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Top 6 Retail Trends to Look Out For in 2016

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The retail industry has been gradually expanding over the years and has reached around $24 trillion. This number is expected to reach $28 trillion by 20181. Brick-and-mortar retailers are expanding their sales channels and moving towards building an omni-channel retail solution. This has been made possible by the emergence of connected devices and the internet of things. All these connected devices produce a huge amount of data which can be used to make informed decisions about inventory management and stock replenishment. Mobile-based retailing and the rise of a new generation of tech-savvy shoppers has boosted the industry and pushed retailers to open new channels to provide a seamless customer experience.

The major retail trends in 2016 are:

  1. Internet of Things (IoT): Connected Devices to Dominate: Sensors, digital signage, location-based beacons, and innovations such as smart price tags appeal to customers demanding a seamless experience. The IoT component in the retail market is expected to grow at 20% CAGR from $14.2Bn to $35.6Bn by 20202. A major challenge for the IoT industry will be the availability of internet security as well as privacy and data protection.
  2. Data Getting Bigger: Data from sales transactions and social media enable retailers to know what and where customers buy with a great level of certainty. According to McKinsey, a retailer using big data to the fullest could increase its operating margin by more than 60%3. These insights help retailers customize their services to satisfy the shoppers’ desires and forecast the stock levels with improved accuracy.
  3. Omni-channel Retailing to Boom: Despite the complexity, integrating online and offline channels will be key to retaining customers. A study by MasterCard found that 8 out of 10 consumers now use a computer, tablet, smartphone, or in-store technology while shopping. Forrester also predicts that cross-channel retail sales with reach $1.8 trillion in the U.S .by 20174. With omni-channel retail growing, fraud management also becomes a key challenge for retailers. Forrester Consulting conducted a study on how retailers are managing fraud across channels and found that 65% of retailers believe that they lack the tools to effectively manage omni-channel fraud; which will drive more investment in fraud management.
  4. The Rise of the Millennials: Tech-savvy millennials have enormous purchasing power, are vocal about their preferences on social media, and favor a multi-channel shopping experience.  By 2025, millennials are expected to make up 75% of the global workforce. 63% of millennials stay updated on brands through social networks, and 89%5 would prefer a store with advanced mobile capability.
  5. “Mobile” – Search & Shop on the Move: Mobile apps, expanding beyond basic research, purchase and payment, have made tablets and smartphones into “shopping assistants”. Forrester Research reported that commerce transacted on smartphones today comprises 10% of all ecommerce, up from 6% in 2013 and 3% in 20126.
  6. Flexible and Visible Supply Chain: With customers wanting to buy from different retail channels, retailers are investing in technologies such as RFID to build a system-wide visible and accurate supply chain. Studies suggest that retail companies invested 29%of their capital expenditure in omni-channel fulfilment, indicating its importance.
  7. Retail Sales Worldwide Will Top $22 Trillion This Year, emarketer, 2014.
  8. IoT in retail market to surge at 20% CAGR by 2020, imc, 2015
  9. Big data: The next frontier for innovation, competition, and productivity, 2011
  10. eCommerce Forecast, 2014 To 2019 (US), Forrester, 2015
  11. Three online retail trends for 2016, smart insights, 2015
  12. Forrester Research eCommerce Forecast, 2014 To 2019 (US) April 22, 2015
  13. Making omni-channel fulfillment processes profitable is imperative for CEOs, says JDA report, logistics management, 2015

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