Retail is undergoing explosive change. We've all seen the articles about how digital affected holiday sales. But these changes are about a great deal more than just one season, and 2016 is sure to bring further massive disruption.
Here are seven megatrends that'll transform retail in 2016.
Cross-channel marketing based upon unified omni-channel profiles
Retailers have consistently been at the forefront of innovation when it comes to using data to create better experiences for customers. And retailers know that omni-channel consumer behavior is making it critical that data from all channels be combined into unified profiles. PC-based browsing data was the easy bit. Mobile's more challenging, but when more than half of connected consumer time takes place on mobile devices, you can't ignore the need.
In addition, the IAB just released a study that shows how common in-store use of mobile phones has become. The study affirms that such behaviors aren't just confined to Millennials. Rather, use of smartphones and tablets as shopping aids is strong in virtually every age group.
Different cohorts use their phones for different things. But the unifying truth -- that mobile is an integral part of most people's shopping experience -- will drive more and more retailers to progress in uniting data sets for more comprehensive shopper understanding. That goes for web only, multichannel and brick and mortar retailers.
Social buying will explode
For years, marketers have leveraged social as an engagement tool. But innovations from the major social networks are setting the stage for a massive increase in the quantity of goods purchased directly in social environments. By combining massive consumer access, time spent, social shopping, and new buying mechanisms, social media properties are drastically reducing the friction between a social property user and the completed transaction.
Further, by combining these new capabilities with efforts to change how and where people consume professional newspaper, magazine and other content, they've set the stage for what amount to individualized stores -- integrated shopping environments curated and brought to the user based upon what data suggest they may be interested in purchasing.
The collaborative economy will begin to change our conception of retailers
By the collaborative economy I mean peer-to-peer exchange of goods and services. Start-ups like Uber and Etsy are great expressions of the movement. But we're also going to see a lot of blurring on the edges of retail and the collaborative economy.
Jeremiah Owyang of Crowd Companies talks of a gradual progression of companies moving from being makers or sellers of products to becoming platforms that enable commerce. Don't expect to see CPGs stop making things, or grocery stores to stop selling them. But do look for more distribution deals in which retailers provide a platform for the collaborative economy, as fast movers Nordstrom and West Elm have by offering Etsy boutiques in their stores.
Retail apps will take off worldwide
In many markets around the world, apps now represent major revenue streams for retailers. The trend first took off in developing countries where the PC isn't present in most homes. But connected time spent on smartphones has reached the majority of total online time – even in places like the U.S. where there are a lot of PCs.
In 2015, etailers will be using every technique possible to maximize their mobile sales. And since apps now represent more than four out of every five minutes of mobile connected time, apps will need to play a central role in mobile retail strategies worldwide.
Retailers will also recognize that, just like any other channel, apps are not something you can "set and forget." Rather, sustained marketing programs encompassing apps and other channels will quickly become the norm. Because app sales are about much more than just getting the install, and the role of apps will be far broader than just as a transaction vehicle.
Speed-to-customer will be increasingly critical
While the consumer has moved to omni-channel shopping behavior, there's still that pesky challenge of getting a physical good to the buyer. A smartphone or laptop can't deliver your dinner on its own. But retailers are innovating like mad to reduce speed-to-customer.
The major same-day-delivery initiatives are just one expression of the increasing focus on getting products into consumer hands faster. Another goes back farther -- free two day shipping with Amazon Prime membership. Another is the explosion in the number of consumers who order online and pick up in store. And still another is the increasing number of mobile apps that let consumers pay by phone and pick up items like coffee and food without waiting in line.
What's clear in all this is that getting products into consumer hands faster is a major challenge for all retailers and etailers. We're already seeing collaborative economy startups serve as middlemen to get everything from tacos to TV sets in customer hands, lickety-split. Taxi alternative companies are now adding delivery services to their repertoire. We can also expect to see more implementation of in-aisle payment systems you engage with via smartphone.
Dynamic pricing infrastructure will ramp up quickly
These days, retailers with physical stores need to maximize their flexibility with regard to setting and altering prices. The omni-channel consumer has access to a gigantic set of comparative pricing information at their fingertips, and physical stores are beginning to adapt to that reality.
Electronic shelf labels (ESLs) are growing in popularity because they enable both on-the-fly pricing and a variety of other benefits related to omni-channel consistency. In-store pickup is also a big driver of this trend, because retailers must ensure pricing consistency. But some pricing inconsistencies still exist. Grandmother research example: I recently purchased a computer online from a major retailer, choosing store pickup, and then spent two hours waiting while the store team communicated to the IT team because the price of the good was different.
Retailers will dial up the content marketing
We often think that trends start in the most developed economies, and then spread round the world. But here's one in which the developing world is leading. Retailers in markets like India are creating scads of very high quality content to engage users and drive commerce. It's about creating demand -- growing the top portion of the buyer funnel so that more sales get made to more people more often.
And the activity isn't confined to India. China's Alibaba provides ample proof. Alibaba's three-hour, star-studded TV show on the eve of Singles Day is widely credited as a contributor to the massive commercial success of this year's 11-11 event. Directly connecting content marketing to sales can be a challenge, but innovative buying mechanisms and attribution analysis are making the creation of those connections easier. And mobile partnerships like this one between Ulta and Bravo will surely become more common.
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