Retail Predictions for 2014: An Interview with STORES Media Editor Susan Reda
Are you wondering what the hot trends will be for retail in 2014? To find out, Supply Chain Nation asked Susan Reda, Editor of STORES Media, to share highlights from her recently published article on this topic for our Expert Insights series.
SCN: You’ve just published your predictions for retail in 2014. Can you share with our readers which ones you think will have the greatest impact on retailers?
Reda: I think that geo-location will take a giant step forward. In the past, when we used the term geo-location we talked about the consumer’s mobile device being pinged with a message that they were near a certain retailer, and perhaps even that the retailer was offering a promotional price on a certain category, or that if you came into the store you could get 20 percent off on a certain item. What we will see in 2014 is that more retailers will use WiFi in the store, and the promotions and the outreach to consumers will become much more specific to the consumer. Retailers may be able, if they are really good, to know exactly where you are in the store, and be able to incent a purchase based on what you are looking at or what they think might go with what you are looking at. Maybe they are smart enough to know what you like and what you have purchased in the past and they can offer a promotion incentive that is linked back to that.
The whole idea of using data will be ratcheted up in the context of geo-location and the promotions that we are serving up to the consumer, and how we talk to the consumer when they are in the store will be greatly improved in 2014. That can be a big boon for traditional physical retailers who are trying to prevent showrooming and are trying to spark a purchase at that moment and win the business. I think that will be a really big one for 2014.
In that same context, we’re hearing that more and more retailers are using WiFi. Just a few months ago Apple announced a technology called iBeacon. I am still getting my arms around exactly what that can do, but it is my understanding that it is a less expensive way to connect with the iOS operating system, and may have some implications for Android as well. Retailers will be able to put these iBeacon devices in their physical stores and ratchet up the ability to communicate with customers when they are in their stores.
The big unknown with geo-location is how consumers will feel about privacy. In the past, some consumers have raised a white flag, saying enough is enough. What we are hearing more now is that if it is in context, and if I have opted in, or if I feel like the tradeoff—my giving you information, but you give me something in return that is of value to me so that the tradeoff makes sense—consumers are willing to part with some privacy. It will be interesting to watch how that unfolds.
Prediction number two is probably very important to JDA customers since it is related to supply chain. I know several of the experts I interviewed have said to me that you could predict that supply chain is important on any given day and you would be right because it is just table stakes now. That may be true, but I think that it has become so much more important against the backdrop of a consumer for whom two-day delivery, next-day delivery, and I’ll even go so far as to say same-day delivery, is quickly becoming the expectation. So the retailer who doesn’t have a firm grasp of their supply chain at every turn is going to be in trouble. I think the emphasis has to be on the consumer first. You have to assort your business to the shopper, not to the channel. That means you have to really understand every aspect of your supply chain, and particularly, where that inventory is in your supply chain. I think there will be some challenges when it comes to emulating what we have seen in the UK where “click and collect” has really taken off. I do know there are retailers who are looking very closely at that model and wondering how they can make it their own.
Retailers face some challenges in understanding how they can use data to determine where to best take inventory from. By that I mean, a consumer has made a purchase online and the retailer needs to understand—do they want to have it picked from the nearest store and get it to the consumer because they can do that in a very timely fashion? Or do they think they will sell that item from the nearest store, but they have tons of it in the store on the other side of the country. How does it affect their profit margin if they choose to ship from the store on the other side of the country? It’s not just satisfying the customer and their desire to have the product as swiftly as possible, it’s understanding how to deliver that product against a backdrop of profitability. I think that is important as well.
SCN: Thank you, Susan. Those are certainly some very impactful predictions for 2014. In Part II of this blog post launching on Thursday, December 12, Ms. Reda will share how retail leaders and laggards are reacting to these trends.