From a marketing perspective, promoting retail brands has become increasingly difficult, however from a sheer numbers perspective, the retail industry is experiencing a rapid increase with more people willing to spend more money on more products every single day.
The retail industry has been drastically altered by the introduction of the internet, followed by the widespread adoption of mobile and eCommerce sales, and as a result, retail is one of the fastest growing industries around the world today. In fact, the experts anticipate that the retail industry valuation will exceed a record breaking $28 trillion by 2019, with absolutely no signs of slowing down.
So what is contributing to the growth in the retail industry? One word: innovation!
The Innovative Ones
As opposed to many industries where the industry giants are slow to adopt innovation, within the retail world they are often the ones pushing the retail tech industry forward. Because the competition is so cut throat and the consumers have so many options, it is no wonder that enterprises are recognizing that the only way to establish or retain dominance in their retail line is through innovation.
The largest retailer in the world, Walmart, is leading the way in their adoption and quest for innovation. After purchasing Jet.com, the online bulk retailer for $3.3 billion, they announced the launch of an innovation hub in the Silicon Valley in order to enhance their eCommerce capabilities through collaboration with startups. This move, which made Yoram Tietz, Managing Partner of Ernst & Young, dub Walmart “a synonym for innovation”, goes to show that even the largest enterprises are doing what they can to revolutionize the retail industry.
It is, therefore, no wonder that many retail industries are looking to integrate innovative solutions to increase their eCommerce capabilities, strengthen their in-store sales and increase brand loyalty.
Within the retail industry, eCommerce is undoubtedly the driving force that companies are hoping will continue to push the industry valuation forward. In 2015, eCommerce sales reached $1.915 trillion and are expected to exceed $2.352 trillion in 2017. By 2020, retail eCommerce sales will increase to $4.058 trillion, making up 14.6% of total retail spending that year.
Beyond increasing their online purchases, consumers are pushing the mobile retail sales world and will begin expecting mobile-friendly stores in the near future. Giulio Montemagno, the SVP of RetailMeNot, remarked that 43% of consumers said they would “spend more in mobile friendly stores that offer services such as mobile payments, loyalty programmes, reservations, product availability checks, and location-based promotion,” showing that the demand for eCommerce across all screens is already there – now the retail brands need to find the technology that will make it a reality.
Luckily for startups in the eCommerce space, enterprises are constantly seeking new ways to improve the online buying experience, simplify delivery methods and enhance the upsell, making it a desirable industry to be in for startups and retail enterprises alike.
Revising Brick and Mortar Stores
While all eyes are set on eCommerce, the brick and mortar stores that upheld the retail industries for generations are slowly dying down. According to Forbes, “the vast majority of retailers have likely entered a period where comparable store traffic will never increase again for any sustained period of time.” As a direct result, traditional brick and mortar stores are shutting down at an alarming rate; Sears recently laid off 130 employees as part of their efforts to combat revenue declines of over 16%, Macy’s closed 100 stores whose property value they recognized as being more valuable than the stores themselves, and luxury retail brand BCBG Max Azria filed for bankruptcy this past March.
To ensure they don’t meet the same fate, many large enterprises have begun embracing innovation and have incorporated cutting edge technologies within their stores in the hopes of revolutionizing the shopping experience. International clothing brand UniQlo recognized that their late entry into the U.S. meant they had to be innovative in the way they draw customers, and as a result collaborate with Holition to create a “Magic Mirror” which lets customers explore different colors of the same product without having to change their outfit.
In addition to improving the customer experience while shopping, many startups are focusing on innovation that improves the knowledge companies have of their consumers. Startups such as RetailNext are on the fast track to becoming enterprises themselves for the innovation they have brought to the retail world. Their technology utilizes video cameras, IoT sensors, PoS systems and more in order to create real time reports and alerts. Using predictive analytics they are able to increase sales and overall revenue from existing foot traffic. The technology is already being tested by brands such as Bloomingdales, Thomas Pink, Club Monaco and more.
Strengthening Brand Loyalty
As the retail industry continues to leverage technology to drive revenue upward, much of the innovation will be focused on increasing the connection consumers have to brands, both online and in stores.
After their success in Australia, Shoes of Prey partnered with Nordstrom in order to offer custom shoe design stations within selected stores out of an effort to increase customer satisfaction and strengthen connection to their selected purchase. According to Nordstrom, this is just a start to their commitment to technology and integration of innovation within the brand, and they have pledged that 35% of sales will be spent to further this goal. Amazon, the undisputed eCommerce leader, has been making headways in their mission to utilize drones for pilot-free quick door-to-door deliveries to improve logistics and enhance the customer delivery experience.
Other companies are looking to augmented reality to personalize the shopping experience, such as makeup retailer Sephora, who launched a pilot of AR mirrors that let consumers test and customize makeup before purchasing.
Based on the sheer desire for innovation, the ease with which consumers can access brands and the simplicity with which goods can be delivered, we expect more enterprises to partner with startups and technology providers in order to improve their operations, increase revenue and strengthen their position as leaders in their retail category.