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12 Retail Trends and Predictions for 2015

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12 Retail Trends and Predictions for 2015

  1. 1. 12 Retail Trends and Predictions for 2015 Brought to you by
  2. 2. In 2014, we saw more merchants venture into omnichannel retailing and try in-store marketing solutions such as beacons. Next year, we anticipate stores to double down on these strategies and continue to find ways to bridge the gap between offline and digital channels. In addition, we expect platforms such as social media and mobile to play bigger roles in people's shopping experiences. We discuss these trends—among many others— in more detail in this presentation. See how you can use them to make decisions in 2015, stay ahead of your competitors, and provide a better customer experience.
  3. 3. Most boomers will be in their 60s and 70s next year, and retailers that cater to these consumers will need to adjust to make shopping easier for them. Retail expert Georganne Bender pointed out in VOA News that this can already be seen at some drugstore chains. “They’re re-setting their counters, not putting things too high or too low, [and] they’re putting carpeting in the store,” she told the publication. Baby boomers and millennials will continue to influence retail.1
  4. 4. On the flip side, Gen Y will also be a major influence in retail. Merchants who want to reach millennials will need to invest in mobile, as they are the largest group of smartphone owners. Speed is also an essential factor for reaching Gen Y. As a generation that grew up in an age where almost anything is just a click away, millennials have a tendency to be impatient. Retailers who want to engage them must invest in more robust order fulfillment systems and fast (but excellent) customer service. Baby boomers and millennials will continue to influence retail.1
  5. 5. BARBARA THAU BUSINESS REPORTER, FORBES “By the next decade, the Millennial generation, roughly ages 18 to 34, is expected to displace the baby boomers as the nation’s biggest consumer buying group, generating a projected $1.4 trillion in spending by 2020, according to Accenture research. Retailers and brand marketers would be wise to take note, as the preferences of this buying group will dominate purchasing decisions for decades to come.”
  6. 6. In recent years brands have used social media to market their products, talk to customers, and even make merchandising decisions. In the coming months, we anticipate merchants to add “selling” to the list of things they can do on social sites. The recent launches of shopping functionalities in the social realm (i.e. Facebook’s and Twitter’s “buy” buttons and Curalate’s Like2Buy platform for Instagram) tell us that social is going to get a whole lot more shoppable in 2015. Social networks will serve as shopping platforms.2
  7. 7. Retailers that have already started participating in the trend include Nordstrom and Target, which are using the Like2Buy platform on Instagram, and Home Depot, (RED), and Burberry, which are testing Twitter’s buy button. If social shopping takes off—and there’s a good chance that it will—users will be able to enjoy a more seamless shopping experience. The clunky transition from one channel to the next (i.e. social to ecommerce) will be eliminated and purchases will be completed much faster. Social networks will serve as shopping platforms.2
  8. 8. Consumers these days are more drawn to retailers that invest in Corporate Social Responsibility (CSR). A survey by Cone Communications and Echo Research uncovered that 87 percent of global consumers factor in CSR into their purchase decisions. In 2015, we expect more merchants to launch ethical and good deed initiatives. Brands will double down on Corporate Social Responsibility.3
  9. 9. Examples of CSR include ModCloth’s anti- Photoshop pledge, and Warby Parker, which implements a “Give a Pair” initiative to make eye care more accessible to the less-fortunate. How does CSR improve the shopping experience? Simple. It makes customers feel good knowing that they’re contributing to a worthwhile cause. As Adrianne Weissman, owner of apparel store Evelyn & Arthur told us, “shoppers want to know the money they are spending is not going into one person’s pocket, but is truly making a difference in the community they live in.” Brands will double down on Corporate Social Responsibility.3
  10. 10. Enriching and personalizing the shopping journey will no longer be limited to tailored product recommendations and offers. Forward-thinking retailers will find additional ways to make each customer’s experience unique and memorable. We predict that one of the areas that they’ll focus on is customer loyalty. When it comes to reward programs, the “points- for-purchases” model just isn’t cutting it anymore. The practice has become so commonplace that the allure of earning points doesn’t excite consumers the way it used to. The points-for-purchase loyalty model will be less effective.4
