As another year comes to an end, the retail world is ramping up for its busiest season. The National Retail Federation reports that for some retailers, the holiday season represents as much as 30 percent of sales, so it’s not hard to see why it’s a crunch time for those of us in the business.
The holidays also give us an occasion to think about the year ahead and start to consider what we’d like to do differently next year. It’s a time to reflect on trends and market influences and think about how we can adapt to changing times. After all, if there’s one thing that 2017 has taught us, it’s that the retailers who adapted the fastest and the best were the ones who survived the so-called “Retail Apocalypse.”
As we look to the year ahead, we can already see that there are some emerging trends that are likely to gain in importance. Nobody has a crystal ball, but in talking with retailers and researching the market, here are some of our top retail trends and predictions for 2018:
The convergence of channels will become a reality for more retailers.
The retail world is moving beyond multi-channel commerce, and even beyond omni-channel commerce, towards a true convergence of channels. A true convergence of channels spans across data, commerce, and interactions to provide a seamless and immersive brand experience for the customer. It’s about eliminating the traditional data and functional silos that exist in most retail organizations to deliver the ultimate customer experience everywhere, and any time the customer shops.
Some creative examples of the convergence of channels include:
- Beacons recognizing the customer when they enter the store, alerting the store associate via their clienteling app, as well as providing targeted personalized messaging to the customer
- Basket building capabilities as a self-service approach to selecting items, getting recommendations, and then either tendering or suspending a transaction that may then be picked up by the store associate
- Google/social ads that recognize the location of a consumer when online inside or near a retail store
- Sending personally curated collections of products that link back to the e-commerce site
Focusing on omni-channel excellence has proven financial benefits: one study found that companies with omnichannel customer engagement strategies retain on average nearly 9 out of 10 customers compared to only 3 out of 10 for companies with weak omnichannel strategies.
The data and technology gap between consumers and retailers will shrink.
Consumers have had a technology and data advantage over many store associates in the past few years, as mobile phones and tablets have become common in most of our lives. The retail world takes a little longer to adapt, and this meant that it has not been uncommon for consumers to have access to even more information – prices, reviews, inventory, competitive intelligence, and more, than sales associates! You might think that the opposite should be true, but there are still plenty of retailers who fail to equip their associates with the mobile devices, applications (like mobile point of sale, inventory and order management, and clienteling), and even web access that would give them an advantage over consumers.
This is slowly changing, with the cost of mobile devices dropping, security concerns being addressed, and more diverse software solutions being developed. Retailers can benefit from a higher return on their hardware investment nowadays by using devices for more than just one function (for example, both transactional point of sale and clienteling on a tablet).
We will see more predictive and AI tools driving marketing.
Data-driven marketing has been a goal for retail marketers for several years now, but new technology is finally beginning to make it a reality. Over the past few years, retailers have gone to great lengths to collect and centralize data from multiple channels. This was no small feat.
Now that we’ve collected the data, there will be a focus on improving its usefulness, rather than just the sheer amount of it. Actionable analytics tools will become more common, enabling marketers to use business intelligence tools to analyze the data and, with a single click, create smarter customer segments and clusters. This will enable them to deliver more relevant messages and campaigns that are ultimately more effective in driving engagement and sales.
Email will continue to be king, but other marketing channels are gaining in importance.
Email is not going away anytime soon – certainly not in 2018. However, as more and more brands fight for our inbox attention, getting meaningful engagement from email marketing gets increasingly challenging. Deliverability, open, and click-through rates are dropping, and marketers are turning to new ways to engage their customers.
SMS is one channel that has proven to be remarkably effective in terms of reaching customers: with open rates that hover around – wait for it – 99 percent, it’s easy to understand why SMS is gaining in popularity. It would be difficult or impossible to find any retail marketer who has run any email campaign in the last year with such a high open rate.
Many retailers are seeing great success in using their sales associates to reach out 1:1 to key customers. This relationship-selling approach, driven by clienteling, is amazingly effective in influencing repeat visits, sales of higher value and higher-margin items, and improving conversion rates. The technology now exists to digitize the associate’s little black book, giving them access to the customer’s omni-channel profile and delivering outreach reminders about compelling topics at just the right moment.
More and more retailers will embrace, rather than try to fight, Amazon.
Retailers, both in the e-commerce space and those with physical stores, have been anxiously watching Amazon grow in leaps and bounds since it was founded just over a decade ago. Amazon is now worth more than Walmart, Costco, and Target combined.
The behemoth marketplace has innovated over the years to become a real competitive threat in a growing number of verticals, from household essentials to apparel, and most recently, its own private label home furnishings line.
Retailers have struggled to fight off Amazon for years. More recently, though, rather than seeing Amazon as a competitor, more and more smart retailers are joining forces with the marketplace and embracing it as an effective sales and fulfillment channel.
This creates a new challenge for retailers who are already struggling to manage their customers, products, and inventory across their existing channels. Adding Amazon to the mix adds additional complexity to the supply chain, so it’s important – if not essential – that your e-commerce software makes it easy to manage Amazon orders and inventory in the same way as the other channels.
Personalization will continue to permeate additional channels.
“Curated shopping is based on the fact that customers want a personalized experience and they will seek advice from experts to help them with the process. Retailers and brands that provide this service are able to use this type of personalization as a core differentiator. It also serves to offer the customers a more memorable experience when they shop, which enhances customer loyalty.”
(BRP Digital Commerce Survey)
Personalization is gaining importance in the world of retail, with 38 percent of retailers indicating in a recent BRP study that improving personalization is a top priority. Retailers have been working on personalizing emails with dynamic content, serving up personalized product recommendations on e-commerce sites (for example, “you may also like,” or “shoppers like you also bought”).
In 2018, we will see personalization taken to the next level. E-commerce personalization will become more immersive, with entire microsites created for customers to explore curated product collections, connect with their favorite associates, manage their accounts, and more.
The in-store experience will become more personal, as well, with retailers using clienteling in new and innovative ways to equip associates with the data and tools needed to tailor unique shopping experiences for each customer.
Omni-channel order fulfillment will get smarter.
Retailers have recognized the consumer demand for in-store pickup of online orders (BOPIS, or Buy Online Pick Up In-Store) and in-store orders of out of stock items (also referred to as “endless aisle”). By 2021, 90 percent of retailers will offer Buy Online Pick Up In-Store (BOPIS).
It’s great for shoppers that more and more retailers are offering new ways of fulfilling orders. What shoppers often don’t realize is the added cost to retailers who are going to great lengths to deliver this service despite having siloed or disconnected systems.
What we will see in 2018 is more and more retailers delivering on BOPIS and endless aisle in leaner, smarter, more automated ways. Distributed order management systems that help retailers find the most cost-effective and efficient ways to fulfill orders using built-in business intelligence are gaining in popularity.
Let’s recap our top retail trends and predictions for 2018:
- The convergence of channels will become a reality for more retailers.
- The data and technology gap between consumers and retailers will shrink.
- We will see more predictive and AI tools driving marketing.
- Email will continue to be king, but other marketing channels are gaining in importance.
- More and more retailers will embrace, rather than try to fight, Amazon.
- Personalization will continue to permeate additional channels.
- Omni-channel order fulfillment will get smarter.
One of the most exciting things about starting a new year in the world of retail is the NRF Retail’s Big Show that takes place every January in New York City! It’s a great place to immerse yourself in the world of retail trends and technology and to put your finger on the pulse of the industry. We’ll be exhibiting again this year and hope to see you there. Click here to request a meeting with one of our retail technology experts.