Despite early announcements of major store closings and employee furloughs by some of retails largest and most prominent players, the National Retail Federation (NRF) is forecasting a growth rate of 3.1 percent in 2016, a performance rate higher than the 10 year average of 2.7 percent. The NRF also predicted non-store retail to grow at a rate of 6 to 9 percent this year. “We think 2016 will be favorable for growth in the retail industry,” said NRF President and CEO Matthew Shay. “All of the experts agree that the consumer is in the driver’s seat and steering our economic recovery.”
But at a time when traditional physical retail stores are struggling to get their heads around the art and science of online sales, social marketing and all things digital, those who have mastered the online sales genre are venturing into the world of physical retail outlets. Both are doing their very best at trying to understand and lock down an ever evasive and fickle consumer. Leslie Ghize, EVP of TOBE, is in the business of examining consumer culture and at this year’s Retail’s BIG Show, described today’s customers as “being like balls in a pinball machine, constantly knocked around and bombarded by media and brands.” But make no mistake retailer’s, more than ever before, customers are in control and driving the retail economy. For those who can integrate today’s digital technology to segment, identify and capture their audience’s attention and fill their needs most effectively will prevail against even the most experienced traditional retailers. Data driven personalization will dominate retail in 2016.
Armed with their smartphones, consumers will be roaming stores with powerful technology that produces real-time interaction between customer and seller. Developing tactics to capture; evaluate and react effectively to all the data pouring in from those devises will be critical to succeeding in 2016, even among the most well healed, traditional retailers. And while an all-inclusive omnichannel, digital, social and in-store experience is important, consumers are quickly becoming annoyed with poorly calculated and overly perpetuated attempts to catching their attention. In the coming year, less equals more and quality content will out-trump quantity.
An effective in-store experience will revolve around rewarding the customer at every turn with creative displays that make it impossible for customers to avoid key products and special offers. Building on the sale and adding items to the shopper’s basket will generate more favorable revenues. Utilizing technology throughout the purchasing decision making process, will not only enhance the consumers experience but will maximize product margins. A recent Forrester report states that by the end of 2016, “4.8 billion individuals globally will use a mobile phone and smartphone subscribers will represent 46% of the global population. In the US, more than 30% of sales will have a mobile cross-channel component, meaning consumers will use mobile at some point throughout the purchase life cycle, from product research to in-store interactions.”
2016 may also be the year to shift away from a “go-it-alone” strategy. Recently Gap and Virgin Hotels formed a partnership to leverage Gaps unused in-store technology to connect their guests with Gaps online catalog; permitting Virgin’s Chicago guests to have Gap products delivered to their rooms and have their purchases added to the hotel bill. Tricia Nichols, Gap’s global lead of consumer engagements and partnerships said, “For us, it’s been a really interesting partnership. We’re testing things that hadn’t been done. Another great thing about these partnerships is that you don’t know where they will go. The consumers will tell you. … Then you can be somewhat nimble and react to consumer behavior and adapt to it.”
Other industry giants are also forming new and creative partnerships that provide accessibility and convenience without trading quality. Whole Foods is betting on its trendy consumers to embrace wine in a can. Fearless in the stigmatized face of wine in a box, product experts at Whole Foods are convinced that the newest container/product partnership will inspire their active, on-the-go customers to embrace their favorite wine wrapped in aluminum and capped with a pop-top instead of a cork.
The relationship between retailer and consumer will continue to be influenced by the internet of things, digital technology and data; lots and lots of data. For retailers who master the nuances of the data and move deliberately into a data-driven business model, the future holds much promise for success.
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