As we move into the new year, it’s time to look ahead and predict what’s in store for the retail industry as it races to stay relevant in the Age of Amazon.
Here are five predictions to keep an eye on in 2017:
1. Retailers will invest heavily in transforming brick and mortar stores into mini-fulfillment centers: For the first time ever, online shopping outpaced in-store during Black Friday weekend this year, signaling a shift that we’ve seen coming for years. As the scales tip, traditional retailers will need to act fast to capitalize on the biggest advantage they have over their online pure-play counterparts: physical stores themselves.
By building “connected” stores that blend the digital and physical experience – allowing them to effectively double as flexible fulfillment centers – retailers can capitalize on their decades-long investment in building stores along corridors where people live, work and play. Retailers will also be keen on finding ways to equip their associates with tools that help pick and pack effectively for these programs, without adding extra burden to their current workload.
2. Retailers will want to provide more last-mile fulfillment options: Brick-and-mortar retailers will find new ways to meet the demands of their customers. Retailers will begin to invest more heavily into curbside pickup, as well as delivery through partnerships with companies like Uber and Postmates. As Amazon is reportedly planning no-checkout grocery stores where customers are automatically charged for their items through a combination of AI, computer vision and data pulled from multiple sensors, it further increases the urgency for retailers to act and innovate quickly.
3. New in-store experiences will draw shoppers to stores: As in-store sales decline in proportion to online sales quarter after quarter, retailers will develop new programs and incentives to build a better in-store engagement model with customers. One such idea is Nordstrom and is called Reserve & Try, where customers select merchandise through their mobile phone and have it placed in a dressing room so it’s ready and waiting when they arrive, with their name on the door. Experiences like this that expedite the shopping process will be key for retailers in 2017.
4. The true costs of same-day delivery will become apparent: On-demand delivery services have been popular in major cities around the country, however much of the true delivery costs have been subsidized. Net shipping losses are high.
As the subsidies come off, consumers that do not live in dense urban areas and are outside the highest income brackets will be resistant to added fees, opting instead for alternative, affordable fulfillment options that fit seamlessly into their day-to-day lives. On-demand delivery services will need to get creative to offset their fees or risk encountering major scaling issues.
5. Shopping malls will be reimagined: Similar to stores being reimagined as hybrid fulfillment centers, malls will need to evolve to meet the changing demands of today’s shoppers who increasingly are opting for faster and more efficient experiences.
In 2017, we’ll see an increase in in-mall interactive experiences, entertainment and designated spots to pick up orders from multiple stores – much like the
Curbside Pickup Pod in Los Angeles.
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