to bridge the gap between offline and digital channels.

In addition, we expect platforms such as SOCIAL MEDIA AND MOBILE TO PLAY BIGGER ROLES in people's shopping experiences. Many retailers leveraged social to engage users and influence their merchandising decisions this year, but in 2017, we’re anticipating companies to go beyond that and use social not just to showcase products, but to actually sell them.

The same goes for mobile. Companies won’t just use the small screen to “get in front” of customers (i.e. through geo-fencing and mobile-enabled sites). In 2017, retailers will step up their efforts by incorporating mobile into other parts of the customer journey, including order fulfillment, payments, and loyalty.

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Boomers and millennials will continue to heavily influence retail.

Retail in 2017 will continue to be driven by the needs and preferences of two prominent generations: BABY BOOMERS AND MILLENNIALS. Most boomers will be in their 60s and 70s next year, and retailers that cater to these consumers would need to adjust to make shopping easier for them.

As consulting firm PwC noted, “the Baby Boomer generation will age with increased financial resources and with a greater emphasis on youth and vitality than previous generations. As a result, they not only will tax manufacturers to adapt products to their specific post-retirement needs, but also will require retailers to respond to their evolving needs as they approach the age of 70 in 2017.”

This can already be seen at some drugstore chains. “They’re re-setting their counters, not putting things too high or too low, [and] they’re putting carpeting in the store,” she told the publication.

On the flip side, Gen Z—a young but equally large—market segment will also be a major influencein retail. Merchants who want to reach millennials (18-34years) will need to invest in mobile, as they are the largest group of smartphone owners (and adoption is still growing).

Speed is also an essential factor when it comes to reaching the Gen Z market. As a generation that grew up in an age where almost anything is just a click away, millennials have a tendency to be impatient.

Retailers who want to engage them must invest in more robust order fulfillment systems and fast (but excellent) customer service.

Social networks will serve as shopping platforms.

Over the last several years, brands have used social media to market their products, talk to customers, and even make merchandising decisions; but in the coming months, we anticipate merchants to add “selling” to the list of things they can do on social sites.

The launches of shopping functionalities in the social realm (i.e. Facebook´s and Twitter´s “buy” buttons and Curalate’s Like2Buy platform for Instagram) tell us that..

SOCIAL IS GOING TO BECOME MORE SHOPPABLE IN 2017.

If social shopping takes off—and there’s a good chance that it will—users will be able to enjoy a more seamless shopping experience. The clunky transition from one channel to the next (i.E. Social to ecommerce) will be eliminated and purchases will be completed much faster.

We also expect that users will continue using social networks to discover and talk about products, so retailers should keep investing in their social media initiatives.

We expect that more retailers will adopt social selling solutions such as Soldsie (selling through comments) and Like2Buy (user generated content galleries).

Apparel retailer TopShelf Style is a great example of social selling in action. TopShelf utilizes Soldsie, a solution that allows the retailer to implement comment selling on Instagram. Whenever TopShelf puts something up for sale on Instagram, customers who want to buy it simply need to comment “sold” together with their email address. Soldsie then generates an invoice and sends it to the shopper, so they can complete the transaction.

Nordstrom is leveraging Instagram and Like2Buy to sell its products.A customer who’d like to purchase an item she sees on the retailer’s feed can tap on the Like2Buy link found on Nordstrom’s Instagram profile. Clicking the link will take her to the retailer’s Like2Buy site, which looks similar to its Instagram page. When the shopper taps on an image, she’ll be taken directly to its product page, where she can find more details and proceed to checkout.

There’s a lot of debate around whether or not social media does have a true impact on purchases, and research says that it does. Forty-three percent of social media users have purchased a product after sharing or favoriting it on Pinterest, Facebook, or Twitter.

We think this would be a good opportunity to call out Pinterest specifically, because we find it to be a highly inspirational social network. - when I go on Pinterest, I call it falling into the rabbit hole. I just get so enthralled by the images and when I look at the boards of my favorite brands, I really get connected with the brand, their stories, and of course, their products -.

