A collection of our top 12 forecasts for the retail industry.
Welcome to Vend’s 2016 Retail Trends and Predictions report – a collection of our top 12 forecasts for the retail industry. Just like our 2015 predictions, this year’s forecasts will shed light on the trends and issues that’ll make (or continue to make) a big impact on the retail industry.
To supplement this year’s piece, we’ve included the whitepaper, ‘Preparing for the future of shopping – a collection of insights and forecasts from other retail thought leaders’. This whitepaper, along with the 12 predictions below, will give you a better understanding of what’s in store for 2016, so you can prepare and take action.Download whitepaper
Retailers will give consumers more payment options.
The rise of mobile payments and the EMV mandate in the United States will prod merchants to update their old payment terminals to newer models, which will not only help retailers with compliance and security, but also enable them to accept more payment options.
Notable players include PayPal, which recently rolled out the PayPal Here Chip Card reader. PayPal’s device is compatible with iOS and Android devices, and is built to accept both EMV and magnetic stripe cards, as well as NFC payments such as Apple Pay, Android Pay, and Samsung Pay.
Similarly, there’s Mercury, a payment solution that equips retailers with the hardware they need to accept EMV cards as well as mobile payments. There’s also Poynt, a smart terminal that supports several payment technologies including magnetic cards, EMV, NFC, and QR codes.
As retailers increasingly adopt these payment solutions, we can expect more stores to start accepting additional payment types, most notably EMV cards and mobile payments.
Example: Vend customer LifeLine Repairs made the switch early on when they only had two stores. They had plans to roll out 23 more stores and knew the process would be much smoother if they started the transition early.
CEO of Proximity Marketing division, Proxama
“We are fast approaching a place where mobile technology will offer retailers a channel that will create a perfect synergy between payments, loyalty, marketing and advertising.
The mobile device is increasingly becoming an essential part of the customer’s shopping journey. Bluetooth Low Energy (BLE) Beacons, NFC and QR codes are the latest proximity technologies on offer to retailers, providing an opportunity to engage with customers via their smartphone.
Mobile payment technologies such as Apple Pay are already using this type of innovation but, despite the relatively slow consumer uptake of this technology, the smart retailer will be looking beyond just mobile payments.”
Mobile will play a bigger role in click-and-collect initiatives.
Traditional click-and-collect programs typically involve people shopping online then picking up items in-store. In 2016 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.
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.
These are just a few examples of mobile playing a bigger role in click-and-collect. We anticipate to see more of these initiatives in 2016.
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 2016, more retailers will start analyzing online and offline data together. Doing so will give them a more comprehensive picture of their customers’ shopping journeys.
Barneys is a great example of a retailer that understands the power of unified data. Matthew Woolsey, Barneys’ executive vice president for digital, told the Washington Post that looking at both online and offline customer behaviors showed that many women who purchase fine jewelry in their brick-and-mortar locations have previously browsed for it online.
If Barneys had looked just at their shoppers’ online data, they wouldn’t have figured out that their web-browsing customers eventually purchased offline, and they wouldn’t have a complete understanding of their customers’ path to purchase.
Retailers will continue to remove friction from shopping.
Frictionless shopping has always been an objective of omnichannel. In 2016, we anticipate companies will further explore ways to reduce friction in the shopping journey.
We can already see signs of this happening. There’s the Amazon Dash button, for instance, which makes re-ordering possible with literally just a push of a button.
Other stores are removing friction from offer redemption. Take Starbucks, which recently streamlined this process by updating its app’s barcode screen to show available rewards, offers, and coupons. This way, users won’t forget that they have a redeemable reward and they won’t have to pull up a separate screen to redeem the offer.
Meanwhile, mobile payment companies are continuously finding ways to eliminate friction from transactions. For example, Apple's mobile wallet can automatically detect NFC readers, so users won’t have “wake-up” their phones or open an app to start the payment process.
Head of Customer Success, RetailNext
“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 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.”
Merchants will adopt in-store mobile devices.
In 2016, we anticipate the continued adoption of mobile devices such as mPOS systems and in-store tablets.
One example of a merchant using mobile technology well is cookware retailer Borough Kitchen, which runs Vend on their iPads. Having a tablet-based POS system enables them to improve the customer experience and speed up checkout. For instance, founders David Caldana & Justin Kowbel say that all they have to do during their peak hours and the holiday season is add new tills by switching on additional iPads. This allows them to reduce lines and ring up sales much faster.
Old school loyalty programs are on their way out.
Modern consumers still value rewards and promotions, but they don’t matter as much anymore. According to a study by MasterCard, only 18% of respondents considered promotions as important. The study also found that “in choosing a retailer, omnishoppers prioritize value, track record and convenience, over loyalty rewards.”
This isn’t to say that loyalty programs won’t be successful in 2016. But it’s important to note that simply implementing rewards won’t be enough to stay competitive. In the coming months and years, the retailers that will win are those that offer personalized rewards, coupled with great products and convenient buying experiences.
We also anticipate that retailers will leverage technology to make this happen. Traditional loyalty programs will be replaced by mobile-based ones that not only make it easier to redeem rewards, but also enhance the consumer experience.
Chief Executive Officer, Collect Apps
“The future of 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 to be 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.”
Retail pure-plays will disappear.
