2017 retail trends: 5 things tech vendors need to know
There is general agreement that retail is tough, and will only get tougher next year, as commodity prices, inflation, rents, rates and staff wages rise.
Competition will keep prices down for consumers, so the savings must therefore come from operational efficiencies. That’s going to be a very tough circle to square, and there will certainly not be enough money, time or laying down of departmental egos to get it all done.
And yet, by being aware of these realities, vendors will discover a wealth of opportunities to sell solutions to retailers over the next 12 months.
To help them along, here are my key 2017 retail trends surrounding IT spend, which technology vendors need to be aware of:
#1 – bigger investment in integrating different channels to market
Optimising at the front end of each channel delivers all sorts of tiny incremental measures of success. But these don’t have much value if basket abandonment rates are rising, or AOV is under pressure. Both must be measured across every channel customers shop, through, including the call centre. No one is doing that yet, because no one can see the same customer across every channel.
And that’s because it’s not easy, but if Jeff Bezos keeps on challenging the industry to change by saying things like ‘retail success should be measured on customer experience not profit’ then we all have to work even harder to make change happen.
Technology opportunities: Cloud, APIs, ERP, process redesign, networks, mobile apps
#2 – ecommerce platforms upgraded to something more scalable and robust
The four major platforms are holding ecommerce development back. With pureplays now running billion dollar enterprises, the percentage of business being done online continuing to grow. The consumer is including digital in the majority of their transactions, but site speed and availability is not keeping pace, and the vendors in charge are ripe for disruption.
The word scale has been politicised by the platform vendors so that everyone’s expectations have been managed downwards. But the real challenge to be met involves not just availability, but global trading, consistency, personalisation and true omnichannel order management. This requires scale of an entirely different magnitude and most of the innovation is coming from disruptors, supported by companies with big cloud capabilities.
Technology: cloud, hybrid ecommerce, web service
#3 – investment in supply chain processes and partnerships that can respond to omnichannel commerce
About five years ago, supply chain started to get overlooked in terms of media coverage and investment, but its importance never went away. Now, the poor relation is back in the headlines as retailers realise that they can’t support endless aisle availability, or afford to provide flexible fulfilment without involving the people who can deliver it more closely in strategic decisions.
Supply chain isn’t sexy compared to stores and ecommerce, but given that customer experience is less about lovely-looking websites and in-store theatre, and more about perfect order management, easy payments and convenience delivery (and returns), then retailers need to inject some pheromones into supply chain. The next generation of supply chain leaders who are not kept in the dark like mushrooms by operations are just the guys to do it.
Technology: warehouse management, logistics, order and returns management, task management
#4 – focus on recruiting, training and tech-enabling a new type of store associate
New tech has arrived to address recruitment, training and working, all of it critical to enabling a new type of workforce – but has anyone actually yet described the people that will be needed?
Currently, all the future gazing about what the new store associate will look like focuses on the tech they will need, not the person. This isn’t very polite, given that they are the ones in the front line every day. Increasingly they are Millennials, who are accused daily of being needy, selfish, narcissistic, scared of confrontation by the popular media. However, they are also tech savvy, well-educated, connected, world aware, colour-blind, idealistic, demanding – all characteristics which will define the store associate of the future; not a disinterested, uninformed, process-burdened drone.
Technology: mobile apps, machine learning support, analytics, hybrid POS
#5 – better planning for an unpredictable future
Being told what the future is like should be regarded as nothing more than a source of inspiration for retailers to have a deeper think about just how unprepared they are for it. Ask a senior management consultant and then ask an idiot, and you are likely to get roughly the same answer; most people are fed up with content called The Future of Retail.
Or not. Where else can people all go if they don’t know what’s going to happen? And who can resist having a guess? I certainly can’t but if there is any value that I think I can offer, it is that the gap between what a retailer can do and what it can’t is enormous, so there is no chance at all that they can afford to invest in all the technologies, processes and people they require next year.
As ever, it’s a journey that needs 3-5 years in a world that is offering at most 1-2. For example, retailers want actionable insights, but can a human data scientist actually manage the size of data? No. Can most data people tell you what the data means even if it was manageable. No. Are there enough people who can put the insight into action? No. And lastly, is there anyone to measure the effectiveness of the insight that was actioned. No. So, the tech industry tells retailers that they need to act on insight but no one has really worked out how to do it.
Technology : Machine learning, AI, IoT
For more insight into how the retail sector will evolve next year, read our 2017 retail trends piece from industry advisor, Ken Towle.