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- 1. 8 trends that will redefine retail in 2016 www.footfall.com +1 (224) 698 8514
- 2. The retail environment was challenging in 2015, and it’s not going to get any easier in 2016. Intense market competition, channel complexities and pressure on prices are making it more and more difficult for retailers and shopping malls to drive profitability. 02
- 3. However, it’s not all doom and gloom. We’re part of an innovative industry, full of energy and positive change, which makes it possible to connect with the consumer in newer, more dynamic ways than ever before. One of the most exciting things about retail is that we never know what’s round the corner. Yet at the same time we need to understand what’s evolving, where possible, in order to align activities with continually changing consumer behavior patterns. To get retail businesses off to the right start in 2016, FootFall has delved into the future to look at what we can expect amongst the unexpected. Here are 8 key retail trends that will separate the stars and the strivers over the next 12 months, enabling commerce spikes. Acting on this insight is the key to soaring retail profitability in 2016. 03
- 4. Retailers and shopping malls will need to take a long, hard look at why brick-and-mortar is falling out of favor 1 04
- 5. 9%of total retail sales will be made through the web by 2018 1 Emarketer On the whole we saw Year-on-Year footfall improve globally in 2015, as increasing consumer confidence and spending power managed to outweigh market turbulence. However, there’s no ignoring the fact that physical retail is losing sales share of channel to ecommerce. A recent report that we published analyzing online vs. offline activity noted that every region globally will see an increase in both internet users and digital shoppers over the next three years, with web sales accounting for nearly 9% of total retail sales by 2018.1 One of the reasons behind this is that these new, agile digital channels can intrinsically offer what customers want, whereas retailers and shopping malls are having to adapt an in some ways outmoded model for 21st century preferences. Additionally, for retailers, there is a challenge in balancing fulfilment strategies between channels; maintaining stock levels in the store whilst supporting the‘infinite shelf’online. Those that achieve this successfully will retain their footfall share – and perhaps even grow it by taking customers from less prepared rivals. 05
- 6. Customers are changing at a quicker pace than the retail sector 2 06
- 7. As if transforming brick-and-mortar for the digitally-driven shopper isn’t task enough, the scope of what shoppers want never stands still. As soon as retail mastered the web, consumers went mobile. Now we’re getting a grip on that, they’re moving into social media commerce. In the physical retail environment, the main reason that customers are moving quicker than retailers and shopping malls is because the data they are generating simply isn’t being converted into insights quickly enough. Retail businesses need to be putting greater investment into customer intelligence solutions, which are capable of combining multiple shopper metrics into a single analysis, delivered in real-time to key decision makers. This will enable retailers and shopping malls to react rapidly to external influences impacting consumer behavior, and prepare for predicted changes to shopping trends, in order to either capitalize on them or disrupt them. Customer intelligence solutions 07
- 8. Experiences will define brand success in all channels 3 08
- 9. 70%of USA Today’s top brands for customer service are recommended for their ecommerce offering USA Today journalist Matt Granite Increasingly, shopper satisfaction is being determined on more than just the nuts and bolts of running an efficient business. Customers are judging it on the overall experience; the‘X factor’that makes each retail encounter unique to their requirements. On the whole, digital channels seem to be better at customer service than brick-and-mortar. When USA Today journalist Matt Granite was asked to name his top 10 companies for customer service in Spring 2015, more than 70% of his retail recommendations were either wholly online, or he namechecked them because of their ecommerce offering. For the two retail stores that made it into the shortlist – World Wide Stereo and Nordstrom – personalization and knowledge were the drivers behind his satisfaction. In 2016, retailers and shopping malls will need to look closely at how they connect the dots between each part of the shopper journey, in particular incorporating the fastest rising customer service channel: social media. Connecting these dots is fundamental to creating holistic experiences that deliver beyond providing the right goods in the right place, and support customers throughout the lifetime relationship. Achieving this goes back to data. 09
- 10. Business infrastructures will need to collaborate around the customer 4 10
- 11. Customer-Centric Teams Responsive Decisions In 2016, being able to meet consumer standards will mean not just understanding what shoppers want – but putting the customer at the centre of the business. What separates this trend from previous years is that it won’t just be a strategic shift; retail organizations will need to dismantle and rebuild their company infrastructure, to enable key personnel to discover and share retail insights in a more effective way. This means breaking down the siloes between departments. Retail organizations embarking on changes over the coming months will need to ensure that the change isn’t just physical. It needs to be accompanied by a restructuring of data intelligence, to give customer- centric teams the metrics they need to make responsive decisions. 11
- 12. Retail organizations will have to replicate the on-demand services shoppers crave 5 12
