Top 5 retail trends to watch in 2015

The retail landscape is changing more rapidly now than at any point in history. As technology and customer demands evolve, retailers and their supply chains must be increasingly flexible and adaptable.

Let’s take a look at the top 5 trends for the retail supply chain in 2015.

1. This year will be omnichannel’s time to shine.

As much as the term “omnichannel” is overused and overhyped, there’s no denying that the concept of integrated, silo-free customer experience is a reality that’s here to stay. The difference in 2015? Retailers are getting smarter about it.

The past few years have been full of instances of retailers scrambling to adopt so-called omnichannel strategies and capabilities, sometimes with less up-front analysis than such significant changes usually warrant. Often, goals were unclear and retailers were unsure how to accurately measure ROI or define success.

In early 2014, almost two-thirds of retailers stated they had undertaken particular omnichannel initiatives solely because of a perceived customer expectation, rather than supporting data. The result was sometimes a patchwork quilt of roughly-executed capabilities, limited customer insight, and legacy systems ill-suited to enable the new approach.

Fast forward along the learning curve to 2015: While no retailer would say it has this whole omnichannel thing entirely figured out, many leading retailers are now really hitting their strides. Those that are succeeding in the space have been figuring out what’s working and what isn’t, how to measure it and how to improve it. And others have been following that lead. The dust has begun to settle, and the early mania surrounding the buzzword of omnichannel has given way to the reality of data-driven, incremental steps toward the realization of omnichannel.

2. Transportation issues will get worse before they get better.

It’s no secret that these days, retailers face challenges on virtually all fronts when it comes to getting products from origin to consumer.

While many U.S. seaports moved record volumes of freight in 2014 — an almost 7% increase over 2013 — in many ways it was a troublesome year, with ongoing congestion issues and, in the case of the West Coast, ominous uncertainty surrounding labor negotiations.

While negotiations between the ILWU and the PMA continue to drag on, larger port issues would remain even if a labor agreement could be reached immediately. Alliances, bigger ships, operational shortcomings, infrastructure limitations and more will continue to make for a rocky road ahead. While ports, carriers, and terminal operators realize the problems exist, figuring out the best way to address them and then actually addressing them isn’t an overnight endeavor.

Things aren’t much easier once cargo begins its domestic journey, either. While highway infrastructure continues to age and the funding to improve it remains elusive, the shortage of truck drivers is increasingly acute. Though Congress recently voted to suspend the Hours-of-Service restart rules that FMCSA instituted in 2013, it’s only a temporary stay, and will be revisited in September of 2015. The ever-tumultuous world of transportation will continue to keep retailers on their toes in 2015.

3. Cyber-security and the supply chain grow closer.

Retailers’ continued commitment to cyber-security was thrust into the spotlight over the past year, with a series of data breaches capturing the attention of the public and the media. Historically focused on maintaining the security of their own systems and networks, the scale of the threat has caused many retailers to look outside their virtual four walls.

In 2014, several leading retailers reached out and joined forces to create the Retail Cyber Intelligence Sharing Center (R-CISC), an industry-wide entity dedicated to sharing leading practices and actionable intelligence in the fight against retail cyber threats.

In 2015, expect to see retailers’ continued focus on their own systems, but also greater attention to the much larger ecosystem throughout the supply chain. An average mid-size retailer can have thousands of suppliers and vendors; larger chains have tens of thousands. Each of those suppliers has its own network of suppliers, creating an enormous web of electronic interdependency and data exchange.

Often considered to be solely the purview of “the IT guys,” supply chain execs will find themselves playing a larger role in their companies’ cyber-security measures.

4. Brick and mortar is back with a vengeance.

After many years of pundits heralding “the end of brick and mortar,” the store is reasserting its importance as a vital part of retail commerce.

A recent study indicated that 82% of consumers had made purchases online in the past year, and e-commerce sales have been growing by more than 19% a year.

E-commerce is getting bigger, not going away, but it’s not putting a stake in the heart of stores either. Instead, as retailers learn more about how to move toward true omnichannel integration, the physical presence and the online presence will be more intertwined. Previous years’ rampant fears about “showrooming” are giving way to success stories around leveraging stores in support of omnichannel strategies.

Many chains have found big wins with pilot programs that employ their existing network of physical locations as order fulfillment centers, and retailers are really learning how to maximize the benefit of “buy online pick up in store.” Indeed, if omnichannel centers on a richer customer relationship, then in-store interactions are a critical component of the experience.

Expect to see more tailored, personalized shopper experiences, enabled by technology. E-commerce isn’t killing stores, it is compelling stores to get better and become more relevant, and we’re finally beginning to see more results of that effect.

5. Smaller footprints, greater impacts.

Big boxes are getting smaller and moving to the city. Several major retailers have recently stated plans for smaller-format stores, usually in more urban locations.

The U.S. Census Bureau announced last year that urban population growth continues to dramatically outpace the country’s overall growth rate, as more people move to cities. Hand-in-hand with urbanization comes smaller household sizes; these and other factors have shifted many retailers’ focus to smaller stores in urban locations.

Along with this move comes a new set of supply chain challenges, ranging from managing localized product mixes, to the urban distribution challenges of navigating an 18-wheeler through city traffic, tight docks, and vigilant parking enforcement officers.

More than ever before, retail supply chain professionals will find themselves grappling with the usual challenges of moving product from origin to consumer — now with an added layer of urban complexity on top. 2015 is shaping up to be an exciting year in retail supply chain, with many new developments.

All these topics, and more, will be highlighted in sessions at the Retail Industry Leaders Association’s upcoming Retail Supply Chain Conference in Orlando on Feb. 22-25. With a program developed by and featuring many of retail’s top supply chain executives, the longest-running supply chain conference devoted to retailers is focused on top issues, leading practices and actionable takeaways. Visit www.rila.org/supplychain for more details.