From the biggest Black Friday/ Cyber Monday weekend in history, to store closings at flagships like Macy’s and The Limited, 2016 was a tumultuous and pivotal year for retail. Many key trends will carry forward into 2017 and those who are able to stay ahead of them will lead the continuing evolution of the industry.
What changed the retail landscape in 2016?
- Walmart acquired Jet.com. The mega retailer agreed in August to pay $3 billion in cash and $300 million in Walmart stock to buy fast-growing ecommerce site Jet.com. The deal, which closed in September, expands Walmart’s reach to new customers—but more importantly will optimize Walmart’s supply chain. At Walmart’s scale, Jet’s algorithm which finds the least expensive route to get product to customers in real-time can potentially save millions, while also increasing the efficiency and speed at which customers receive their orders.
- Retailers introduced chatbots to the shopping experience. Retailers are embracing this tech, which lets consumers chat with them via messenger services to get simple pieces of information and make online purchases. Chatbots are popping up everywhere. Sephora uses one in the messaging app Kik to send beauty tips and videos to its customers, for instance, while Uber lets customers hail rides via a chatbot in Facebook’s messaging system. Consumers seem to like chatbots, with a recent survey finding that 37% of Americans are now willing to make purchases through them.
- Pop-ups and experiential retail picked up steam. One recent example that combined both of these percolating trends was Snapchat’s pop-up store in Manhattan, where consumers can buy the social networking site’s video-recording Spectacles from a unique vending machine. Creative plays like this one raise the bar for traditional brick-and-mortar retail.
- Amazon piloted checkout-less store Amazon Go. Shoppers can take their purchases and just walk out of this store in Seattle, removing one of the key points of friction at the grocery store. This sets the standard for effortless commerce efforts in the new year.
- Omnichannel became more data-driven, with a strong need to get to know consumers holistically, across all digital channels. Many marketers are struggling to keep pace, with 49% saying doing so is a challenge, according to a recent survey.
What else should retailers prepare for in 2017?
- AI-driven conversational commerce will continue to grow. In one sign of the trend, MasterCard announced in October that it planned to introduce AI-driven bots that will let consumers conduct transactions, manage their finances and shop on messaging platforms. Expect to see a lot more innovation on this front, especially as voice recognition and more sophisticated data models are incorporated.
- Consumers raise the bar for returns. As consumers become more demanding about online shopping, merchants will need to make it easy to for them to understand which products are eligible for return, see what refund they are getting straight away and return items easily. Armed with the right technology, merchants will be able to prevent the return of final-sale items and identify reasons for returns so they can respond quickly to large-scale problems.
- Retailers who leverage emotion will continue to gain ground. Donald’s Trump’s election underlined how powerful emotional appeals can be. In an environment where fast and free are table stakes, retailers who tap what is in consumers’ hearts will have an edge. Besides the increasing popularity of pop-up stores, another sign of the trend: Even Amazon is venturing into bookstores, recognizing that retail stores offer a special environment that can’t be created online. This is great news for retailers who take the time to understand their customers’ motivations and build an emotional connection with them.