And if you upload images correctly and link them to products on your ecommerce site, you can really create that seamless path to purchase that consumers are craving.

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Brands will double down on Corporate Social Responsibility.

Consumers these days are more drawn to retailers that invest in Corporate Social Responsibility (CSR).

How does CSR improve the shopping experience? Simple. It makes customers feel good knowing that they’re contributing to a worthwhile cause.

In 2017, we expect more merchants to launch ethical and good deed initiatives. Examples of retailers pulling off CSR quite well include ModCloth, which recently signed an anti-Photoshop pledgeand Warby Parker, which implements a “Give a Pair” initiative to make eye care more accessible to the less-fortunate.

As Adrianne Weissman, owner of apparel store Evelyn & Arthur says: “shoppers want to know the money they are spending is not going into one person’s pocket, but is truly making a difference in the community they live in.”

Loyalty-wise, the points-for-purchases model will no longer be effective.

Enriching and personalizing the shopping journey will no longer be limited to tailored product recommendations and offers. Forward-thinking retailers will find additional ways to make each customer’s experience unique and memorable. We predict that one of the areas that they’ll focus on is CUSTOMER LOYALTY.

When it comes to reward programs, the “points-for-purchases” model just isn’t cutting it anymore. The practice has become so commonplace that the allure of earning points doesn’t excite consumers the way it used to.

Retailers would have to deliver more imaginative efforts to reward and incentivize shoppers.

In addition to giving away generic points, THE LOYALTY PROGRAMS OF THE FUTURE WILL REWARD SHOPPERS FOR THEIR ACTIONS AND ENGAGEMENT, RATHER THAN JUST PURCHASES.

Consumers have begun to expect more personalized offers and services - not just blanket discounts - in return for their participation in rewards programs. Moreover, consumers cited relevant discounts and personalized offers as the top benefits of such programs.

WALGREENS, FOR EXAMPLE, NOW LETS ITS MEMBERS EARN POINTS WHENEVER THEY

ENGAGE IN HEALTHY ACTIVITIES LIKE WALKING, WEIGHT TRACKING, AND MORE.

Also when talking about consumer loyalty programs, the future of it and of thewhole retail is all about using technology to strengthen customer relationships and improve the customer experience, while making the day-to-day operations easier for merchants.

Take an emerging consumer technology like Apple Passbook, soon Apple Wallet, for example. Consumers use Passbook to keep their coupons and loyalty cards in one place on their iOS device and will soon be able to pay using the one app as well. This is a technology that’s just now available for merchants to start taking advantage of. As more and more consumers adopt it, it will become vital in the future as they demand to use it in-store. But to ensure it actually improves the customer experience it needs to be fully integrated with point-of-sale and your loyalty software or offers marketing engine, so that it runs slickly, speeding up transactions over the counter.

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Retailers will adopt and experiment with technology.

Merchants will adopt and/or experiment with tech innovations and figure outhow they can use them to improve the shopping experience.

WE’LL LIKELY SEE MORE OF THE FOLLOWING IN THE COMING YEAR:

POS TECHNOLOGYIn 2017, we anticipate the continued adoption of mobile devicessuch as mPOS systems and in-store tablets.

BEACONS

Beacons will make their way into even more stores in the coming year. The technology, which provides in-store analytics and marketing solutions for brick-and-mortar retailers, has already generated results for several merchants, which is why we’re confident that beacon adoption will continue to grow in 2017.

WEARABLES

A research done by Acquity Group has shown that about seven percent of consumers currently own wearable gadgets such as smart watches, glasses, and fitness monitors. However, this figure is expected to double in 2017.

This will likely prod companies to experiment with how they can use wearable technology to market or serve customers. We probably won’t see every consumer wearing a smart device by next year (not yet, anyway), but this won’t stop forward-thinking retailers from experimenting with the technology.

