Tales of Retail 2015

Posted January 7, 2015

Five Less Obvious Retail Trends That Experts Are Predicting Will Impact Retail in the Coming Year.

It’s almost a given that certain retail trends will continue on into the foreseeable future. These include the explosion in online and mobile sales and the improving integration of on- and offline sales.

In her cnbc.com piece, Krystina Gustafson touches on five trends that are less apparent, but no less important to how things play out in retail. The following has been excerpted from Gustafson’s piece and edited to fit our format. You may find the complete article in its entirety by clicking on this link.

1. Back to mobile 101

On Cyber Monday, mobile sales accounted for 22 percent of online sales, an increase of more than 27 percent compared to the prior year, according to IBM Digital Analytics. [But with] that growth…came [problems].

On Black Friday, for example, Best Buy’s website experienced a number of hard outages, which it attributed in part to a “concentrated spike in mobile traffic.” As a result, Elana Anderson, senior vice president of worldwide marketing at Demandware technology, predicts retailers will go back to basics on their mobile initiatives in 2015. A lot of retailers rushed [into mobile] and didn’t really do their homework,” Anderson said.

For ThreatMetrix’s observation on Black Friday and Cyber Monday, see our recent press release “ThreatMetrix Protected 10 of the Top 20 Online Retailers Against Fraud During Cyber Week.” And don’t forget to see our recap on Christmas week, “ThreatMetrix Helped Stop More Than 11.4 Million Attempted Fraudulent Transactions During the Holiday Shopping Season.”

No mobile a big disadvantage

Manav Mital, CEO and co-founder of Instart Logic technology, said that while a great mobile site was a competitive advantage a year ago, in 2015, the lack thereof will be a huge competitive disadvantage.

Performance counts

“Retailers have realized that whiz-bang features like virtual dressing rooms don’t make any difference if shoppers abandon their site because they are frustrated with site performance,” he said.

Apps to shift focus

Although Anderson anticipates most firms will focus their attention on optimizing their mobile sites, she said she doesn’t think mobile apps are dead “by any sense.” Instead, she predicts they will shift from pure shoppable applications to include such features as loyalty programs and editorial content.

2. Retail gets ‘microsized’

Target and Wal-Mart, which have traditionally operated in a big-box format, are two names that have already announced small-store initiatives for 2015. For its part, Wal-Mart plans to open 200 to 220 small-format stores in its new fiscal year; a Target spokeswoman said the retailer will open five TargetExpress locations in 2015, as well as one CityTarget.

“Smaller-format stores have appeal for obvious reasons, driven by urbanization, a rise in smaller households and consumers’ changing notion of convenience,” according to a recent report by consulting firm Daymon Worldwide.

3. Lower-income consumers catch a break

“We believe retailers most likely to benefit are those exposed to lower-end consumers,” said [Wells Fargo analyst Paul Lejuez] describing the customers as those who spend 10 percent or more of their income at the pump and heating their home. The retailers [who benefit] include Wal-Mart, Target, Kohl’s and the dollar stores.

That’s not to say things will be easy for this shopper. According to Customer Growth Partners, about half of working-age adults are either in part-time roles or are still unemployed, while many who have jobs have seen their wages stagnate.

4. Strong stay strong, weak still weak

As was the case in 2014, there will be a big divide between the retailers who are getting it right, and those who are struggling to survive.

[Sears, industry experts say,] will…be watching [its] department store[s], which [are] …experiencing a sales bleed. After pulling numerous levers to cut costs and keep the business afloat, the company said last month that it is considering converting hundreds of its stores into a real estate investment trust.

Sears is also in the process of closing a number of its underperforming stores.

5. What won’t happen

For all the changes anticipated next year, Forrester Research cautioned people shouldn’t get ahead of themselves in certain areas. Among the things analysts Sucharita Mulpuru and Andy Hoar don’t expect will happen in 2015:

Credit and debit cards are here to stay

Apple Pay won’t replace old-fashion credit and debit cards; Alibaba won’t transform the online landscape in the U.S.; and online grocery sales won’t have a breakthrough year.

Alibaba underperforming

According to the research firm, there are a number of obstacles facing Apple Pay, including the fact that iPhone 6 penetration is still small among mobile users. Alibaba’s U.S. strategy has been “underwhelming to date,” with further challenges coming from American consumers who are slow to shift their allegiances.

Online groceries on the shelf

Regarding the $1 trillion grocery business, “Online grocery continues to be the least penetrated of all online categories because of the challenges of cost-effectively delivering fresh and frozen foods,” the report said.

According to Forrester, online penetration of grocery sales was only 2 percent in 2013.

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