By Rob Garf / www.supplychain247.com / November 6th, 2015
Demandware, an industry-leading provider of enterprise cloud commerce solutions, and who has used its experience in advising some of the world’s largest retailers help grow their business, predicts where retail is headed in 2016.
Predictions are a funny thing.
When prophecies are ultimately proven correct, prognosticators shout their brilliance from the rooftops.
When they’re proven wrong (as is more often the case), the would-be oracle is typically found a safe distance from their crystal ball.
The global team at Demandware is adding its 2016 thoughts to the mix. Based on our experience advising some of the world’s largest retailers and helping them grow their business, we know what works.
Our industry insights and collective decades of experience give us unique perspective on where retail is headed.
So we’re reasonably confident about our predictions, but here’s what’s different about Demandware Predicts – we will own what we say.
In mid-2016, we’ll revisit our predictions and rate our performance, holding our own feet to the fire when we’re completely off base. We polled many of our subject matter experts for their thoughts, and these are our nine best predictions, in no particular order.
Machine Learning Will Drive Voice-Based Intelligent Assistants
Rama Ramakrishnan, Chief Data Scientist
Machine learning will expand beyond shopper personalization to positively impact merchants and marketers in the form of a Siri-like intelligence assistant that pops up occasionally with insights and recommendations. Swiping, typing and tapping will in many corners become a thing of the past, replaced by voice commands.
One example: a voice agent could recommend that retailers run a buy-one-get-one sale on women’s sandals to clear out excess inventory, and even suggest the optimum time of day to run the sale. Personalization will be woven so deeply into the fabric of the shopping experience that consumers won’t know they’re being personalized to.
Retailers Will Realign Their Organizations
Julie Rousseau, Commerce Strategy Consultant
2016 will be the year of organizational change, as attention turns to the significant organizational challenges required to deliver effectively on the omni-channel promise. The dissolution of the boundaries between ecommerce and the rest of the organization will gain momentum.
Staff in traditional parts of the business are becoming digitally savvy simply through the rising tide of cultural change, and that provides unprecedented opportunities for aligning online and offline operations in the areas where they complement each other best. Companies that fail to address new organizational requirements will never fully realize the full potential of their omni-channel efforts. This being the case, consultants advising retailers on organizational realignment will make a killing.
Alibaba Will Struggle
Daniel Reckling, Senior Commerce Strategist
Alibaba will have a hard time in 2016. Yes, they are huge but they have ceased to innovate.
They are challenged in China and have yet to successfully enter new markets, which has spooked investors.
One year after its record IPO, Alibaba shares lost more than one-quarter of their value.
Also, many eager global retailers are knocking on China’s door and stand to gain ground and Chinese ecommerce consumers have shown a new willingness to buy directly from brands rather than through massive marketplaces.
In-Store Payment Will Evolve Dramatically
Eric Olafson, Senior Vice President of Store Solutions
Retailers will implement mobile POS systems, beacons, sensors and other touchless technology that, as the McKinsey Global Institute puts it, will make checkout feel like stealing.
In-store payment methods will evolve dramatically.
For starters, chip and signature cards will fail to catch on in a big way because A) they only marginally reduce the risk of fraud, B) retailers will weigh the cost of implementing this 20-year old technology against the fraud liability risk and decide it’s not worth it and C) retailers would prefer to invest in mobile payment technology, which minimize the need for cards altogether.
Gen Z Will Become a Bigger Force in Online Commerce
Matt Mayes, Manager of Data Intelligence and Insights
Adolescents (Generation Z, aged 12-17) will become a larger percentage of online commerce in North America.
They will be driven in large part by integrated experiences between ecommerce sites and social media.
The ease of payment (TouchID, etc.) means that adolescents can have their fingerprint added to their parents’ mobile wallet accounts, obviating the need for their own credit card.
Push Marketing Will Make a Comeback
Elana Anderson, Senior Vice President of Worldwide Marketing
Push marketing will make a comeback, as retailers look to remove as much friction from the buying process as possible, and enable consumers to buy products not just in their store and on their site, but at the point of interaction.
At the same time, the traditional divide between marketing and commerce at many major retailers will start to collapse in 2016, resulting in these organizational functions coming together.
Success will depend on the retailer’s ability to compel the customer with the perfect product or offer, which requires a skill set that brings together truly individualized customer insight with rich content.
Data-Driven Decision Making Will Replace Gut Instinct
Graeme Grant, Vice President of Intelligence
2016 will be the year that the majority of retailers move from intuition-based decision making to data-driven decision making, creating, among other things, a severe talent shortage of data scientists, which are already in tight supply.
Some of the biggest merchants are forgoing the crucial Chief Merchant role altogether, folding those responsibilities into other data-intensive roles.
Scrappy startups will leverage data science to battle the bigs.
One example: 4-year old Stitch Fix has employed fifty data scientists.
Last Mile Fulfillment Providers Will Drive Instant Gratification
Rob Garf, Vice President of Industry Insights
Last mile fulfillment providers will continue to drive instant gratification.
Retailers will further leverage and extend their stores as fulfillment center in an effort to compete with Amazon Now.
Google will begin to position its self-driving cars as a retail fulfillment method.
Retailers will use self-driving cars as they continue to look for innovative ways to defray the profit-crushing expense of free shipping and returns.
‘Omni-Channel’ Will Become an Antiquated Term
Alan Bunce, Senior Director of Product Marketing
The term ‘omni-channel’ will become a passé, dated term as the number of shoppers buying products from multiple channels, on multiple devices, outstrips those who only shop one channel.
‘Omni-channel’ will be replaced by a more apt term like unified commerce.
“Unified commerce” will refer to a single commerce platform that gives retailers a unified view of customers, inventory, etc., across all channels.
So there you have it. Demandware Predicts 2016.
As a reminder, we will revisit these predictions in mid-2016, and look forward to grading our performance and sharing the results.
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