AUGMENTED REALITY

We already do see plenty of VR and AR-centric efforts in retail. From virtual fitting rooms to interactive window displays, merchants are continuously finding ways to use augmented reality to draw attention and improve experiences. Walgreens, for instance, was testing Google’s Project Tango 3D to create AR-enabled mobile maps and navigation for its customers. Expect such experiments to continue in 2017.

3D printing

We also anticipate 3D printing to slowly make its way into the retail world.

Some merchants, including online jewelry store Brilliance.com, have already found a use for the technology. Brilliance is using 3D mock-ups to help customers try on different rings so they can determine the right size, shape, carat, and diamond arrangement for their hands.

More retailers will take control of their value chain and improve order fulfillment.

If retailers truly want to provide compelling shopper experiences, they would have to take more control of how their products are manufactured, marketed, and distributed, have a complete control of their value chain, from creation all the way to consumption.

NOTABLE RETAILERS THAT HAVE PROVEN THIS STRATEGY INCLUDE APPLE, RALPH LAUREN, ETC. DESPITE HAVING HIGHER PRICES, THESE RETAILERS MANAGED TO ACHIEVE CUSTOMER LOYALTY AND PROFITABILITY THANKS TO THEIR EFFORTS TO HAVE COMPLETE VALUE CHAIN CONTROL—A STRATEGY THAT RESULTS IN EXCELLENT PRODUCTS AND CUSTOMER EXPERIENCES.

More and more retailers will get creative with how they fulfill orders and distribute products. Speed and convenience will become more important than ever, so merchants will come up with better and faster ways to get products into the hands of their customers.

THIS WILL PAVE THE WAY FOR MORE ROBUST ORDER FULFILLMENT PRACTICES (SUCH AS SAME-DAY DELIVERY AND CLICK-AND-COLLECT), ON-THE-GO RETAIL (INCLUDING POP-UPS AND FOOD TRUCKS), SELF-SERVICE CENTERS (SUCH AS AMAZON LOCKERS), AND OTHER NON-TRADITIONAL STRATEGIES.

Mobile will play a bigger rolein click-and-collect initiatives.

Traditional click-and-collect programs typically involve people shopping online then picking up items in-store. In 2017 though, we can expect mobile to play a bigger role in this process.

RETAILERS ARE INCREASINGLY EXPERIMENTING WITH MOBILE TO FACILITATE CLICK-AND-COLLECT.

Some merchants, such as Kohl’s department store, now enable customers to buy via mobile and pick up in-store, while others, such as Sam’s Club [Walmart], are using mobile to send notifications whenever an order is ready for in-store pickup.

An other example - Nordstrom is also looking into using mobile to streamline the in-store pickup experience. (in May 2015, the retailer started testing a service that lets customers text or call their Nordstrom associate as they near the store. The store employee will then head down and meet the customer outside, so they won’t even have to get out of their car.)

More ecommerce sites will set up shop offline.

WE ANTICIPATE THIS TREND TO CONTINUE IN 2017. WHY?

For one thing, the majority of overall retail sales are still taking place offline, and ecommerce sites have realized that they need to set up physical shops if they want to gain significant market share.

Additionally, the need to provide seamless online to in-store experiences continues to grow, and successfully pulling this off requires both a digital and physical presence.

Ecommerce sites setting up shop offline is, on one hand, good news for offline stores, because it validates the need for physical retail. However, this also means that Main Street is going to get a whole lot more competitive, and traditional brick-and-mortar retailers must step up their game in order to win.

Therefore merchants will further ENRICH THE IN-STORE EXPERIENCE BY OFFERING

SERVICES ON TOP OF “STUFF.”

Take for example, Birchbox’s Soho location. In addition to playing video tutorials to keep shoppers informed and inspired, the retailer also offers hair, makeup and nail services in its store.

