New technologies, new products, new consumer preferences—change always threatens to disrupt the status quo, and the retail landscape is no different, says consumer experience marketing company Interactions, a subsidiary of Daymon Worldwide. The trick is to determine which trends are passing fads and which have real staying power. To help, Interactions compiled predictions from six experts from the Daymon family of companies for trends that will have the biggest impact on the U.S. retail environment in 2016:
Improved transparency and distribution
According Jim Holbrook, Daymon Worldwide CEO, one of the biggest themes in retail in 2016 will be “less bad, more good.”
He predicts “we’ll see more products introduced with less sugar, less salt, less words you can’t pronounce, less GMOs and so on. CPGs will also be focused on providing products with more nutrition, more flavor and more simple ingredients.”
Beyond the shelf, Holbrook also predicts changes in distribution.
“Availability and accessibility of products will also change dramatically,” he says, noting the rise of e-commerce. “It’s not that people will stop going into the store to see what’s available. It’s that they want choices and an improved experience.”
Closing the digital divide
“The digital shift will continue to be a major player in retail in 2016,” says Bharat Rupani, president of Interactions and SAS Retail Services, Daymon’s retail execution division. As evidenced by the expansion of online retailers and falling brick-and-mortar market share in 2015, “brick-and-mortar retailers need to find better ways to effectively compete in the digital space.”
According to Rupani, one way some retailers will do this in 2016 is by starting to engage with consumers well before they enter the store through apps and other digital interactions. Rupani also predicts that technology will be used in new ways to enhance the in-store experience.
Retailers take more control of shelves
“The biggest trend we’re going to see as it relates to retail merchandising is that more and more retailers are going to take back control of shelf conditions and the environment in stores,” says Michael Bellman, president of SAS Retail Services. “As a result, decisions about which items to carry and where to place items on shelves will be more driven by analytics than by brand bias.”
As part of this, Bellman believes that more retailers will move from the older merchandising model (where suppliers employ brokers to merchandise items on retailer shelves) to a newer single-source model.
Beacons go mainstream
“The biggest single technology trend that will affect the retail environment in the coming year will be the rise of beacons as an increasingly accepted form of digital communication with shoppers,” says Dr. Lance Eliot, VP of global IT for Interactions.
Eliot says that as more retailers introduce the technology in the coming year, the key to success will be to “use the shopper communication power of beacons judiciously. Target, for example, has wisely opted to keep its pilot use of beacons to a reasonable two messages per shopper per visit.”
Delivering the unexpected
“In 2016, we’ll see more entertainment in stores,” predicts Nicole LeMaire, VP for Interactions. “Live music, wine tastings, specialty food sampling, live chef events—these are going to become more common as retailers incorporate more of a social environment into the retail store.”
LeMaire also predicts that retailers will begin to change their physical environments to help increase shopper engagement.
“We’re starting to see smaller formats, and more outdoor and European-style markets. These offer that local feel people are seeking where shopping is a social activity.”
How the ‘Internet of Things’ is changing retail
In other news, Interactions has released its latest Retail Perceptions report that explores the Internet of Things (IoT) and shoppers’ current and future habits around it.
The IoT is defined as the connectivity of everyday objects—through Bluetooth, Wi-Fi and other network technologies—to the internet so that they can send a receive data.
Interactions discovered that more than 55 percent of shoppers are already plugged into the IoT, with 79 percent planning to purchase IoT products in the next two years.
The report, “The Technology Revolution: How the Internet of Things is Changing Retail,” illustrates how retailers can embrace this evolution and advance their connection with consumers by providing a more personalized experience.
“The connection for retailers and brands is moving far beyond the use of smartphones,” said Kristen Baird, senior director of insights and analytics with Interactions. “With 55 percent of shoppers wanting their devices to alert them when they are running out of products at home, and 14 percent preferring to have products ordered automatically when they run out, retailers have a prime opportunity to engage with shoppers throughout all areas of their life.”
From smart vehicles to smart appliances, shoppers want their everyday devices interconnected, even if it means sharing personal information.
When it comes to security, nearly 70 percent of shoppers say that the convenience of owning smart items outweighs their fear of sharing personal information. To be constantly connected, shoppers are willing to share their online search history (30 percent), purchase history (28 percent), health data (23 percent) and their current location (22 percent).
The report also acknowledges the growing popularity of wearable technology. Nearly 30 percent of shoppers currently own wearable technology products, including smart watches, smart glasses or activity tracking devices. According to the report, 13 percent say that the primary reason that they have purchased wearable technology is to integrate it into their shopping experience.
“Any customization to make the shopping experience more personalized can go a long way with making a meaningful connection with shoppers,” Baird said. “Our report notes that 54 percent of consumers prefer to shop at a store that reflects their personality over one that offers low prices or convenience. Retailers and CPGs can aim to effectively enhance customer engagement by taking advantage of IoT products.”
For retailers, the report lists the top five most useful features in IoT products, such as turning off the lights from mobile devices (43 percent), tracking home security (35 percent), turning off connected appliances or devices (34 percent), adjusting the home thermostat (34 percent) and receiving money-saving tips and information about nearby deals (29 percent).
The full report is available to download for free at interactionsmarketing.com.
*Editor’s note: Read more stories like this in the Equipment, Services & Technology feature, which appears in the March print editions of The Shelby Report.