2016 Retail Innovation Predictions
In Part 1, we discussed the following 2016 retail technology headlines:
- The Retail Robots Are Coming
- There Goes Another Drone
- Omnichannel or Die
- Analyze This
- The Smart Store Revisited
In Part 2, we will focus on branding the future of retail, venture into the internet of things, and do some micro shopping of the target consumer. Can you believe that in 2016, we will still go to stores to shop? Finally, in the spirit of the new Disney Star Wars movie blockbuster, we will discuss whether the "force" is still with the retail industry.
Branding the Future of Retail
In 2015, total retail brand value increased 24% to $348.1 billion, tying with technology as the fastest increasing industry category. The top 10 retail brands of 2015 were Alibaba, Amazon, Walmart, The Home Depot, Ikea, eBay, Woolworths, Aldi, Costco, and Lowe's.
The brand value growth for 2015 was primarily driven by the entrance of Alibaba. Of note, two other online retailers are part of the top 10, Amazon and eBay.
"For successful retailers, technology and brand experience, both physical and virtual, will be as vital as location, and the most successful retailer brands will be integral to the lives of their customers." Brand differentiation is the critical component for retail success in 2016 and beyond.
The Internet of Things (IoT) Shopping
According to a recent RSR survey, 80% pf retailers agree or strongly agree that IoT will dramatically change the way companies do business in the next three years. The highest retailers rated IoT opportunities are:
- Maintaining inventory accuracy in stores (49%)
- Closer engagement with consumers through their interconnected devices (43%)
- Maintaining system wide inventory visibility (40%)
- New services offered to consumer through monitoring their internet connected devices (40%)
- Increasing the inventory available for cross channel fulfillment (31%)
RFID and other onmichannel mobile connected in-store technologies are a start. Expect 2016 to be the year where IoT will build on these base sensor technologies and deliver more immersive personalized shopping experiences.
Micro-Shopping the Target Consumer
2015 was the year where brands such as Walmart, Target, Lowe's, Kohl's, Macy's JC Penney, all announced they were either closing stores or making new ones smaller. For the USA, partially this has been a response to the success of dollar stores.
Europe has been ahead of this trend with the continued success of brands such as Aldi and Lidl which highly disrupted traditional supermarket / hypermarket store formats. The Aldi and Lidl formula is simple. Smaller stores; high quality store branded products at very low prices; limited assortment; and thousands of convenient locations.
In 2016, the small store momentum will continue and will expand to include micro online shopping communities. Social media will contribute to the popularity and growth of new micro online retail stores.
Can You Believe We Still Go to Stores?
The first 15 retail chains listed in a November article had plans to close almost 5,000 stores. The same month another headlines proclaimed "The long, painful death of the American department store."
Fully agree with Macy's CEO that despite online shopping, the death of the store experience is "greatly exaggerated." Ninety one percent of retail holiday sales in the United States took place in actual physical stores.
Brick & mortar stores are not going away. They will continue to evolve in 2016 and become a critical showroom that will increase the value of the brand. Sensor technologies will explode and they will drive more immersive shopping experiences. The store will increasingly become social with shoppers sharing their journey with a mobile connected circle of friends.
Retail, The Force Will be With You, Always.
The "Disruptive Future of Retail" was a presentation that I had the pleasure of delivering at multiple global industry forums in 2015. The introduction featured the following retail industry highlights from Euromonitor International:
- Global retail sales in 2019 will reach $16.4 trillion, 5.9% CAGR.
- Middle East / Africa lead the world in retail growth with 12.8% CAGR, followed by Latin America at 11.2% CAGR.
- The slowest retail growth is in Western Europe at 2.6% CAGR, followed by North America at 3.4% CAGR.
- The largest retail global market is Asia Pacific at $4.1 trillion, followed by Western Europe at $3.1 trillion, and North America at $2.8 trillion.
- The largest numbers of stores are in Asia Pacific at over 32 million, followed by LATAM and Middle East / Africa at 5.6 million stores each.
- New store growth between 2014 and 2019 will be primarily registered in Asia Pacific, Latin America, and Middle East Africa.
The Euromonitor data confirms that the "force" is indeed with the vibrant retail industry as it grows on many onmichannel frontiers. Happy 2016 and welcome to the continued "Disruptive Future of Retail."