Top trends to watch in retail
Retailing in the United States will continue to evolve. Despite boasting nearly 4 million retail establishments in the United States, supporting 42 million jobs and contributing $2.6 trillion each year to the nation’s gross domestic product (according to the National Retail Federation), retailers will continue to face major challenges this year as the industry adapts to a new economy and changing consumer preferences and expectations. Successful retailers will need to have a keen eye trained on a variety of trends and issues affecting the industry and their businesses.
Listen to what John Nicolopoulos, RSM retail practice leader, shares in his industry outlook about the various challenges—and opportunities—retailers will face.
In addition, check out the following trends and issues to monitor this year in retail.
The U.S. economy is expected to continue to grow at a modest pace of 2 to 4 percent this year. However, anticipated policy changes from a new administration in Washington, pending tax reform and proposed economic stimulus and infrastructure plans could boost jobs growth and disposable income in 2017 and beyond. Nonetheless, retailers will face significant challenges. Job growth will likely lead to labor shortages and higher labor costs and the proposed border adjusted tax legislation would likely affect the cost of retailers’ imported products and services, which may or may not be passed on to consumers. These factors, along with rising housing and health care costs and a shift in consumer spending away from products and toward experiences, will continue to challenge retailers in 2017. To compete effectively in this uncertain environment, middle market retailers must optimize their operations, from supply to distribution, and everything between.
There are three major concerns for middle market retailers in terms of labor in 2017: labor costs, labor scarcity and labor retention. Building a skilled workforce, dedicated to the company brand and core philosophy, is an essential part of a retailer’s success.
Listen to what our industry insider says about the importance of a strong workforce, one that’s trained and well-versed in products and brand, particularly for those bricks and mortar businesses, and why it’s a foundational element to overall customer service.
Consumers want access to products on their terms and will develop lasting relationships with those who meet these expectations. Successful retailers understand this and continuously find ways to expand relationships with their customers. Relationships are fostered through exceptional customer service and creative loyalty programs and by creating unique, authentic in-store and online experiences. In 2017, retailers will need to leverage technology to maximize omnichannel effectiveness and better understand their customers.
In particular, those consumers in the millennial generation, with an estimated $200 billion in annual buying power, require additional consideration and evaluation from retailers. These consumers value authentic interactions with their brands, demand access to a vast amount of product information, require competitive pricing and wish to see social responsibility and commitment from the retail businesses they interact with. Retailers must demonstrate these offerings and more to lure and retain this target audience.
In today’s highly competitive retail environment, brand differentiation is essential. Brand differentiation is far more than a catchy jingle and cool logo. It is the essence of an organization and how it is perceived by its customers. Winning brands in 2017 and beyond will be relevant, authentic and create a tribal connection with and among their customers. Most importantly, they will compete on multiple channels as they recognize that each customer interaction affects the brand, whether online or in a physical store. Successful brands will unite their market strategies around online, mobile and in-store customer outreach and transform their bricks and mortar spaces to provide a unique vibe and experience for their shoppers. Understanding customers’ unique expectations enables retailers to create positive experiences and build brand loyalty. Our industry insider explains.
Technology will continue to play an increasingly important role in retailing in the future. Virtual reality, beacons and robotics are at the forefront of newer customer-facing technologies in retail, but many retailers and their customers may not be quite ready for these technologies. The most successful retailers in 2017 will continue to maximize the effectiveness of core technologies to support their omnichannel efforts to ensure that all channels are integrated, provide a positive customer experience and enhance the brand. For their customer-facing technology, they will ensure their store’s website and other channels are providing a seamless shopping experience. Simultaneously they will also perfect their internal technology, ensuring they have a solid supply chain technology platform in place to get products quickly and efficiently to store shelves and/or customers. Without the basic technologies working together, retailers cannot provide a successful multichannel retail experience.
Retailers who have resisted multichannel operations are running out of time. Although certain segments of the industry will continue to be heavily weighted toward a particular channel, most need a multichannel approach to succeed in the long term. Middle market retailers who have watched patiently to learn from the failures and successes of their larger competitors need to mobilize quickly to maintain market share.
A recent RSM omnichannel survey suggests that middle market retailers who are successfully leveraging omnichannel efforts realized a 36 percent increase in sales in the past 12 months and are expecting a 27 percent increase in the next 12 months. More importantly, survey respondents indicated they’ve seen a 40 percent increase in new customers in the past 12 months. In a slow growing economy retailers who remain on the sidelines will continue to forfeit market share if they don’t respond quickly.
Our industry insider shares more about the importance of technology and a sound omnichannel strategy.