A Look Into the Future
To help you prepare for what figures to be another volatile year, Total Retail sent its editorial advisory board a series of questions about what they expect to be the biggest trends, technologies and disruptors that will impact retail businesses in 2017. In addition, our board members offer their advice on how to make 2017 a success. Here’s a sampling of their answers.
What’s the trend that you’re most closely watching for the retail industry in 2017?
Lauren Freedman: I’ll be watching mobile shopping behavior, its revenue generating growth and its increasing proportion to overall digital sales. I’ll also continue to monitor its role in research prior to visiting stores and how it’s used in-store to better the shopping experience. In particular, I’ll be watching how inventory transparency is now at the fingertips of in-store shoppers thanks to mobile, and how having this information creates a more productive shopping experience for consumers.
Mark Friedman: A continued move towards use of mobile to shop. Also, reduced traffic to retail stores and sliding conversion rates. Even at certain times of the year, online traffic is tough to come by and perhaps more focus should be going to conversion as opposed to traffic — e.g., improving rebuy rates and units per order.
Jenn McClain-De Jong: With the recent softness in all retail, you’re going to see a lot of mergers and acquisitions along with new businesses thinking outside of typical retail (e.g., apparel companies bringing in coffee shops). Retailers must get smarter with data to really jump-start personalization. Big data is great, but are we taking action on it? The answer is no in most cases.
Aubrie Pagano: I’m totally biased, but personalization is a massive trend for 2017, and we’re at the forefront of it. From activations in-store to online iFrames, retail is trying to engage customers with customized experiences.
Peter Cobb: Continued migration of online shoppers to mobile, and the continued decline of brick-and-mortar stores.
Richard Last: I’ll be watching very closely developments by omnichannel retailers, specifically in the area of buy online, pick up in-store (BOPIS). In 2016, BOPIS became real for quite a few retailers. However, it’s one thing to offer the solution on a small scale for early adapters; it’s another thing to develop scalable solutions that are seamless for both customer and store associate, and virtually error free. Identifying, reserving and putting aside merchandise in-store can be especially challenging for SKU-intensive categories, including apparel. The item wanted might be available in the specific size/color combination, but where is it physically located? On the rack? In the dressing room? In a shopper’s cart? Will a solution for 5 percent to 10 percent of online orders scale to up to 50 percent of orders? (This may sound too high, but in my early catalog days in the 1980s, close to 60 percent of our orders were ship-to-store.) If retailers can pull off BOPIS, it will be an important weapon in the arsenal to combat the Amazon threat.
Brian Schultz: Continued iteration and adoption of alternate payment methods, and even more competition in the alternate payment vendor space. I’m fascinated to see to what extent technologies like Apple Pay alter the mobile checkout process with pay-from-product-page functionality.
Jim Garlow: During an election year, it’s not uncommon to see companies hold off on making financial investments until they see how things settle. This is common no matter which party they expect to win. So as a primarily B-to-B company, we pay close attention to post-election sales trends to see how we think the coming year will be. However, it’s not uncommon to see a post-election sales boost (again, no matter which party wins), as there’s some pent-up demand.
On the consumer side, I expect similar trends, as many consumers were getting sick of the pre-November bombardment of campaign ads, and now may be in a more optimistic mood to shop.
Lastly, having spent 15-plus years in retail, another key factor is the weather. We’re expecting a colder-than-normal winter in the upper states, and dryer in the southern states with the La Nina effects. The weather may have a big effect on sales of spring and summer clothing, air conditioners and recreational vehicles.
Conversely, what’s something that you believe will be of less importance to retailers in 2017?
MF: Ha, I don’t think that anything ever becomes less important. Maybe optimizing sites for tablets. Traffic from tablet devices is declining as smartphone screen sizes get bigger.
JMDJ: Traditional marketing. The growth of digital is definitely taking over, and this includes social. And store visuals/in-store marketing. Why? Money has to be spent to drive the e-commerce demand and necessary traffic. Spend less money on marketing in stores, but still provide a strong experience.
AP: Marketing-wise, Snapchat will be less of a focus it seems, as Instagram has done a good job combatting the competition for retail brands.
PC: Each retailer will be tasked with determining its appropriate pricing policy.
RL: Less important to retailers in 2017, but “coming soon” is virtual reality (VR). VR is exploding for holiday 2016, specifically for gaming and entertainment. As VR is adapted more frequently by consumers, the “killer apps” for shopping will eventually emerge. Smart retailers like Lowe’s, Wayfair, The North Face and Ikea will continue to experiment, test and learn during 2017. Smart retailers will be more prepared for VR when it reaches mass, as they’re building skill set and knowledge now. Will the VR “wins” come from enhanced in-store experiences or rich online shopping applications? Or even from customer experiences we haven’t thought of yet? The picture will become a lot clearer by 2018.
