With the Thanksgiving weekend behind us, the retail industry is afforded a brief moment or two of respite from the frenzy of holiday shopping to reflect on what’s working, what’s not, and what opportunities lie ahead as retail’s most important season really starts to heat up.
Based on the current retail landscape, there are several factors that will impact how the holidays take shape this year. In fact, there are four specific factors to consider:
- Traditional retail events are no longer compressed into time segments and the shopper is reinventing how retailers approach these events. The pattern began to show in an impactful way Thanksgiving 2014, and we saw further evidence of this last week. Black Friday was originally a one-day event that transformed into a weekend event many years ago. Last year, it became a week-long event, and this year Black Friday has been transformed into a month-long event starting when the calendar turned from October to November.
- The growing influence of digital channels translates into more buying choices for shoppers, with not only a variety of products, brands and retailers to choose from, but a variety of mobile devices in which to use, including desktops, notebooks, smartphones, tablets and watches. Similar to technology lifecycles, the adoption rates vary by user, or in this case, by shopper. For example, some shoppers are at the early adoption stage and using Apple Watches and mobile payments on devices, whereas the majority of shoppers are just now considering the migration from desktops and notebooks to smartphones and tables. As the tablet has grown more expeditiously than the PC, the adoption rate is moving much quicker, and therefore the mobility of shopping has transformed how retailers should be doing business.
- There’s a significant shift from product-driven to product-plus The product-plus factor describes a secondary element that shoppers are looking for in addition to a great product and a great value, and includes innovative and experiential features. For example, shoppers want to fully embrace and experience life, and therefore are more inclined to spend money on experiences than product alone. Shoppers want more than just a product, and this can be seen with the need for community with product like Nike+ Connect, where the product connects users with others in a community ecosystem of the brand. On product-plus innovation, there is need among shoppers to be interactive with products like the Apple Watch or the gaming technologies. The ultimate would be taking the community aspect and coupling this with the gaming aspects like PS4 or Xbox One.
- Service-focused in-store experiences reverse the thoughts of yesteryear when retailers aimed to keep customers in stores as long as possible so they’d spend more money. Today, retailers are moving toward models where they expedite the shopping visit to create maximum value by giving the customer back precious time. And the good news here is that while she may want to spend less time in-store per visit, she’s likely to visit more frequently if her journey is painless and efficient. Tactical examples include expedited checkout and mobile POS, “click and collect” and quick-find product apps.
The four factors above are great, but what do they mean to the retailer, and how can retailers further capitalize on them, both for themselves and their shoppers?
The call to action is a reinvention of physical retail, which has lagged behind the transformational pace of digital side of the business. Retailers must understand causal effect of promotions and events, and need to be more in tune with shoppers, particularly with price transparency, value offerings and consistency across and through digital and physical channels.
They must also understand the rate of adoption for the target market served so that relevant technologies are deployed in a format that best aligns with the customer segments. The product-plus factors mean a deeper understanding about the “plus” side of that equation for the target market – retail needs to go beyond the realm of only trading money for a product.
Lastly, retailers must transform the in-store experience to best match to the goals of the shopper. Doing so will require accepting new insights, such as more time spent in-store does not necessarily equate to more money spent, and using enabling technologies to measure in-store shopping behaviors to best align product purchasing with shopper wants.
Oh, and did I mention – this is just the beginning!! It will be a wild ride towards retail 2020.
The top trends shaping holiday and beyond
Value-driven dominance: Value does not necessarily mean low price or even cheap. Value in terms of retail is the “perception of a deliverable being greater than the price paid for the deliverable.” For instance, TJX has great value but, at the same time, so does Hérmés. Value is, of course, in the eye of the beholder. Today, value is also measured in time. In this case, the deliverable is available in the quantity, format and time that there is a need for the deliverable. Retailers that can expedite shopping for those in “great need” are creating great value while at the same time, retailers that expose shoppers to an environment that allows for high engagement are also offering great value.
Experiential shopping initiatives: The ability to add the plus to a product with some type of experience or interaction. Customization allows for product and interaction to merge, resulting in high shopper engagement. The same goes with community ecosystems that provide another level to the product purchase. As the brand ethos is so embedded in the product, the customer becomes the brand manager.
Service-centered focus: Processes, infrastructures and systems live behind the scenes and produce painless and frictionless shopping which shoppers may not see or hear, but nonetheless experience with pleasure. Expedited checkout, “click-and-collect” and curbside pick-up are three examples. Mobile wallet is another great example, but retailers still struggle to execute this initiative on a large scale. Product search and price look-up apps are other programs implemented to make shopping convenient.
Top Four Product Category Picks for Holiday:
- Star Wars. Star Wars. Star Wars.
2. “Not-Your-Father’s-Electronics: drones, hovercrafts and robots
- Electronics with a twist:
- Innovation + Tech: Apple Watch
- Experience + Tech: Xbox One, PS4
3. Community + Tech: Fibit, Nike+ Connect
4. High Ticket:
I am optimistic that retail will achieve positive year-over-year gains as forecasted previously. Not only are the macroeconomic indicators good, but there is pent up shopping demand from the previous two months and I am sensing a “holiday spirit” that I have not seen in a long time, maybe as a residual spill over from recent tragic global events that have brought us together as a community.
The wild card, as it was this autumn, will be the weather. Colder weather in the central U.S. will drive sales, but untimely blizzards can potentially wreak havoc. In the Northeast, the weather continues to challenge retailers, many of whom have stock geared to temperatures that are normally 10-15 degrees lower. Remember, last year at this time, the Northeast experienced temperatures that were 20-30 degrees lower. This begs the question, while warmer weather will get shoppers outside and into physical stores, will they be buying scarves and sweaters?