February 15, 2017, 3:46 PM EST
The Synchrony Trend Spotter: Retail Trends to Watch
Ten Retail Trends to WatchDOWNLOAD
Table of Contents
Spot Trends to Stay Ahead
Trend 1: Retailers create interactive shopping experiences
Implications: Retailers who use their in-store space for interacting with their customers can expect a more dedicated following and larger baskets. Even online retailers are going brick-and-mortar, using the consumer’s desire for an immediate purchase and an exciting experience. When having a great experience in the store, customers stay longer, browse more and have more of an emotional connection with the brand. We expect this trend to catch on with more retailers in the coming year.
Trend 2: Augmented and virtual reality (AR & VR)
Implications: Virtual and augmented reality are no longer just for high-tech electronic showrooms. Brands ranging from hotels to beauty products have been exploring virtual reality to engage their customers. Brands are using virtual reality for advertising, not only for 360-degree and 3-D videos, but also for content creation with immersive storytelling and product demos. The Pokémon GO phenomenon is a good example of a virtual reality app that creates excitement and engagement. Brands such as Starbucks and Bloomingdale’s are using the app to design campaigns and interactive experiences.
Trend 3: Healthy living—the newest old trend
As a result, sales for products related to health and fitness have grown as well. Athleisure has grown significantly as an apparel category. Last October, Morgan Stanley’s report on the athleisure trend found that “sports apparel and footwear sales have jumped 42% to $270 billion over the past seven years.”6
Implications: The growth in the health field is not just for food and fitness brands. Retailers who focus on athleisure, organic items and the outdoors can potentially tap into new areas of growth. Large department stores like JCPenney are increasing square footage devoted to active wear and focusing on it as a category for growth. The emphasis on health and fitness spans generations, and retailers may find an engaged audience by promoting and selling an active and healthy lifestyle.
Trend 4: The robot invasion
David Marcotte, a senior vice president with consulting firm Kantar Retail stated, “Americans find robots enormously entertaining. And there’s no emotional judging.” Some surveys have shown that people would rather interact with robots than with a person.7 The robot never judges you if you grab the ABBA karaoke CD.
Implications: Many large retailers have been testing robots, both in the backroom and on the selling floor. Lowe’s has been developing OSHbot, a customer service robot that speaks multiple languages and helps shoppers find items. As reported in Business Insider, Best Buy has begun using Chloe, a robot that retrieves products that customers request from a kiosk. And Target recently began a trial of Tally, a robot that travels through aisles and takes inventory.8 As the technology becomes more widely available and accessible, a robot invasion is getting more likely.
Trend 5: Brands and consumers "Socialize"
Implications: A comprehensive social media strategy should feature helpful content, not just a sales pitch. Social media content that makes an emotional connection to the brand is the most successful. Brands should keep the content engaging and interactive. Many retailers are using Snapchat filters and gaming to keep their customers engaged with the brand and keep them coming back.
Trend 6: Ship-to-store: a new way to increase foot traffic
Implications: The Ship-to-Store concept may not be high-tech, but it is an additional way to engage with customers and think about their needs. This is a way to engage with busy parents, the lunch hour crowd and last minute gift givers. Any strategy that has the customer engage in the store and creates an incremental visit is a boon for the retailer.
Trend 7: Conversational commerce: the newest purchase channel
Amazon entered the at-home voice command arena first, but Google has also developed the software, with Google Home. This is still cutting edge, but it may signal a new competition for voice technology in the future as other retailers may also develop voice-based functionality for purchases.
Implications: Industry watchers and trade publications estimate huge growth for the Amazon Echo, with one source estimating it will be a $1 billion business for Amazon.12 As the technology becomes more widely adopted, not only will other retailers take notice, but partnerships will also grow for usage of the technology. Currently, home security companies have partnered with Echo. But in the future, maybe local delivery services or contractors will use the service as well. Additionally, other retailers may adopt voice technology and launch Echo-like products and services. Although not fully formed, voice technology is anticipated to grow as the next retail channel.
Trend 8: Quick hits: partnerships and pop-ups
Temporary stores and startups have found a place in high-end New York City retail districts. Stantt, which makes men’s shirts to-order, opened a pop-up. Matt Hornbuckle, Stantt’s chief executive and co-founder said, “The overhead and financial commitment to open a store in Manhattan was too much for a startup. And we didn’t want to commit to something that was a hypothesis before we tested it out.”13
Implications: For retailers who want to test the waters with a low cost and quick concept, partnering with another retailer or setting up a pop-up shop may be a viable solution. Some large retailers have partnered with other retailers to go outside their own brand to drive traffic and pull in a more diverse customer set. Plus, smaller retailers can launch a low-cost shop without having to invest a significant amount of time and money.
Trend 9: Cash is no longer king: emergence of the cashless society
Implications: The benefit of a cashless society for consumers is the ease and convenience of using their smartphone to pay, as opposed to carrying cash everywhere. For a generation that has grown up with digital technology and views digital purchasing as the norm, the mobile wallet is a natural evolution. The benefit for the retailer is a seamless point-of-sale experience that speeds the customer through checkout and the ability for customized promotions and personalized marketing.
Trend 10: Internet of things (IOT)
Implications: The payoff of IoT for merchants is more data collected in more places, providing rich insights into consumer behavior, market trends, buying patterns and customer engagement. This allows for personalized offers and interaction with customers, yielding increased customer loyalty. For consumers, it signals an increase in convenience and shopping whenever and wherever their busy schedule allows.