- 13. In recent months, the demand for service-based support has skyrocketed. Some cities can now receive Amazon orders in under an hour, while major U.S. retailers are expanding their fulfilment capabilities. A great example of this is Whole Foods, which has joined forces with grocery delivery startup Instacart. Another game-changer in this arena has been Uber. By effectively crowdsourcing transportation, Uber has caused some seismic waves across the taxi industry, and now has more than 8 million users. But what does this on-demand economy have to do with retail? The simple answer is that it is shaping what consumers expect from all businesses. A store associate is no longer just someone who processes a purchase, for example. In 2016 the associate must be a point of information, a salesperson, an advisor, a support network, an ordering service, AND a checkout. Which they need technology, real-time intelligence and connectivity to achieve. Real-Time Intelligence Connectivity 13
- 14. Shopping will become much more than a retail experience 6 14
- 15. One very interesting trend FootFall observed in the shopping mall industry in 2015 was the shift away from retail-only mandates to leisure destinations. The rise of ecommerce has turned the internet into a virtual shopping mall, where consumers can browse all their favourite brands from one location. Without its former USPs, the retail property sector has needed to create another visitor draw, and that has taken the form of new entertainment facilities such as cinemas, ten pin bowling, pop-up events and experiences, and investment in food and beverage outlets. ‘Shopper-tainment’, as Nielsen terms it, will play an even greater role in attracting footfall in 2016, and filter increasingly into the retail sector. The analyst predicts that it will lead to a demarcation of store and hospitality venue formats – such as restaurants featuring farmers markets, or off-licenses hosting wine tasting events.2 The blurring of lines between retail and leisure will enhance the importance of new metrics, such as dwell time and repeat visitor activity, in assessing the success of shopper-tainment initiatives. Shopper-tainment 2 http://www.nielsen.com/content/dam/corporate/us/en/reports-downloads/2012-Reports/Retail-USA-Whats-In-Store-2016-White-Paper-Mar-2012.pdf 15
- 16. The Internet of Things will start filling in the customer experience gaps 7 16
- 17. There’s been a lot of talk about the Internet of Things (IoT) at industry level, but 2015 showed the first signs of it sneaking into consumer consciousness, with the launch of prototypes such as Amazon Dash and Domino’s emergency pizza button. In 2016, Gartner believes that 6.4 billion connected ‘things’will be in use - up 30% on 2015.3 As IoT evolves, forward-thinking retailers will be connecting technology to improve the customer experience. For example, if a shopper is waiting outside a locked store fitting room, they can be picked up by a security camera and an alert sent to the workforce to open up the fitting room. One wider repercussion of the growth of IoT in retail will be a heightened need to make use of customer data; utilizing analytics in real-time to influence a purchasing outcome, and carrying out retrospective analysis to make ongoing improvements. Even if retailers and shopping malls aren’t using the connected capabilities of their devices to automate or enhance processes, the shopper experience must still be founded in data-driven intelligence to enable intuitive experiences. Forward-Thinking 6.4billion connected‘things’ will be in use; up 30% on 2015 3 http://www.gartner.com/newsroom/id/3165317 17
- 18. Mobile will reveal more about shopper behavior than ever before 8 18
- 19. We know that today’s consumer is ‘always on’and much of their connectivity is channelled through mobile devices. However, most retail organizations are only using smartphones and tablets as a touchpoint for their customers – not as a source of data. There is another, under-utilized benefit to the widespread use of digital devices, in that they leave a data trail in the brick-and-mortar environment. The latest retail intelligence solutions can detect mobile phones if the Wi-Fi function is switched on, and use it to map where a shopper travels within a store or mall. Retail organizations that harness this new depth of intelligence in 2016 will be able to build a more accurate picture of shopper behaviour than ever before. They will be able to monitor exactly where visitors travel, the length of their dwell time - and in the retail environment potentially monitor movement against point of sale data, to correlate journeys with conversions. And as mobile devices have their own IP address, retailers and shopping malls will be able to determine regular customers versus first time shoppers. Shopper Behaviour 19
- 20. FootFall: know your customers inside and out to increase profitability FootFall, the retail intelligence company, works with retailers and shopping malls around the world to provide actionable insight into customer behaviour, which delivers increased revenue and improved profitability. Part ofTyco Retail Solutions, we provide 3D data for clear cut decisions. By analyzing the most relevant mix of metrics from both store and online behaviour - including customer numbers, queues, sales, marketing and other key performance data - we can identify the widest range of profit drivers. More than 1200 retail businesses across 64 countries partner with FootFall for long-term retail intelligence, including adidas, Hugo Boss, Lacoste, Mango, Tesco and Marks & Spencer. www.footfall.com Top takeaways from 2016’s key trends Brick-and-mortar will have to work harder than ecommerce to drive footfall and maintain share of channel. Investment in retail intelligence technology could prove a key differentiator Customer understanding is everything. Businesses that are using accurate data streams, delivered to key decision makers will foster more profitable relationships The quicker the insights, the easier it is to keep pace with evolving consumer behavior – so invest in a retail intelligence solution that can deliver real-time information Use technology to make the mall or store do more. Turn it into a social destination, and enrich the capabilities of customer service. Impress shoppers wherever possible Tap into the insights available through shoppers’ mobile devices for customer understanding way beyond the competition www.footfall.com +1 (224) 698 8514 For trend insights throughout 2016, follow @footfallinsight onTwitter