The Year in Review: What Did 2015 Mean For Retail?

Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.

So how did retail do this year? In looking back at the topics I touched on in 2015, here are my top take-aways for the year.

1. Brand integrity is inescapable. I started 2015 with an article entitled "Brand Integrity: The Watch-Phrase for 2015." The more I look at how retailers use social media and digital channels, the more I become convinced that social media is where retailers must prove that they genuinely care about their customers and that they genuinely believe in the lifestyle values the brand supports and conveys. If all you give them to care about is price, then that is indeed all they will care about.

Uniqlo spopping

Photo: RetailWire

2. There is a major mind shift happening around digital and the store. At the beginning of 2015, I warned retailers to not get caught up with bright shiny objects when it came to keeping stores relevant. Our store research showed a wariness with gimmicks, like smart dressing rooms, even when those gimmicks drive meaningful sales improvements. Retailers haven’t quite figured out how to bring digital into the store, but they seem to be taking a new look at employees and their role. If we can figure out digital as part of how the employee enables the customer experience, it will go a long way towards helping retailers figure out and embrace the kinds of changes that need to happen in stores to keep them relevant.

3. To get to where you’re going, it helps to know where you’ve been. My whopping 9-part series of articles on the history of omnichannel drew the most feedback in my blogging career. But it is crucially important to understand how we got to the crossroads we currently face and the decisions made in the past that led us to the challenges we struggle with right now. With cloud transformation revolutionizing how IT is delivered, and with omnichannel maybe understood but certainly not a fully-executed strategy, there is a lot of change ahead of retail. And a lot of chances to make the same kinds of mistakes over and over again, if we don’t pay attention to where we came from.

BrainTrust

"All of this adds up to a potential logistical nightmare for retailers, but it is an area that retailers must master."

Max Goldberg

President, Max Goldberg & Associates


"Knowing the changing customer is at the heart of all of Nikki’s trends and is the single most difficult challenge facing retailers."

Ron Margulis

Managing Director, RAM Communications


"Much of the problem rests with new programs and technologies being positioned as ad hoc and not fully integrated into the retailer’s traditional merchandising and marketing practices."

Mark Heckman

Principal, Mark Heckman Consulting


Discussion Questions

Which of the trends mentioned in the article will be the most challenging for retailers to execute? Which are most critical to master?

Poll

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Max Goldberg
Max Goldberg
8 years ago

Omnichannel seems the most difficult for retailers to execute because it requires precise coordination of many disciplines and it is something consumers have come to expect. Consumers expect items to be in stock and identically priced across platforms. They expect BOPIS and easy, cross-channel returns. All of this adds up to a potential logistical nightmare for retailers, but it is an area that retailers must master.

Ron Margulis
Ron Margulis
8 years ago

Knowing the changing customer is at the heart of all of Nikki’s trends and is the single most difficult challenge facing retailers. The use of technology, knowing what has and hasn’t worked in the past and delivering on the brand promise are all important, but it is still the person in the store engaging the customer and the person back at HQ creating programs that change shopping behavior who need to be on point for the retailer to be successful.

I’ve cited the mantra of my grandfather, a ShopRite Supermarket operator for years, several times in this space, but it’s worth repeating: “My job as a retailer is to make it as easy as possible for my customers to buy from me and as hard as possible to buy from anyone else.” This holds especially true today.

Dick Seesel
Dick Seesel
8 years ago

I tend to look at things from the perspective of merchandise content, so I’m focused on Nikki’s point number two (the mind shift between digital and the store). I’m seeing stores rapidly trying to build out their omnichannel experience, and not just by adding services such as BOPIS. In some cases they are trying to replicate the breadth of assortment available on their e-commerce sites in their brick-and-mortar stores … and it rarely seems to work.

In a year where decent unemployment numbers and low gas prices should have fueled stronger consumer demand, we’ve seen just the opposite during the second half of 2015. In my opinion, lack of assortment clarity (not just lack of brand integrity, as Nikki points out) is a big culprit. With few exceptions, stores are simply not doing a great job telling their shoppers, “This is what you need to buy” and directing them toward the important trends or key items. If “Star Wars” can be an inescapable idea, how about a big idea in apparel?

Jonathan Hinz
Jonathan Hinz
8 years ago

Great article Nikki. I really think you listed out the most important items in order.

There is a fundamental shift in how consumers interact with businesses and how those businesses connect and market to consumers. At the forefront of that shift is brand identity and integrity.

