Retail Outlook: Experts Predict What to Expect in 2016
New technologies, new products, new consumer preferences — change always threatens to disrupt the status quo, and the retail landscape is no different. The trick is to determine which trends are passing fads and which have real staying power.
To help, we asked six experts from the Daymon Worldwide family of companies (Interactions is a subsidiary of Daymon Worldwide) to share their predictions for trends that will have the biggest impact on the U.S. retail environment in 2016.
Improved Transparency and Distribution
According Jim Holbrook, CEO of Daymon Worldwide, one of the biggest themes in retail in 2016 will be ‘less bad, more good.’ That is, we will see more products introduced with less sugar, less salt, less words you can’t pronounce, less GMOs and so on. CPGs will also be focused on providing products with more nutrition, more flavor and more simple ingredients. This is going to continue to accelerate across all categories.”
Holbrook is quick to note that this isn’t simply a matter of CPGs wanting to help improve nutrition.
“What’s really happening here is there is a shift in trust away from brands and companies and onto other consumers and people they know,” he said. “The Internet and social media are huge facilitators for that, as are Millennials. They have a far different trust hierarchy than previous generations. While they may be willing to rent out their living room or an extra bedroom to strangers [through a service like Airbnb], they don’t trust a product when they can’t pronounce the ingredients.”
Beyond the shelf, Holbrook also predicts changes in distribution. “Availability and accessibility of products will also change dramatically,” he said. “There’s a changing landscape of formats — for example, Walmart is testing out online ordering combined with in-store pickup and Amazon just announced they are opening a physical bookstore. Retailers are heading in the direction of covering all points of distribution.”
As for the rise of e-commerce options, “it’s not that people will stop going into the store to see what’s available,” Holbrook explained. “It’s that they want choices and an improved experience. For example, we might see a service where you can preorder your staples, then pull up to the store and have your paper towels, diapers, laundry detergent and so on loaded into the back of your car while you go inside to pick out more interesting items.”
-- Jim Holbrook, CEO of Daymon Worldwide, oversees Daymon Worldwide’s portfolio of private brand development, sourcing, branding and retail services companies.
Closing the Digital Divide
“The digital shift will continue to be a major player in retail in 2016,” said Bharat Rupani, president of interactions and SAS Retail Services. As evidenced by the expansion of online retailers and falling brick-and-mortar market share in 2015, “brick-and-mortar retailers need to find better ways to effectively compete in the digital space.”
According to Rupani, one way some retailers will do this in 2016 is by starting to engage with consumers well before they enter the store. “Today, brands are engaging with consumers through apps and other digital interactions before they ever enter the store. In the coming year, retailers will want to embrace technology and figure out how to get engaged with a digital audience. Shoppers want to feel like they are having a personal experience with retailers, and technology can help make that happen by being available everywhere a shopper is: in person, on their mobile device, through an app, and so on.”
Rupani also predicts that technology will be used in new ways to enhance the in-store experience. For example, “when you sample a product in store today, it is likely with a Sales Advisor and the product. The product demo of the future will include technology to give a more dynamic experience to the shopper, while collecting vital information for the retailer and brand to make the shopping trip a more personalized experience.”
Technology is becoming engrained in our culture and Rupani predicts, “Consumers will continue to demand connectivity through technology; they want ease of use and information at their fingertips. The expectation has been set, now retailers have to meet it.”
--Bharat leads Daymon Worldwide’s Retail Services business units, including Interactions and SAS Retail Services, and oversees private brand development with key retail partners across Asia.
Retailers Take More Control of Shelves
“The biggest trend we’re going to see as it relates to retail merchandising is that more and more retailers are going to take back control of shelf conditions and the environment in stores,” said Michael Bellmant, president of SAS Retail Services. “As a result, decisions about which items to carry and where to place items on shelves will be more driven by analytics than by brand bias.”
As part of this, Bellman believes that more retailers will move from the older merchandising model (where suppliers employ brokers to merchandise items on retailer shelves) to a newer single source model like the one SAS Retail offers many of its retail partners. Not only does the newer model help eliminate brand bias, “it also gives retailers a more effective and efficient way to utilize existing merchandising dollars. Plus, shoppers benefit from new items getting to the shelves faster,” explains Bellman.
Bellman also predicts that “we’re going to see a shift in planograms from being supplier-driven to being more retail-driven. Retailers have the sales data, and they will increasingly use that to decide where items should be placed on the shelves and how much space they should have on their own, as opposed to allowing the supplier to dictate that. This will benefit both the retailer and consumers by providing better itemization and an improved shopping experience.”
--As an original founding partner, Michael Bellman has helped transform SAS Retail Services over the past 20 years from a small regional provider into an industry leader by driving growth and expansion, and overseeing multiple mergers and acquisitions.
Beacons Go Mainstream
“The biggest single technology trend that will affect the retail environment in the coming year will be the rise of beacons as an increasingly accepted form of digital communication with shoppers,” said Dr. Lance Eliot, VP of global IT for Interactions. “Currently, most of the retailers using beacons are doing so on a very subtle and cautious trial basis.”
Eliot explains that this is because “stores aren’t sure yet whether consumers will love or hate beacons. Consumers might come to hate them if they are perceived as overly obtrusive. Shoppers do not want to walk into a store and feel as though ‘Big Brother’ has suddenly taken hold of their smartphones. Nor do they want to constantly have their shopping experience disrupted by numerous messages and alerts telling them about special deals in the store.”
According to Eliot, as more retailers introduce the technology in the coming year, the key to success will be to “use the shopper communication power of beacons judiciously. Target, for example, has wisely opted to keep its pilot use of beacons to a reasonable two messages per