Top 6 Retail Trends to Watch in 2014
Consumer Goods manufacturers and Retailers operate fundamentally different businesses, but share common goals and challenges. Both are motivated to influence shopper behavior, drive greater sales volume and face a price sensitive and loyalty-challenged consumer landscape. Data and analytic collaboration can establish a critical connection between both parties in pursuit of their common objectives. In this way their mutual efforts can be optimized, not collide and ultimately yield a win-win for both. The cost of acquiring, storing and managing data is falling steadily and therefore, Retailers will have the opportunity to push budget dollars into analytics across new parts of the business. Retailers will invest heavily in consumer data and related analytics to improve productivity and the result will be a value chain that is flexible and matches more closely to actual consumer demand.
In 2014, Retailers will also invest in data-driven marketing and demand-driven retail execution frameworks (including supply, demand, merchandise, and store operations planning) as competitive differentiators to forward-leaning retail organizations. Here are several other Retail areas to watch in 2014:
Cross-Channel One-to-One Shopper Engagement. Retailers looking to differentiate themselves with shoppers will invest in "recognizing" or knowing shoppers across platforms and routes to market and providing individualized, customized messaging and content through each. A top priority for Retailers will be to connect the dots – breakdown internal organizational silos limiting cross-channel shopper engagement – and creating a comprehensive customer profile and thus, relevant marketing and engagement messages.
What's old is new…and personalization (at the heart of traditional 1to1 marketing and CRM) lies at the center of omnichannel marketing strategies in 2014. As Retailers have been "saying" for two years, they will continue to "pursue and do" in 2014 – reach shoppers with what they want, when they want it and via the channel they prefer to shop. Retailers will also work to curate the right product information at the right time in the shopping process.
Content-Rich Experiences. Savvy Retailers are using multimedia content to make the shopping experience more engaging. Retailers recognize that shoppers want to be entertained and informed as they browse the web (or the store) and make purchase decisions.
Content-rich experiences extend beyond the web to the store. In 2014, Retailers will continue to find new ways to differentiate the in-store shopping experience from the one shoppers find online. They will offer in-store only events and services and invest in guest experiences aimed at bringing customers to stores and keeping them there.
"Social Curation" Buzz. Social Curation will become a small-scale buzzword for retail in 2014 as Retailers leverage shopper social data and insights to curate product assortments online and in-store. Analytics will also be helpful in gauging new product introduction performance as in near-real-time, the Retailer will have access to product performance data and can make future inventory decisions based on actual shopper demand.
Smaller Format Store Growth. In 2014, we will see a continued rotation into smaller format retail environments vs. big box growth. The smaller format stores such as dollar stores and specialty discounters will have a formidable impact on supercenters, malls, and mass merchandisers. These smaller format stores will take share from the larger box stores, have the flexibility to fit into new, high-density living and multi-purpose (convenient) locales and provide an environment for more customized assortment based on shopper analytics for specific stores. Today's consumer is both brand-aware and cost-conscious, making her the ideal outlet store shopper. According to one retail report, more than half of all Saks stores are now outlets, and 13 of the 15 planned stores for the next two years will be outlet stores. Nordstrom is planning 30 more Nordstrom Rack stores in 2014.
Big Data "Buzz" Subsides…Analytics Investments Increase. Retail, like many other industries is looking to leverage Big Data in new and different ways to maximize profits. In Retail, Big Data means access to real-time analytics that will fuel dynamic pricing in store. Digital pricing in store will take flight both in-store and online. Big Data capabilities will enable dynamic pricing in a real-time, customized manner vs. based on historical sales trends or latent POS data trends. Based on consumer purchase behavior, Retailers will also use Big Data to customize in-store product sets.
Expect technology investments to pick up in Q1 and Q2 2014 as political, economic and consumer sentiment indicators point in a positive direction going into end of 2013. While Gartner forecasts that Big Data will drive $34 billion of IT spending in 2014, Retailers are at times slow to adopt data-enabled insights and analytics best practices.
Mobility Is No Longer the Exception. E-commerce has been growing for years (e.g. Cyber Monday), but now consumers are shifting away from purchasing items on their laptop or desktop and are now buying via phone or tablet. Consumers are increasingly using mobile phones and tablets for product research and online purchase. In 2013, mobile shopping accounted for 17% of Cyber Monday shopping, a 55% increase over last year, according to IBM. This shift to mobile will accelerate in 2014.
Though mobile still accounts for such a small share of U.S. retail sales, this shift is further along in more digitally advanced markets like the UK, where mobile will account for an estimated 24% of retail e-commerce sales in 2014, and rise to 35% in 2017 according to emarketer. The combination of portability, connectivity and relative affordability gives the smartphone a privileged place in driving always-on commerce.
Throughout 2013, interest in mobile wallet for retail remained constant with limited implementation and deployment despite the hype and talk at every major retail conference. The percentage of consumers who use smartphones and tablets is growing rapidly and willingness to use mobile wallets will rise as confidence grows in the Retailer's ability to secure consumer information. Financial institutions, payment networks, mobile network operators, merchants, and mobile technology providers all have a vested interest in the deployment of a profitable mobile wallet solution and are battling for their own piece of the action, stalling growth in 2013 according to Javelin Strategy and Research. Although making mobile wallets mainstream is still a few years off, their acceptance at major Retailers and by consumers will continue to grow in 2014.