All research points to the need for a deeper relationship with consumers to build and maintain trust. Using online consumer review communities will help businesses manage those relationships and gain deeper insights into how their consumers feel about the products they sell and the services they offer.

Kim Garretson
Kim Garretson
8 years ago

Regarding this quote in the piece: “social media is where retailers must prove that they genuinely care about their customers.” I monitored the Twitter accounts of big retailers’ customer service departments on Cyber Monday and they mostly failed in customer care. The largest percentage of inbound questions and complaints were about out-of-stock products, and not just the doorbusters. Almost every response on Twitter to these questions were a variation of: “Sorry, we don’t know when there will be more availability. Why don’t you keep checking back at the site” (not very customer-centric, because of course the data exists in these enterprises to answer that question).

I think turning customer service departments into a place where they can use social media to engage and inform customers on specifics about specific products will be critical to master. And 2016 is the year where the technology to do this becomes much less challenging.

Gordon Arnold
Gordon Arnold
8 years ago

As pointed out in this most interesting discussion article, fiscal year 2015 confirmed the need to accept the present day retail needs and move to ownership and execution. Most of what I have seen to date is the numbers written in red not for the holiday spirit rather to report the poor sales results. This type of information supply is rarely inspiring or supportive.

For now and the foreseeable future market share is a necessary focus with special attention to expansion and retention by means of brand successes. Both e-stores and B&M facilities need to address the executive level of IT knowledge to successfully implement digital improvements that will get sales results.

Of the three opportunities highlighted today, my hope is for a far better understanding of the omnichannel framework. In listening to and reading retail executive discussion about the subject it appears that the market owns a largely subjective definition and vision of this important requirement. We will see fiscal year 2016 rolling in more of these same needs with less response time for those of us in trouble.

Anne Howe
Anne Howe
8 years ago

Brand integrity is a must master, in my humble opinion. And so many retailers need a brand refresh, and by that I do not mean a new tagline. I mean a real live refresh that is centered around the experience delivered in the physical space, as part of the omnichannel journey. Connecting the dots is certainly a key part of the digital journey, but so many retailers have over-focused on the technology pieces and ignored the human factor.

Brick and mortar retail is not going away, but the human experience seems to have been pushed to the back of retailers’ agendas. It’s time to bring the human factor to the forefront and focus on what the retail brand conveys to shoppers in real life.

Price doesn’t pull or tug on any heartstrings.

Ralph Jacobson
Ralph Jacobson
8 years ago

None of these challenges are easy. Most retailers still have a long way to go. The one that is high on my list is #2. I believe “omni-channel” is no longer relevant. I think the consumer IS the channel. Period. You need to be device/time/location independent.

Mark Heckman
Mark Heckman
8 years ago

For physical stores to remain relevant and profitable, retailers must improve on making strides in connecting mobile commerce to the in-store experience. Beacons, kiosks, shopping apps, digital and other technologies have been less than gloriously successful in securing shopper engagement.

Much of the problem rests with new programs and technologies being positioned as ad hoc and not fully integrated into the retailer’s traditional merchandising and marketing practices. Other retailers are just simply in denial that what worked in the past will continue to drive the business going forward.

Every retailer that has invested heavily into physical stores with large inventories should especially be operating in crisis mode until the in-store and online experiences become not just connected, but even symbiotic.

Lee Kent
Lee Kent
8 years ago

Having recently been involved with a couple of blog posts about “Surroundware,” all that software and even hardware that got bolted onto old legacy systems to help retail limp into the 21st century, I know the pain that many retailers are going through right now.

We are now “in the 21st century and we are looking to hire COBOL programmers to reverse engineer the heart and soul of our business. The mission now has become much more difficult as we try to bring new business sense into this vast nucleus of processes that have spanned decades.” – See more here

Hands down, the most challenging thing standing in the way of omnichannel — or really any new technology — is what’s lurking behind in the cobbled together software and hardware solutions that have been bolted and patched for decades now.

And that’s my 2 cents.

Arie Shpanya
Arie Shpanya
8 years ago

Nikki’s first point resonated with me the most because competing on price isn’t sustainable in the long term. This year, next year, and every year in retail, brands have to be strong and offer more than a low price. Sure, there are certain brands that can thrive as low price leaders, but that isn’t the case for most. Amazon isn’t always the lowest price these days, but they also have fast shipping, excellent customer service, and a wide product selection (not to mention the perks their Prime subscribers enjoy). It’s about having a great price that makes sense based on the hard work that has gone into branding.