BS: Flash sales as a concept are losing steam relative to having the right product in the right place at the right time for the right price. It’s all about customer convenience. Along this line, natural search keyword competition is quickly making the concept of targeted campaign micro-sites obsolete as brands fuel marketing dollars and content into their primary e-commerce sites.
JG: Two areas: With continued “fracking” and the discovery of deposits around Texas, I’d expect steady to lowering costs on fuel, which should cause less concern or possibly increased sales in auto, boating, travel and other fuel byproduct areas such as inks and clothing manufacturing.
Second, interest rates. There’s been a lot of speculation regarding what the Fed is going to do in this area, but I expect it to be of little impact, which may bode well for retailers like Home Depot, Lowe’s and home furnishings brands.
LF: For many retailers, it may likely be their physical stores. Despite this scenario, retailers must continue to look for ways to innovate in the physical world. This will likely involve the creative use of in-store technology, associate training, and ideas that drive shoppers to visit and explore.
What’s the technology you believe will impact retailers most in 2017?
JMDJ: Mobile (personalization); apps — client facing and associate; and updated point-of-sale solutions — more cloud (speed) vs. large ERP.
AP: Amazon is a force to be reckoned with. The big guys will be up against them in 2017 even more than they are already.
PC: Personalization in all aspects — site, email, social.
RL: It will once again be everything mobile. Mobile visits have already reached a tipping point, exceeding website visits for many retailers. Key priorities for 2017 will include mobile conversion; mobile attribution; mobile in-store integration; CRM and mobile analytics; mobile payments; and mobile wallets. The challenges for retailers in 2017 include prioritizing strategic investments in mobile technologies, as well as adapting to the proliferation of devices along with lack of standards for hardware, network carriers and services.
BS: Product visualization technologies like 3-D product modeling and augmented reality are meshing nicely with consumers’ continued, exponentially increasing preference for their mobile device as a shopping tool.
JG: At CDW, we’re seeing heavier investments from retailers in data retrieval for faster decision making, such as inventory levels and shelf restocking; a greater usage of mobile applications, both consumers and associates; in-store Wi-Fi; and reducing silos that prohibit data retrieval for operational insights.
LF: Analytics and data will be critical to understanding one’s customers and tailoring the customer experience accordingly.
MF: 3-D printing as well as personalization and customization of products. Also, in-store mobile applications and easier checkout in-store.
What’s the key priority for you in growing your business this year?
AP: We’ll be focusing on opening Bow & Drape’s first brick-and-mortar micro-store, a destination that’s sub 200 square feet. We’ll also continue to focus on technology, innovative product and, of course, customization.
PC: Mobile first.
BS: We’re focused on making the customer’s entire shopping journey, pre- and post-transaction, as seamless across channels and pleasant as possible, while keeping scalability for growth in mind.
JG: For IT, we continue to focus on full-scale on-site tech solutions, installs and segment needs — healthcare is vastly different than K-12.
MF: Improved conversion, A/B testing, better mining of customer data and using it to drive sales.
JMDJ: Develop a marketing communication plan to drive repeat visits; a focus on a client application once launched; and reduce the number of direct mail pieces we send while increasing redemption.
What advice would you give to retailers to help them have a successful year?
PC: Pick five to six key strategies that will turbocharge your business and be relentless in carrying them out.
RL: Embrace a culture of analytics throughout the organization. Behavioral data, customer data, financial data, product data, web/mobile analytics, social data, and socio/demographic data all play an important role in top-line and bottom-line success. Big data should drive not only marketing plans, but also merchandise assortment plans, inventory plans, customer experience and customer care. Successful retailers will treat customer information with the same rigor and discipline that they have long applied to financial information.
BS: Find your unique value proposition in a crowded market, and go after it through the lens of your customer’s experience.
JG: Here are a few things I suggest:
- Invest in in-store technology.
- Use print as your core framework/foundation, but expand your digital marketing.
- Continue to expand your social media presence.
- Continue to use data as a key driver of business decisions. As our election polls highlighted, poor data can lead to unexpected outcomes. Therefore, know what your customer is looking for and map their journey so that you can provide the appropriate product at every milestone.
LF: Start with the customer experience, always keeping the shopper top of mind. Understand their shifting behavior from desktop to mobile. Be diligent in looking at the data to explore their interests in functionality so your road map reflects those desires. Continue to build experiences across all of your channels that reflect parity and empower shoppers to make decisions that are most convenient and compelling for their needs at any given moment.
MF: The devil is in the details. You can have the best ideas, but you need to be able to execute on those ideas.
JMDJ: Stay focused on what’s important to your business. There are so many vendors out there, and there’s going to be a lot of noise during the early quarters of 2017. Remember to put the customer first in all decisions because they’re the ones that matter.
AP: Focus on technology and a unique value proposition for attracting customers in-store. It’s not to visit your new internet cafe; the experience has to be something more compelling to get them there.