The first in a series of posts on 2016 predictions within retail is here. Over the course of the next few days, I will outline industry trends (below), tech trends impacting retail and specific retailer predictions.
- Retail sales growth will remain tepid - Spending will continue to be hampered by consumers paying more for healthcare and housing. Pockets of strength will be restaurants & bars, non-store retail (online), auto and home improvement.
- Discount & Outlet vs. Department Stores - The "perceived deal" and "the find" will continue to earn customer wallets. The only way to provide both of those two is through discount & outlet stores...much to the dismay of department stores.
- Cheap chic reigns supreme - H&M, Uniqlo, Zara, Forever 21 and now Primark will continue to drive the mindset of the consumer and steal share from legacy retailers. Mindset: Apparel should be cheap and viewed as disposable.
- Ecommerce is truly here - Although brick & mortar still owns the overwhelming majority of spend, 2015 truly made the customer comfortable with shopping online. Online grocery shopping truly became available and mobile sites/apps hadn't reached the tipping point. That all changed in 2015 and will make previous year's growth seem small.
- Marketplaces thrive - Shoppers start their shopping in a search engine or at a site named Amazon. Sometime in 2016, 50%+ of everything purchased on Amazon will be from a 3rd party seller. Brands will realize the need to list in these marketplaces or risk losing the "eye share."
- Minimal retail footprint downsizing - Although most industry pundits agree that North America has too much retail space, we likely won't see much downsizing in 2016. Stubborn retailers will still open stores in smaller sizes and hope to steal market share from competitors. 2017 will be a different story...
- Liberation of brands - Brands will make further progress in "owning the conversation" with the customer as they focus on selling direct and cutting out the middle man. Some will earn organic sales due to being front of mind whilst others will realize paying for awareness is addictive and expensive.
- Etail is a losing game - It has become increasingly more difficult to run a retail business as 100% ecommerce. With the cost of acquiring an order and/or customer increasing monthly, etailers cannot survive paying for every order. The existing etailers realized this in 2015 by focusing on marketplaces/services to pay the bills.
- Shippers with deep pockets survive - Customers are no longer willing to pay for shipping yet want the product now. Large, comprehensive delivery networks are costly. The Instacarts and Delivs of the world can survive in highly dense markets but the end of domination by FedEx and UPS using USPS for final mile delivery is nowhere near.