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 2015, 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 2015, retailers will step up their efforts by incorporating mobile into other parts of the customer journey, including order fulfillment, payments, and loyalty.
We discuss these trends—among many others—in more detail below. Read through the following predictions and see how you can use them to make decisions in 2015, stay ahead of your competitors, and provide a better shopping experience for your customers.
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 2015.”
Retail expert Georganne Bender pointed out in VOAnews.com that 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 Y—a young but equally large—market segment will also be a major influence in retail. Merchants who want to reach millennials 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 Y 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.
The recent 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 get a whole lot more shoppable in 2015.
Retailers that have already started participating in the trend include Nordstrom and Target, which are using the Like2Buy platform on Instagram, and Home Depot, (RED), and Burberry, which are testing Twitter’s buy button.
In the screenshots below, you can see how 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.
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.
In 2015, 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 pledge, and Warby Parker, which implements a “Give a Pair” initiative to make eye care more accessible to the less-fortunate.
How does CSR improve the shopping experience? Simple. It makes customers feel good knowing that they’re contributing to a worthwhile cause. As Adrianne Weissman, owner of apparel store Evelyn & Arthur told us, “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.”
When it comes to reward programs, the “points-for-purchases” model just isn’t cutting it anymore. As we mentioned in a previous post, “The practice has become so commonplace that the allure of earning points doesn’t excite consumers the way it used to.”
That’s why in 2015, 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.
Walgreens, for example, now lets its members earn points whenever they engage in healthy activities like walking, weight tracking, and more.
Customized perks will also be a big part of loyalty program success in the coming year. Research cited by eMarketer revealed that “consumers have begun to expect more personalized offers and services—not just blanket discounts—in return for their participation” in rewards programs. Moreover, according to the study, consumers cited relevant discounts and personalized offers as the top benefits of such programs.
Initiatives to make the cash register extinct will continue to go strong in 2015. Cloud-based point of sale systems have proven that they can outperform old-fashioned registers in all aspects (performance, functionality, looks) and an increasing number of retailers will recognize this and make the switch.
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 2015.
Research 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 2015. This will likely prod companies to experiment with how they can use wearable technology to market or serve customers.
According to Retail TouchPoints, Barneys New York is “is venturing into the wearable tech world through a collaboration with Opening Ceremony, the Council of Fashion Designers of America and Intel.” Meanwhile, Kenneth Cole reportedly unveiled a Google Glass app in 2014 to market its new cologne.
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.
We’ve already seen plenty of 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, is testing Google’s Project Tango 3D to create AR-enabled mobile maps and navigation for its customers.
Expect such experiments to continue in 2015.
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.
Fortunately, there are plenty of solutions that make data analytics accessible and affordable for small and medium retailers.
Swarm for instance, gives brick-and-mortar stores the ability to analyze foot traffic so they can make better decisions and tailor customer interactions. There’s also Collect, which gives merchants insights into the spending habits of their top customers, allowing them to send personalized rewards and offers.
Vendors will continue to develop and refine their solutions so they can provide the most accurate and insightful data in the fastest and most convenient ways possible.
As Chain Store Age cites, “The 2014 Identity Fraud Study reported an increase of more than 500,000 fraud victims to 13.1 million people in 2013, the second highest number since the study began.” Moreover, it’s been found that the average cost of a breach per organization in 2014 is $3.5 million—an increase of 15 percent from the year before.
But it’s not just about the numbers. In this day and age, consumers aren’t just looking for unique and convenient shopping experiences—they also want their purchasing journeys to be safe and secure.
That’s why in 2015, we anticipate risk mitigation and data security to be among retailers’ top priorities.
There are a number of ways retailers can better manage risk in the coming year. One is to instill awareness and training across the entire organization to ensure that everyone knows the importance of risk mitigation. Retailers can also be more selective of their vendors that handle their data and processes.
We also expect merchants and solutions providers to come up with better ways to protect customer data.
