14 Trends Driving Disruption in Retail in 2017

Is 2017 the year when brick-and-mortar stores get completely overshadowed by their online counterparts? It’s certainly a concern for some.

After all, major American retailers like Macy’s, Kohl’s, Walmart and Sears together closed hundreds of locations due to poor profits in 2016. In the meantime, online sales have continued to soar, with Forrester and eMarketer predicting that total online spending in the U.S. would reach US$385-$440.4 billion by the end of 2017.

Despite all that, according to the U.S. Census Bureau, brick-and-mortar sales accounted for over 92% percent of total U.S. sales in the first quarter of 2016. This means that physical stores are still incredibly popular – as long as you take advantage of the latest technologies to deliver a shopping experience that extends beyond your retail locations.

Watch out for the following disruptive trends, and your retail chain will outperform everyone else in 2017 – we promise!

1. Customer-Driven In-Store Experiences

To lure customers away from their computer screens back to your store, you need to offer them the same level of convenience that they can find online. That means catering to their product needs in a more personal way, avoiding “out of stock” situations and providing more flexible fulfillment options.

Data will play a key role in driving a more in-depth understanding of customers, including what they like, what they’ve bought, what products they’ve looked at and so on. This in turn will help retailers meet their shopping needs more effectively. Data will also help warehouse logistics teams to be more aligned with real-time, in-store demands – to make sure the customer always gets the product they want.

Retailers that embrace this level of interconnectedness will thrive in 2017.

Achieving “interconnectedness” with the Internet of things

The Internet of things (IoT) is defined as a system of interconnected devices that are embedded within various ordinary objects, such as smartphones, thermostats, washing machines, vehicles and so on, to collect and exchange data over the Internet. Retailers typically use the IoT to learn more about their customers and keep track of their stock levels.

For instance, German retailer Metro Group has invested US$209 million in electronic shelf labels, which allow it to regulate prices in real time – without assigning store employees to replace each label by hand. This keeps all prices up-to-date, along with any discounts or promotions.

2. Continued Growth of Online Shopping

With online shopping continuing to grow at a rapid rate, keeping an eye on your shipping services, stock levels and warehouse logistics will be as important as ever.

According to ShipMatrix, the number of UPS ground packages delivered on time during the holidays in the U.S. decreased from 97% in 2014 to 91% in 2015. So, by offering more flexible shipping and delivery options, you can easily gain the upper hand over your competition – both online and offline.

3. Improved Shipping and Delivery Methods

When it comes to giving customers additional fulfillment options, physical retailers have one key advantage that their online counterparts don’t – brick-and-mortar stores. For instance, customers can buy your product online and then pick it up at the nearest store. This fulfillment method made up 30% of Sam’s Club’s ecommerce sales in 2015, so don’t dismiss it!

Other fulfillment options include:

• Order online or in store and ship to home
• Order in store and pick up at another location

In 2017, stores that deliver any or all of the above will have more opportunities to sell their products without making a big investment in alternative shipping methods.

4. Spread of Agile Methodologies among Retailers

Businesses that embrace innovation and step away from routine operations and processes are more likely to succeed in today’s fast-changing world of information. That’s what agile methodologies are all about.

They advocate customer collaboration, adaptability to change, regular feedback and similar practices, which is why in the last 30 years, they’ve been particularly helpful in software development. With technology becoming more intertwined with the way businesses operate, agile methodologies are now spreading into other industries, and we believe that in 2017, we’ll see more retailers implement them.

Your best bet is to start small, by implementing agile methods in your IT department first – where software developers are likely already familiar with them – and go from there.

5. Mobile Payments

As the number of mobile users continues to grow, so will the potential to sell more products. According to IBM, smartphone traffic makes up 53% of all online traffic, while tablets and desktops make up the rest. However, when it comes to online sales, mobile only accounts for 29%. So, there is room for growth.

The best way to fill this gap is by implementing mobile payments. In 2017, retailers that haven’t adopted mobile payments to will do so – and if you’re one of them, then we recommend you do the same.

6. Unification of Online and Offline Customer Experiences

Savvy retailers will continue to invest in a single, centralized platform to communicate with their customers across various channel and devices in a unified manner, merging the gap between online and offline.

Known as unified commerce, this method of communication creates a seamless customer experience that makes shopping more effortless than ever. With unified commerce, a customer can come across your product on your social media page, look it up on your website, check it out at your physical location and/or purchase it through their mobile device.

Retailers that don’t have a system like that in place should start investing into one immediately – because those that don’t are bound to go out of business soon.

7. Data-Driven Business Decisions

More retailers will realize the importance of collecting data and applying it to every aspect of their business – from supply chain management to customer interactions.

JustFab for instance relies on fun quizzes to gather information about its customers and then makes product recommendations based on their individual preferences. If a customer is not happy with a particular recommendation, the retailer tracks that and then makes a more informed recommendation next time.

In business, data tends to lead to better decisions, which means that having more data would not hurt.

8. Data Security

Collecting data does have one con – it needs to be secure.

