2016 was an exciting year for the retail industry. A parade of innovative options, widgets, and new players wowed consumers and continue to drive a sea change in their preferences and expectations. Online and brick & mortar retailers alike found themselves scrambling to stay relevant and competitive. We’ll see more of the same in 2017, with shifting consumer attitudes and needs forcing retailers to rethink, and in some cases to reinvent their channel, product mix and service strategies.
The new year promises to be a winner for retailers and consumers alike. As we look ahead, let’s consider the following 16 top trends.
- Amazon’s Phase 2 – Shopping with Alexa
Amazon continues to take center stage and not only thanks to its great customer service, competitive pricing, an unbeatable product mix, reliable user reviews and support, and the gold standard Prime program offering member discounts, same-day delivery, and vast entertainment options. Now, Amazon’s “Just Ask” feature on Echo (Alexa) has made shopping virtually effortless. Alexa offers daily promotions and special deals, supported by Echo which knows the customer’s buying history, delivery address, and shipping and payment preferences. The reverberations of this winning combination will be felt by every brand and retailer. A game changer.
- Brick & Mortar Stagnates But Still Relevant
Brick & mortar has not closed up shop, but will experience continued stagnation in 2017. The obvious reason is online shopping. There is a but, however. The good news for many terrestrial retail categories is that while consumers increasingly conduct product research online, the basic human need to see, touch, feel and/or try on before purchasing is an enduring one. Searches for “locations near me” are on the upswing, indicating that consumers want “hands on” before they buy.
- Brands Expand Locations and Pop-up Stores
Brands will continue to open their own locations. This concept holds undeniable appeal for any brand that wants to tell its story (not to mention control its sales, inventory, and service ethos) in a way that many department stores are simply unprepared to do. For online-only brands retailers, a pop-up storefront offers an opportunity to connect with customers face to face.
- The Customer Experience Is a Sensory Experience
The customer experience is all-encompassing. A store today isn’t just about the products and service you expect to find there—its look, feel, and, increasingly, its aroma are all key brand markers. Proprietary scents are being created for specific brands and retailers and, beyond the brick & mortar applications, they will carry forward to the packaging of online purchases; consumers will recognize the brand before they even open the box. Lighting, color, scent, texture, sound, and taste will all become an integral part of the competitive differentiator.
- The Mall in Transition
The traditional mall is passé. Today’s consumer wants everything he needs conveniently located in one place. Thus, the mall is being redefined as a multi-purpose space that showcases not only traditional staples such as clothing, fashion accessories, home goods, and food but also neighborhood-style shops and services. In the new mall, you’ll find everything you need to live—from doctor’s offices to schools and libraries, hair salons, grocery stores, real estate and business offices, restaurants, movie theatres, and, yes, residential apartments. (Once you’re in, you’ll never want to leave!) Look at Hudson Yards in Manhattan as the new standard.
- Geo-fencing, Geo-targeting, Geo-conquesting
Location and proximity-based messaging with store beacons is fast becoming the predominant tool brick & mortar retailers use to communicate with their nearby and in-store customers. We are still in the early days of this technology and already it takes many forms. With geo-fencing, American Eagle Outfitters can send a targeted offer to anyone who has installed their app as they pull into the parking lot, while Oscar Mayer uses deli counter beacons to geo-target customers, highlighting menu specials that include its products. Geo-conquesting, meanwhile, will allow businesses to send consumers messages when they are about to visit a competitor. Beacon technology is poised to outgrow its current, relatively limited geographic range in 2017 as an array of new applications emerge.
- Shopping Virtually…With Virtual Reality And Holograms
Retailers will enhance and personalize the in-store shopping experience through the use of holograms and virtual reality displays. One such application lets customers “try on” an outfit without ever changing clothes, while others create entire virtual environments. Retailers will be particularly drawn to the technology as they discover how relatively little physical space is required to create dynamic 3D experiences. Outdoor sports retailer The North Face has fashioned a display that places the customer in the middle of Yosemite National Park, while Lowe’s uses Microsoft’s HoloLens to let any homeowner design her virtual dream kitchen with every imaginable appliance, bell, and whistle.
- Instant Gratification Will Encourage More Services
We are all busy people and we appreciate instant gratification. These truths, coupled with the staggering popularity of mobile/online shopping, have given rise to an army of consumers who purchase on their devices then drive to nearby outlets to retrieve their bounty. Savvy retailers such as Newegg now offer a free will-call service option that provides local customers the convenience of pick up from the Newegg Hybrid Center in place of shipping. Brick & mortar retailers that make the pick-up process an effortless and positive experience for their online buyers suddenly find themselves in possession of the formula for repeat business!