Retailers and financial institutions in Australia, for example, have recently made the PIN as the primary form of card payment authorization because it has proven to be more secure than signatures. PINs keep customers safe from fraud in the event that they lose their cards. Unlike signatures, which can be forged, PIN codes cannot be easily cracked.
Another interesting security initiative can be seen in Apple Pay, which assigns a unique Device Account Number to each phone. The Device Account Number, along with a transaction-specific security code is used to process each purchase, so credit or debit card numbers are never transmitted with the payment, nor are they shared with merchants.
Expect to see more of these initiatives in the coming year.
As the authors put it, the most successful retailers will be the ones that have “complete control of their value chain, from creation all the way to consumption.”
Notable retailers that have proven this strategy include Apple, Ralph Lauren, and Trade Joe’s. 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.
Retailers will realize this in 2015, which is why we’ll likely see an increase in value chain initiatives, single product retail, and private label merchandise.
Additionally, 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.
We anticipate this trend to continue in 2015. 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 the brick-and-mortar realm 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.
To do this, we predict that 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.
Take for instance, O’Reilly Auto Parts, a retailer that tailors its merchandise mix from store to store. As Retail Info Systems News reported, “Each O’Reilly store is also a local store, carrying the tools, equipment and accessories that match the specific auto aftermarket needs of the store’s customer base as well as the vehicles they own.”
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.
Consider what retailers such as Starbucks, Target, and Chipotle are doing. In order to tap into dense, urban markets, these chains have started to deviate from their usual store formats to establish smaller, “express” stores in specific locations.
Target opened its first express branch in Minnesota this year, while Starbucks and Chipotle both announced plans to build smaller format stores.
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 2015.
Next year, more retailers will introduce mobile loyalty programs. Shoppers will no longer have to clutter up their wallets with physical cards. Instead, they can track and redeem their rewards using their smartphones through apps such as Collect.
Convenient services such as mobile ordering will be more prevalent. Larger merchants, including BJ’s Restaurant and Chipotle are already implementing this, but thanks to solutions like Mobi2Go, SMBs can also get in on the mobile fun.
Bird On a Wire, an Auckland-based free-range rotisserie chicken joint, for instance, uses the solution to offer online and mobile ordering, and it’s worked out quite well for them. Owner Ben Grant told the Mobi2Go team that the service streamlined his business. “Mobi2Go mitigates big lines in the shop, integrates directly with our POS system Vend, and is an additional revenue stream for us. It works really well,” he shared.
The number of consumers adopting mobile wallets will increase in 2015, thanks to solutions offered by Google, Softcard, Apple, and most recently, CurrentC. Expect less card-swiping or cash-handling and more phone-scanning next year.
Merchants who want to keep up with mobile payments but are confused as to which method to adopt can look into Poynt, a smart terminal that supports multiple payment technologies including NFC, Bluetooth, QR codes, EMV, and magnetic stripe cards. So whether a customer wants to pay using Apple Pay, Google Wallet, the CurrentC app, or beacon technology, the retailer will have no problems ringing them up.
Omnichannel retailing has begun to pay off for a lot of companies. Consider Macy’s, which just started marketing its mobile and online-to-offline services more aggressively after the success of its initial omnichannel tests.
According to MediaPost, the retailer has found that click-and-collect not only serves as a convenient option for customers, but it also increases spending. Macy’s told the publication: We love this kind of sale, because [the customer has] already made her decision, she knows where to go in the store, and when she gets there, she almost always buys something else — spending about 125% of her intended order.
In addition to click-and-collect, Macy’s will continue to invest in omnichannel through more robust order fulfillment strategies (all Macy’s locations can now ship directly to someone’s home) and better mobile experiences (customers can now manage their points and offers via mobile.)
Keep this in mind whenever you’re pondering which direction to take your business. Always ask yourself if your efforts are truly making shopping faster, safer, and more enjoyable for your customers. Stick with that strategy, and you’ll be just fine in the future.