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:
- 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.
- 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.
- 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.
- 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.
- “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.
- 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%7 of their capital expenditure in omni-channel fulfilment, indicating its importance.
- Retail Sales Worldwide Will Top $22 Trillion This Year, emarketer, 2014.
- IoT in retail market to surge at 20% CAGR by 2020, imc, 2015
- Big data: The next frontier for innovation, competition, and productivity, 2011
- eCommerce Forecast, 2014 To 2019 (US), Forrester, 2015
- Three online retail trends for 2016, smart insights, 2015
- Forrester Research eCommerce Forecast, 2014 To 2019 (US) April 22, 2015
- Making omni-channel fulfillment processes profitable is imperative for CEOs, says JDA report, logistics management, 2015