A study by MasterCard found that eight out of 10 consumers now use a computer, smartphone, tablet, or in-store technology while shopping. Forrester also predicts that cross-channel retail sales with reach $1.8 trillion in the US by 2017.
Omnichannel is showing no signs of slowing down, and in order to keep up, retailers – whether they’ve started in brick & mortar or ecommerce – will need to merge their physical and digital systems to serve omnishoppers.
We’re seeing many retailers that have already bet big on omnichannel. Online subscription service Birchbox, which opened its first physical store in 2014, established pop-up shops in various US cities to determine where it would set up its next brick & mortar stores. There’s also Nasty Gal, a former online pure-play, which has opened two new stores in Los Angeles.
Meanwhile, retailers that already have both physical and ecommerce stores are working to further bridge different shopping channels. For instance, there’s Macy’s, which in addition to offering typical omnichannel services like click-and-collect, also lets customers browse the inventory at their local store on the Macy’s site. This lets shoppers see what’s in stock at the nearest Macy’s location, and they can either purchase a product and pick it up right away, or arrange for same-day delivery.
The Macy’s mobile app also lets users scan product barcodes in-store, so they can view online reviews, promotions, and more.
More retailers will opt for single-view and cloud-based solutions.
The days of managing online and offline systems separately will soon be gone, as more retailers switch to single-view retail management systems.
Having a single view system across multiple channels is essential to any modern retail strategy. Gaining sales, inventory, and customer visibility across different channels allows merchants to execute their omnichannel initiatives more effectively, so we can expect retailers to adopt more of these systems going forward.
Omnichannel will also drive more retailers to adopt cloud-based apps, as these solutions enable them to scale quickly, work from anywhere, and get real-time insights into various aspects of their business.
In 2016, we’ll see more small and medium retailers adopt single-view and cloud-based tools. Since these businesses are a lot more nimble and aren’t usually tied down to large, complicated legacy systems, they’re in a great position to switch to omnichannel technologies.
VP of Strategy, Profitero
“Maintaining an item file, accurate inventory levels, and managing a pricing system between channels is one of the foundational roadblocks for a lot of retailers who are not necessarily managing their stores and their online business with the same platform.
There’s been an evolution. Over the last three or four years a lot of retailers have realized that online and offline are converging and they need to integrate their systems. But both online retailers who started opening stores, and brick & mortar retailers who went online, often use different platforms when they were getting started. And so they couldn’t very easily see what the online price was next to the brick & mortar price in the same system. That’s an important initial technical roadblock.”
Retailers will invest in omnichannel fraud management.
Omnichannel retailing introduces a lot of complexities, not just in terms of operations and order fulfillment, but also when it comes to fraud prevention. In an omnichannel world, it’s no longer enough to combat fraud in silos.
Unfortunately, the numbers surrounding omnichannel fraud management weren’t great in 2015. ACI Universal Payments commissioned Forrester Consulting to conduct a study on how retailers are managing fraud across channels, and they found that 65% of retailers believe they lack the tools to effectively manage omnichannel fraud.
Additionally, “only 46% have consolidated fraud management solutions across channels” and “54% of retailers say they do not have the skilled staff needed to deal with omnichannel fraud challenges.”
Still, we are optimistic that these numbers will change in 2016. While omnichannel fraud management will continue to be a challenge for the retail industry, we expect more merchants to realize just how crucial it is to implement security measures across different channels.
This is why we’ll start to see an increase in the number of retailers consolidating their fraud management efforts across channels. In doing so, they’ll be able to quickly detect and address suspicious activities no matter where and how they’re taking place, and thus offer more secure shopping experiences.
Social will grow as part of the omnichannel mix.
Social media has been playing a big role in the shopping journey for a while now, and it will continue to do so in 2016 and beyond. We anticipate 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.
Apart from Instagram, no social network has been able to dominate shopping just yet, but that doesn’t mean social media companies will stop trying. Facebook, Twitter and Pinterest all released buy buttons in 2015, and while none of them gained widespread adoption, we can expect social networks to continue investing in social commerce.
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.
Content Strategist, Retail TouchPoints
“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.
I think this would be a good opportunity to call out Pinterest specifically, because I 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.”
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.
CEO of Integrated Marketing Solutions
“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.”
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 (particularly larger merchants) will likely look into ways they can leverage the Internet of Things (IoT) in their locations.
A study by McKinsey found that the uses of IoT in retail could have an economic impact of $410 billion to $1.2 trillion per year in 2025. That may be a long way to go, but that doesn’t mean forward-thinking retailers won’t step up to the plate sooner.
This year, expect pioneering retailers to use connected devices to streamline in-store shopping and communicate with shoppers. As McKinsey points out, a few examples of IoT include merchants using in-store devices to automatically ring up customers, track real-time shopping behaviors, and send tailored offers to customers.
Vice President, Tyco Retail Solutions
“Mobile devices were the start of the IoT retail interactive shopping journey. Wearables and an increased focus on adding sensors inside the store (such as RFID) will accelerate the consumer connectivity trends.
Big data and video analytics will clarify and add value to the personal shopping conversation.”
Omnichannel will be integrated into every aspect of retail.
The key focus for retailers in 2016 will be omnichannel. No matter what industry you’re in or how complicated your operations are, bringing online and offline together is important in every facet of your retail business.