- Where’s My Stuff? GPS Trackers For Delivery Services Will Tell You
Today’s consumers expect companies to have technology in place to pinpoint deliveries. Some do, but others have yet to make the necessary investment. If you want to know if that pizza you ordered is still in the oven or, better yet, almost at the door, Domino’s has the solution. Similar to Uber’s technology, the company’s “pizza tracker” uses GPS to let customers know exactly where the driver is on the route. No matter what you’re selling and shipping, the bottom line is that just telling the customer his purchase is “on the way” is no long acceptable.
- The Packaging (R)Evolution
Many of us still feel the thrill when an item we ordered arrives at our door, and now that feeling is being upgraded through enhanced package design. As it turns out, packaging is an integral part of the customer experience, significant for both the brand and retailer. It is another piece of the differentiator puzzle and supports a company’s unique signature. Can anyone imagine receiving an Apple product in a large box filled with Styrofoam peanuts or bubble wrap? Subscription services is a booming business whose practitioners are paying particularly close attention to what their product packaging says about them, which brings us to…
- Subscription Services Will Continue To Change How Companies Do Business
Companies such as Harry’s and Dollar Shave Club have become fierce competitors to Gillette, a division of Procter & Gamble. Shavers, razor blades, and shaving creams arrive automatically and are specifically tailored to a consumer’s individual preferences. This is built-in repeat business and what more could any retailer ask for? In addition to consistently selecting and sending only the right stuff, astute subscription services such as Trunk Club, Birchbox, and Loot Crate utilize innovative, distinctive packaging that enhances the customer experience.
- Peer-to-Peer Ecommerce Sites Expand Offerings
Social networks have for some time permitted and occasionally even helped their members sell to one another, but with the official entry of Facebook into peer-to-peer ecommerce retailers owe it to themselves to take notice and watch what happens next. Facebook’s Marketplace allows users to buy and sell items within their personal networks. This is akin to an online tag sale with competitive prices and no hassle. Who doesn’t love a bargain?
- Renting versus Owning
The sustainable economy is often in the news, and one result is a growing appreciation of the economics of sharing, especially among our youth. How often is a suitcase used? What about a leaf or snow blower? Does every home on the block really need one? Rent the Runway has revolutionized the way women are “purchasing” an evening gown and accessories, while ECrent is a company that creates a platform for renting and sharing. This trend is neither new nor a trifling one in some European nations—don’t be surprised as it takes hold in the U.S. of A.
- Customers Trust Reviews … More Than Ever
In 1995, when Amazon began encouraging its customers to post reviews of the products they were purchasing, the initial reaction was that the Internet retailer had lost its marbles. Some critics considered it a recipe for retail suicide. Fast forward twenty years later. Consumers trust and rely on product reviews more than ever. Who doesn’t scour reviews to find the “perfect” hotel or vacuum cleaner? Consumers have become review junkies, studying product comments and relying on the customer community to answer their toughest questions. In 2017, companies will be evaluating their (and their competitor’s) customer’s comments more diligently, using ad hoc reviews strategically and responding to those who comment in a more systematic fashion.
- Membership/Loyalty Programs Help Improve The Customer Relationship
No doubt inspired by the success of Amazon Prime, most major retailers are experimenting with membership programs, if not already rolling them out. Bed Bath & Beyond is looking at eliminating its coveted “20% off a single item” coupon that customers receive in the mail, online, or clip from a magazine. They have initiated an invitation-only, fee-based membership loyalty program that offers 20% off the entire purchase any time a member customer shops in one of its stores or online. Free shipping is included, of course. Given that membership fees have historically helped improve company’s margins, it’s a win-win combination—especially for those consumers who are already loyal shoppers. 20% off the entire purchase, every time? Sign me up!
- What Does My Garment Do?
One of the trends we covered among last year’s prognostications was “wearables,” the emergent blend of technology and fashion. There have been major advancements this year with more to follow in due course. Designers are hard at work creating gowns that use technology to glow in the dark and produce other special effects. With the advent of IBM’s Watson, apparel manufacturers are making garments that “think,” with fabrics that get lighter or heavier as the temperature changes from day to night. Nike just released self-lacing sneakers. We are only seeing the tip of the iceberg and it’s certainly one of the trends we’ll be watching in years to come.
Trends come and go, but 67% of U.S. consumers describe customer service as “very important” in their choice of, or loyalty to, a brand. According to Microsoft’s 2016 State of Global Customer Service Report, 55% of customers have higher expectations for service today than they did a year ago. With transactions “de-humanized” through innovation, the human element is even more central. Embrace the noteworthy 2017 trends, run with the changes, and remember: any channel can employ the human connection.