Retail sales in 2016 were projected to reach $22 trillion globally, buoyed by events such as Alibaba's $18 billion Singles Day and the 11 US e-commerce days with over $1 billion in sales beginning on Thanksgiving in 2016.
However, the massive increases in sales mean that the market is even more crowded. Customers can afford to be selective about price and user experience, because global competition is now the norm and there is always a competitor willing to offer a comparable experience.
In today's landscape, retailers and brands must make the following four key trends a priority to stay competitive.
1. Product content will become mission-critical for retailers
Having a great product is a cornerstone of a successful retail company, but if that great product isn't effectively merchandised across a variety of platforms, its success is severely limited.
Enter content. Fully 88% of consumers say detailed product content is a key purchase driver. What does that content look like?
Good product content should go beyond simply showing an image and sourcing information; it should help customers by adding value, by offering educational content and forging a connection with a brand. Once a seller has provided high-quality product content, that information needs to be consistent across every platform that a seller uses to sell its products.
The likes of Amazon are at the forefront of the product information "war," and it has implemented strict guidelines aimed at reducing the amount of counterfeit sellers and inaccurate product content on its platform.
2. Omnichannel will move from aspirational to essential
The word "omnichannel" has been one of the most talked about concepts in the world of retail in recent years, but it may finally be behind us. Retailers have had a few years to invest in the selling experience on multiple channels, and the margin for error is significantly smaller than it used to be.
Consumer data backs up the importance of nailing the omnichannel experience: Shoppers who interact with companies across multiple channels spend 18-36% more than customers who interact with only one channel.
Retailers have had their logistics capabilities and physical stores in place for many years now, but new investments in additional physical operations, such as in-store technology, pose a host of issues at a time when consumers expect a more unified experience than ever before. Integrating new technology into the e-commerce experience, with its global shipping networks, online sites, mobile apps, and more, creates a new level of complexity.
The recent emergence of Amazon Go signals a shot across the bow for retailers as well. The company's beta version of a grocery store, with instant checkouts, product selection, and arrangement determined by artificial intelligence, may force the entire grocery industry to rethink existing stores.
An entire generation of consumers has grown up with frictionless checkouts online, and this new store merges Amazon's current excellence with the experience younger generations are already accustomed to. This is the year to get your metaphorical house in order.
3. Compliance will remain a challenge
Global commerce is now the norm for many businesses, but the more geography a company covers, the more regulation it must deal with. Globally, new regulations on medical devices, food products, traceability, and more... challenge businesses across every industry, and each country has its own version of these regulations.
Companies can't afford to mishandle their product information in many of these categories: Food and health products can become deadly if the tiniest of details is missed. And every country requires slightly different information, often in a different language than the country of origin.
Retailers must streamline their product information distribution systems to ensure compliance with each initiative and ensure overall accuracy.
4. Retailers will embrace predictive technology
One of the most effective ways to get access to consumer wallets is personalization. However, traditional personalization models of "you bought this, so you might like that," can go only so far, because they struggle to identify purchase factors outside of what retailers program into their item relationships, and they can't identify specific consumers and their individual preferences.
Some 45% of shoppers are more likely to shop with brands and retailers that offer personalized recommendations, and predictive analytics are the gateway to these customers.
Because consumers aren't always sure of what their next purchase will be, offering highly relevant and timely recommendations can accelerate purchase decisions and gain even more information on core customers.
This level of deep understanding also helps build a better decision-making culture, where merchandising and marketing efforts are informed by customer data instead of speculation.
* * *
The retail market is more crowded and competitive than ever. Consumers can purchase almost anything, anytime, anywhere, and that trend is only going to accelerate.
The future comes with many opportunities and challenges; retailers that keep these four trends in mind as cornerstones of their overall retail philosophy will be well-placed to succeed.