What to Look for From the Retail Industry in 2015
Retail is an evolving, exciting industry right now, and that's unlikely to change in 2015. Disruptive forces will continue to play their part — whether technology based, competitively based or a combination — creating challenges for retailers, but also fantastic opportunities. Here are some things to watch for in 2015:
Market Share Challenge
The market share of established players will continue to face pressure from multiple angles — e.g., being squeezed by the likes of Amazon.com, which is raising the bar for everyone. As Amazon Fresh expands globally, existing grocers will need to look carefully at their overall capabilities from a customer experience and supply chain fulfilment perspective.
Simultaneously, competition from "the little guy" will continue via online sites enabling someone selling from their home to compete with long-standing suppliers. Additionally, overseas competition will increase as major retailers set up foreign language websites allowing consumers in different countries to order from them.
The Death of Loyalty?
Collection of loyalty data has armed retailers with vast information about shoppers, and offered customers money-saving opportunities. Since the 2008 financial crisis, consumers started looking harder for value. Loyalty to a specific brand has seemingly decreased as shoppers frequent multiple brands, formats and channels to get products they need.
Furthermore, the cost of running a loyalty program is becoming questionable relative to its benefit. Late in 2014, The Economist reported U.K.-based Tesco's Clubcard no longer produced enough sales to cover its annual operating costs. Sainsburys also warned members that points would be worth half the value.
The Rebirth of Loyalty?
While loyalty programs powered by physical cards struggle, new technology-based loyalty 2.0 initiatives are appearing and growing (e.g., smartphone applications). Loyalty 2.0 revolves around real-time personalization, which tailors an offer, ad, or other product placement or service to the person at the right time and place to make an impression and drive sales.
Oliver Guy is the global industry director, retail at Software AG, specializing in retail digital transformation and omnichannel technology strategy.
Oliver advises retailers across the globe on their technology strategy and decisions. With more than 20 years focused in technology, Oliver has worked with major names in global retail helping them improve their business through the use of innovative technology. Prior to joining Software AG, Oliver was part of the European Management team at Oracle Retail, his team being responsible for Retail focused Solution Consulting across Europe. Oliver started his career in technology implementing Supply Chain Planning and Optimisation solutions for customers across multiple industries in both Europe and Asia Pacific with Manugistics (JDA).