Similarly, Urban Outfitters recently opened a New York branch that has an on-site salon and coffee shop, in a move to turn the location into a destination, rather than just a store.

Retailers that localize their product mix and store formats will win.

Localization will be more important than ever. Merchants that customize their stores and merchandise according the needs of their local communities will find great success in 2017.

It’s important to note however, that neighborhood-specific merchandise is only one part of a good local strategy. In addition to inventory, retailers will also need TO TAILOR EACH OF THEIR STORE FORMATS BASED ON THEIR RESPECTIVE COMMUNITIES AND LOCATIONS.

We predict more stores will follow suit and tailor experiences, merchandise, and even store formats to the neighborhoods they belong to. The ones that do (or that continue to do so) will win big in 2017

Stocking up on more merchandise won’t cut it anymore.

An increasing number of retailers are learning that having more products won’t necessarily win over customers. Shoppers these days are already overwhelmed with too many choices, so widening your range can sometimes do more harm than good.

This could be one of the reasons why we’ve seen a rise in subscription services that curate products for customers. Such services make it easier for customers to discover and select products, thus saving them time and preventing decision fatigue.

Going forward, we expect more retailers to follow a similar path.

Merchants will learn that they need to thoughtfully curate items, rather than simply stock more merchandise.

They’ll win over customers not because they have the widest selection, but because they have the best and most relevant assortments for their target market, and they’re able to deliver those products using the preferred retail channel of each customer.

One of the things retailers have to understand is that online always wins in terms of the breadth of the store. In the past, a lot of retailers focused on stocking more things in the store. In other words, more is better.

But that’s no longer the case. Now, the retailers that seem to be winning are the ones that curate assortments. What that means is carefully selecting the top styles, showing the top models, or offering a showcase of ‘good, better, best’ instead of trying to stock every color or every single SKU.

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Retailers will unify their online and offline data collection.

Since today’s consumers go through multiple channels in their path to purchase, collecting and studying data in silos won’t cut it anymore.

In 2017, more retailers will start analyzing online and offline data together. Doing so will give them a more comprehensive picture of their customers’ shopping journeys.

CONSUMERS DON’T DISTINGUISH BETWEEN CHANNELS. THEY ARE CHANNEL BLIND, THEREFORE THEY EXPECT THE SAME SERVICE, PRODUCTS, OFFERS, AND PRICING ONLINE AS THEY DO IN-STORE AND ON MOBILE. THIS IS WHY MERCHANTS NEED TO COLLECTRELEVANT DATA AND MAKE SURE THAT THEIR RETAIL PROPOSITIONS ARE CONSISTENT ACROSS ALL CHANNELS.

With today’s shopper and their new shopping journeys, it’s becoming more important than ever to optimize a shopper’s visit to store or site. This can be through an understanding of what they’re shopping for (where and how) and ensuring there’s available inventory on site, or at least a very convenient option – to the shopper – to deliver products to them.

Specific to retail stores, because of the lower frequency of shopping trips and store visits, the imperative arises to deliver an authentic, seamless, branded shopping experience – from the most optimal shopper interactions with staff to zero points of friction in the shopping process.

Those are the things that will establish one as a ‘retailer of choice’ and keep them coming back.

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More retailers will look into the Internet of Things to enhance the shopping experience.

Mobile devices are just the beginning. In addition to using mPOS systems and in-store tablets, some retailers will likely look into ways they can leverage the Internet of Things (IoT) in their locations.

This year, we expect pioneering retailers to use connected devices to streamline in-store shopping and communicate with shoppers.

The goal of the Internet of Things is to enable things to be connected anytime, anyplace, with anything and anyone ideally using any path/network and any service. IoT is a new revolution of the Internet. Objects make themselves recognizable and they obtain intelligence by making or enabling context related decisions thanks to the fact that they can communicate information about themselves.

A few examples of IoT: Merchants using in-store devices to automatically ring up customers, track real-time shopping behaviors and send tailored offers to customers, etc.