  11. 11. That’s why in 2015 retailers have to deliver more imaginative efforts to reward and incentivize shoppers. The loyalty programs of the future will reward shoppers for their actions and engagement, rather than just purchases. Walgreens, for example, now lets its members earn points by engaging in healthy activities like walking & weight tracking. The points-for-purchase loyalty model will be less effective.4
  12. 12. Customized perks will also be a big part of loyalty program success in the coming year. Research cited by eMarketer revealed that “consumers have begun to expect more personalized offers and services—not just blanket discounts—in return for their participation” in rewards programs. Moreover, according to the study, consumers cited relevant discounts and personalized offers as the top benefits of such programs. The points-for-purchase loyalty model will be less effective.4
  13. 13. POS TECHNOLOGY Initiatives to make the cash register extinct will continue to go strong in 2015. Cloud-based point- of-sale systems have proven that they can outperform old-fashioned registers in all aspects (performance, functionality, looks) and an increasing number of retailers will recognize this and make the switch. Will you be one of the savvy merchants upgrading to a cloud-based POS system next year? Try Vend for free and see how it can help you transform your business in 2015. Retailers will adopt and experiment with technology.5
  14. 14. BEACONS Beacons will make their way into even more stores in the coming year. The technology, which provides in-store analytics and marketing solutions for brick-and-mortar retailers, has already generated results for several merchants, including US grocery giant Safeway, which is why we’re confident that beacon adoption will continue to grow in 2015. Retailers will adopt and experiment with technology.5
  15. 15. WEARABLES Research by Acquity Group has shown that about 7% of consumers currently own wearable gadgets such as smart watches, glasses, and fitness monitors. This figure is expected to double in 2015, prodding companies to experiment with how they can use wearable technology. According to Retail TouchPoints, Barneys New York is “is venturing into the wearable tech world through a collaboration with Opening Ceremony, the Council of Fashion Designers of America and Intel.” Meanwhile, Kenneth Cole unveiled a Google Glass app in 2014 to market cologne. Retailers will adopt and experiment with technology.5
  16. 16. AUGMENTED REALITY We’ve already seen plenty of AR-centric efforts in retail. From virtual fitting rooms to interactive window displays, merchants are continuously finding ways to use augmented reality to draw attention and improve experiences. Walgreens, for instance, is testing Google’s Project Tango 3D to create AR-enabled mobile maps and navigation for its customers. Expect such experiments to continue in 2015. Retailers will adopt and experiment with technology.5
  17. 17. 3D PRINTING We also anticipate 3D printing to make its way into the retail world. Some merchants, including online jewelry store, have already found a use for the technology. Brilliance is using 3D mock-ups to help customers try on different rings so they can determine the right size, shape, carat, and diamond arrangement for their hands. Retailers will adopt and experiment with technology.5
  18. 18. Next year, we expect the number of SMBs using big data and analytics to grow. Retailers will realize that they need to rely on data in order to get to know their customers and provide customized shopping experiences. Fortunately, there are plenty of solutions that make data analytics accessible and affordable for small and medium retailers. Data will be more accessible and powerful.6
  19. 19. Swarm for instance, gives brick-and-mortar stores the ability to analyze foot traffic so they can make better decisions and tailor customer interactions. There’s also Collect, which gives merchants insights into the spending habits of their top customers, allowing them to send personalized rewards and offers. Vendors will continue to develop and refine their solutions so they can provide the most accurate and insightful data in the fastest and most convenient ways possible. Data will be more accessible and powerful.6
  20. 20. DAN BERTHIAUME SENIOR EDITOR, CHAIN STORE AGE “Granular, real-time Big Data analysis can take retailers closer to providing true “one-to-one” personalization, where the customer has a completely tailored experience that seamlessly travels with them across all touch points, in real time. No retailer has fully achieved this personalization goal to date, but drilling deep into Big Data in a timely fashion is an encouraging step forward.”