That’s why data security will continue being a huge concern for many people both inside and outside the retail market. In the last few years, data breaches have put the information of millions of debit and credit card users at risk, leading to sales losses and increased distrust of major brands.

National Retail Federation purports that one of the major reasons for the breaches in the retail market is because the U.S. financial industry relies on outdated technology from the 1960s. This means that in 2017, companies will not only need to invest in newer technology, with built-in security protocols and authentication systems, but offer customers tangible benefits of sharing their data in the first place.

9. Personalized Promotions

As customers become more attuned to the tactics used by retailers to deliver personalized messaging – like addressing them by their first name – their interest wanes. That’s why in 2017, we’ll see more retailers test new ways of delivering personalized messaging that addresses the needs of individual customers directly.

Ads that target customers based on their buying habits will be particularly vital since they allow retailers to zero on specific details. For instance, if a customer always shops for a particular brand of jeans, a retailer can create ads that showcase that brand instead of just advertising plain blue jeans.

Retailers that become more pro-active in this area will be more successful at attracting customers.

10. Automation

In 2017, we should see more retailers invest in automated technology such as self-checkouts, chatbots, robotic assistants and automated warehouse systems to reduce labour costs. Brands like Amazon, Walmart and Nordstrom have already taken significant steps toward complete automation, and we’re sure many more will follow.

Here’s what you need to watch out for as far as automation is concerned:

Self-checkout/scan. Self-checkouts and self-scans have been around for quite some time now, but some retailers are already thinking of ways to take this technology a step further.

Amazon’s new grocery store concept known as Amazon Go is arguably one of the most revolutionary shopping experiences in recent years – it bypasses checkouts altogether and instead relies on sensors within its shelves that detect what products customers pick up.

If your store doesn’t have a simpler self-checkout system already, then it’s time to implement one.

Chatbots. These automated customer service representatives help with standard online shopping requests, including product recommendations, pricing and so on.

At the end of 2016, Nordstrom added a chatbot to its Facebook page that assisted customers with gift shopping during the holidays. Other retailers that use this technology include H&M, Macy’s and Tommy Hilfiger.

Robotic assistants. Robotic replacements for human employees are not far off – and they can end up being very cost-effective down the road.

Walmart is planning to roll out a system of self-driving shopping carts that customers would be able to summon with their mobile device and use to guide them within the store from one item to another.

In addition, French supermarket chain Auchan announced in November of 2016 that it will start testing robotic customer service assistants that carry and check out groceries without human assistance.

Automated warehouse systems. With ecommerce fulfillments growing in popularity, more and more retailers are automating their distribution systems to save both time and money.

For instance, Hudson’s Bay Company launched a system in November of 2016 that can locate and ship a product in 15 minutes, which takes an average human employee 2.5 hours to accomplish. It’s said to be 12 to 15 times faster than manual work, so it makes human employees almost obsolete.

Walmart is currently testing a similar system, with the goal of decreasing labour costs by 80%.

11. Supply Chain Visibility

More and more companies are looking to invest in digitizing the data that relates to order processes, such as shipment, transportation and logistics, to achieve better supply chain visibility. The idea is to make all this information available in real time to all stakeholders, simplifying collaboration across multi-tier supply chain partners.

Since many retailers still rely on analog methods of supply chain management, we expect this to be one of the fastest-growing segments in 2017.

12. Shopping on Social Media

It shouldn’t be a surprise for anyone that social media plays a crucial role in influencing customer behaviour – except that in 2017, platforms like Facebook and Instagram will become even more important in driving direct sales.

For instance, Instagram’s newest feature allows brands to tag the products that appear in the photos they post, similarly to the way users would tag their friends. By clicking or tapping on the descriptions of those products, users would get redirected to the brand’s website or product page, making it even easier for them to purchase the product.

13. Social Influencers

Social influencers – individuals who have established themselves as thought leaders within certain niches on social media – will continue being an important alternative for promoting products. Their followers listen to what they have to say because they are often perceived more as product reviewers rather than salespeople or brand ambassadors.

Since they cost less than “regular celebrities,” they are perfect for spreading the word about the quality of your products to an engaged audience if you can’t invest too much in marketing.

14. Virtual Reality Shopping

Virtual reality isn’t just for video games – it can work for shopping too. For instance, customers can use virtual reality to try on clothing without leaving the comfort of their home or test out sports equipment to see how it performs in a practical environment.

Though virtual reality is still in its formative years, some companies are already relying on it to build stronger customer relationships. For example, online beauty supply store Bellabox has used virtual reality to allow its customers to have a virtual conversation with its founder, making the company feel more personable and relatable.

In 2017, virtual reality will undoubtedly continue to increase in popularity, so we’ll likely see more retailers explore its uses.

Seamless Customer Experience to Remain a Priority

Overall, 2017 is shaping up to be the year during which online and offline shopping will continue to intertwine, resulting in a more seamless experience for everyone. Retailers that embrace this change will be well-positioned for future success – and those that don’t will not stick around.

What kind of retailer do you want to be?