  21. 21. The past couple of years have brought us far too many horror stories of data breaches in retail. As Chain Store Age cites, “The 2014 Identity Fraud Study reported an increase of more than 500,000 fraud victims to 13.1 million people in 2013, the second highest number since the study began.” Moreover, it’s been found that the average cost of a breach per organization in 2014 is $3.5 million— an increase of 15 percent from the year before. Companies will find better ways to manage risk7
  22. 22. In this day and age, consumers aren’t just looking for unique and convenient shopping experiences —they also want their purchasing journeys to be safe and secure. So in 2015, we anticipate risk mitigation and data security to be among retailers’ top priorities. There are a number of ways retailers can better manage risk in the coming year. One is to instill awareness and training across the entire organization to ensure that everyone knows the importance of risk mitigation. Retailers can also be more selective of their vendors that handle their data and processes. Companies will find better ways to manage risk7
  23. 23. We also expect merchants and solutions providers to come up with better ways to protect customer data. Retailers and financial institutions in Australia, for example, have recently made the PIN as the primary form of card payment authorization because it has proven to be more secure than signatures. Another interesting security initiative can be seen in Apple Pay, which assigns a unique Device Account Number to each phone so credit or debit card numbers are never transmitted with the payment, nor are they shared with merchants. Companies will find better ways to manage risk7
  24. 24. JOE SKORUPA EDITOR IN CHIEF, RIS NEWS “Two huge trends that will be hot in 2015 are security, due to the many data breaches that have reached epic proportions, and payment solutions, notably the EMV [Europay, MasterCard and Visa] mandate that goes into effect on October 15. Retailers will be devoting many dollars and resources to these major retail trends.”
  25. 25. In their book, The New Rules of Retail, Robin Lewis and Michael Dart assert that if retailers truly want to provide compelling shopper experiences, they need to take more control of how their products are manufactured, marketed, and distributed. As the authors put it, the most successful retailers will be the ones that have “complete control of their value chain, from creation all the way to consumption.” More retailers will take control of their value chain and improve order fulfillment 8
  26. 26. Notable retailers that have proven this strategy include Apple, Ralph Lauren, and Trader Joe’s. Despite having higher prices, these retailers managed to achieve customer loyalty and profitability thanks to their efforts to have complete value chain control—a strategy that results in excellent products and customer experiences. Retailers will realize this in 2015, which is why we’ll likely see an increase in value chain initiatives, single product retail, and private label merchandise. More retailers will take control of their value chain and improve order fulfillment 8
  27. 27. Additionally, more retailers will get creative with how they fulfill orders and distribute products. Speed and convenience will become more important than ever, so merchants will come up with better and faster ways to get products into the hands of their customers. This will pave the way for more robust order fulfillment practices (such as same-day delivery and click-and-collect), on-the-go retail (including pop-ups and food trucks), self-service centers (such as Amazon Lockers), and other non- traditional strategies. More retailers will take control of their value chain and improve order fulfillment 8
  28. 28. In 2014, we saw a number of ecommerce-first businesses expandoffline. Birchbox, for example, opened its first physical shop in Soho last July, while companies like Bonobos and Warby Parker opened more physical stores in 2014. We anticipate this trend to continue in 2015. The majority of overall retail sales are still taking place offline, and ecommerce sites have realized that they need to set up physical shops if they want to gain significant market share. Additionally, the need to provide seamless online to in-store experiences continues to grow, requiring both a digital and physical presence. More ecommerce sites will set up shop offline9
  29. 29. Ecommerce sites setting up shop offline is good news for the brick-and-mortar realm because it validates the need for physical retail. However, it also means that Main Street is going to get a more competitive, and traditional brick-and-mortar retailers must step up their game in order to win. To do this, we predict that merchants will further enrich the in-store experience by offering services on top of “stuff.” For example, Urban Outfitters recently opened a New York branch with on-site salon and coffee shop in a move to create a destination, rather than just a store. More ecommerce sites will set up shop offline9
  30. 30. Localization will be more important than ever. Merchants that customize their stores and merchandise according the needs of their local communities will find great success in 2015. Take for instance, O’Reilly Auto Parts, a retailer that tailors its merchandise mix from store to store. As Retail Info Systems News reported, “Each O’Reilly store is also a local store, carrying the tools, equipment and accessories that match the specific auto aftermarket needs of the store’s customer base as well as the vehicles they own.” Retailers that localize product mix and store formats will win10
  31. 31. Retailers will also need to tailor store formats based on their communities and locations. Consider what retailers such as Starbucks, Target, and Chipotle are doing. In order to tap into dense, urban markets, these chains have started to deviate from their usual store formats to establish smaller, “express” stores. We predict more stores will follow suit and tailor experiences, merchandise, and even store formats to the neighborhoods they belong to. The ones that do (or that continue to do so) will win big in 2015. Retailers that localize product mix and store formats will win10
  32. 32. Mobile will show no signs of slowing down next year and we anticipate smartphones and tablets to play bigger roles in the shopping journey. Expect to see more of the following: LOYALTY APPS Next year, more retailers will introduce mobile loyalty programs. Shoppers will no longer have to clutter up their wallets with physical cards. Instead, they can track and redeem their rewards using smartphones through apps such as Collect. Mobile will continue to grow in all directions11
  33. 33. MOBILE SERVICES Convenient services such as mobile ordering will be more prevalent. Larger merchants are already implementing this, but thanks to solutions like Mobi2Go, SMBs can also get in on the mobile fun. For example, Bird On a Wire, a free-range rotisserie chicken joint in New Zealand, uses the solution to offer online and mobile ordering. “Mobi2Go mitigates big lines in the shop, integrates directly with our POS system Vend, and is an additional revenue stream for us. It works really well,” shared owner Ben Grant. Mobile will continue to grow in all directions11
  34. 34. MOBILE PAYMENT SOLUTIONS The number of consumers using mobile wallets will increase, so expect less card-swiping or cash- handling and more phone-scanning in 2015. Merchants who want to keep up with mobile payments but are confused as to which method to adopt can look into Poynt, a smart terminal that supports multiple payment technologies including NFC, Bluetooth, QR codes, EMV, and magnetic stripe cards. Whether a customer wants to pay using Apple Pay, Google Wallet, CurrentC, or beacon technology, the retailer can ring them up. Mobile will continue to grow in all directions11
  35. 35. As expected, retailers embracing multiple channels to serve customers will be some of the most successful ones in 2015, as omnichannel retailing has begun to pay off for a lot of companies. For example, according to MediaPost, Macy’s department store has found that click-and-collect not only serves as a convenient option for customers, but it also increases spending. In addition to click-and-collect Macy’s will continue to invest in omnichannel through more robust order fulfillment strategies and better mobile experiences. Stores with omnichannel strategies will thrive12
  36. 36. MIYA KNIGHTS SENIOR RESEARCH ANALYST, INTERNATIONAL DATA CORPORATION “Consumers don’t distinguish between channels. They are channel blind, therefore they expect the same service, products, offers, and pricing online as they do in-store and on mobile. This is why merchants need to make sure that their retail propositions are consistent across all channels. Retailers will continue to build omnichannel presences to meet this customer demand.”
  37. 37. This post contains some pretty bold and diverse predictions, but if we really think about it, every single one of them boils down to one thing: improving the customer experience. Always ask yourself if your efforts are truly making shopping faster, safer, and more enjoyable for your customers. Stick with that strategy, and you’ll be just fine in the future. And if you’re looking for insights about these trends, be sure to check out our in-depth article on the Vend Retail Blog and LinkedIn. Bottom line: It’s all about the customer experience
  38. 38. What do you think of these predictions? Can you relate? See our full trend forecast and share your thoughts. Retail tips, resources, training and a supportive community to help you achieve business success. Connect with a community of 10,000+ Vend retailers Vend U: Be the world’s best retailer!
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