What lies ahead?

So, farewell then 2015. And hello 2016. To kick things off, Retail Systems brings you 16 retail technology-related predictions for the year ahead

"2016 is going to be the year when retailers try to differentiate themselves further based on the customer experience they deliver across all of their channels. From a retail technology point of view, this will mean re-platforming projects to deliver a multi-channel system architecture that enables a seamless multi-channel customer experience. This includes having a single view of stock, the driver for Click and Collect, a single view of the customer; it requires getting all the customer’s data and contact into one database. It will also include a move toward personalisation, as retailers strive to engage more deeply with their customers by offering a more relevant range, service and content to different customer groups.

It’s easy to make the claim that your business is customer-centric, but it’s much harder to back it up with an experience that really delivers for all your core customer segments. For example, John Lewis has recently announced that it will spend £500 million on e-commerce; with the focus being on systems and people to deliver the joined-up customer experience that consumers expect. Its target is that more of its sales will be online than in-store by 2019. Given that online sales currently account for just over a third of all sales, it’ll take nothing less than a seamless, personalised multi-channel customer experience to deliver the growth in sales they require. Other retailers know they need to follow this example. Aside from core e-commerce systems, we see huge interest in marketing technologies to deliver CRM strategies, and in-store solutions including clienteling to deliver a more personalised experience. Surely it won’t be long before iBeacons become commonplace in-store, as retailers seek to deliver more relevant and timely incentives to customers based on their in-store behaviour." Martin Newman, CEO, Practicology

"2015 may go down in history as the year when “bricks” retailers survived and learnt and when the mobile took over. Even Zara and its parent Inditex, so often cited for brilliance in using systems to beat competitors and deliver a constantly changing variety of products to stores and customers, admitted the need for a more comprehensive and sophisticated digital offer. John Lewis’ announcement about its e-commerce direction confirmed what some saw as inevitable. However, the move to mobile is of greater significance. Google’s desperate attempts to capture the mobile is clear evidence of the shift’s importance, though the significance of this shift escapes many commentators. The sad attempts of Microsoft to create an app-like environment should make it clear why. Despite the fact that for most consumers the mobile is always on, and so – you would think – available for use at leisure, consumers love the speed and usability of apps. No more keying in browsing terms (for the lazy) or accurate keying in URLs (for the geeks). You just touch a button and – in the case of retail – you’re in the shop.

But, and it’s a big but, there are only a few shops you want to get into quickly. Most phones carry only 10-20 marketplace apps, defined as those where consumers buy by actually spending, rather than commercial utility apps, where consumers check information e.g. account usage, or simple utility apps, through which they conduct their lives e.g. YouTube, Facebook, Diary, Contacts, Bus/Train Times or E-Mail. Of course, the distinction between marketplace and other apps is fuzzy, as non-marketplace apps aspire to commerciality, some with great success. However, consumers’ app behaviour is evolving, as apps get better and – more importantly – as consumers learn which ones they want on their phone (and which they only want temporarily when they are in a buying cycle) and how best to use them. So the game is changing for retailers, to one of becoming the app that stays on the phone permanently (i.e. beyond a particular comparison/buying cycle) and is used often…to buy." Professor Merlin Stone

"For the first time I can genuinely believe that mobile payments will become mainstream in 2016 and not be restricted to the early adopters or PR firms that have a vested interested in pushing their clients' products! Much of this is based around stronger marketing and a better value proposition for consumers. Apple, Android and Samsung have all been effective in getting products adopted and brought the ability to make mobile payments to most of the UK population. It's interesting that this marketing has not been led by the banks, particularly when they have successfully deployed some of the largest mass market mobile payments products in the world, such as Paym. The other major catalyst is the adoption of mobile payments on many of the major transport networks like the London Underground. Therefore my first prediction is that those with the strongest marketing strategies, and not necessarily the best technology will be some of the winners in 2016.

My next prediction is that there will be more reality in the market about the speed of adoption of mobile payments. Yes, it's mainstream in 2016 but as a proportion of payments (rather than percentage growth rates) it will be tiny. This will grow over time but we know that consumer adoption of technology is measured in decades not months. My third prediction is that there will be an increased focus on targeting the under 30s rather than the wider population in general. This segment grew up in the mobile era, and looks towards the mobile as a way to manage their like as well as their money. The launch of mobile centric banks such as Starling and Atom will make the mobile and mobile payments become synonymous.

And what might hold mobile payments back? Rather than a poor consumer experience/proposition as it was in the last few years, the industry still needs to review how it educates customers around security issues. Apple has started to help the messaging by providing mass exposure to tokenization but I think this is an industry wide issue. For example, when we think back to the chip and PIN roll-out for credit cards a decade ago, there was an industry wide effort (with significant marketing funding) to educate consumers. Someone needs to take this role in 2016. Who will it be?" Matt Simester, director, PCL

"In 2016 we expect to see more retailers realising there is so much more value to physical stores than just shelves stacked with products. Physical space is a valuable commodity and retailers should be sure the most is being made of it. Whether it’s Mothercare’s expectant parent classes or John Lewis’ personal stylist sessions, a lot can be done with retail space that turns a trip to the shops into a true customer experience." Glenn Shoosmith, CEO, BookingBug

"I would predict that Black Friday 2016 will see many retailers following the lead of big organisations like Asda taking a step back from the day altogether. While the madness of Black Friday is unlikely to fizzle out in the US, I wouldn’t be surprised if over time we saw fewer and fewer UK retailers taking part as retailers begin to question the real value. Some, like House of Fraser, have mastered the art of short sales, with their charity weekends and big brand discount days, and I would predict a lot more of this activity in the coming years. But one thing is for sure, the retailers who are going to take part must ensure they are prepped and ready for the huge increase in traffic and orders on that day. Test, test and test again and don’t compromise on the customer experience; on a day like Black Friday it is more important than ever." Eric Fergusson, head of retail services, eCommera

"Retailers should acknowledge that most e-commerce sites look remarkably similar; promotional banners, product grids etc. etc. It might work for purely price-driven shoppers, but does little to engage socially-connected or experience-driven shoppers. Expect to see more sites in 2016 that replace or supplement the boring cookie-cutter product grid. Instead look for more fluid layouts, more social interaction and richer media." Doug Heise, global product marketing director, CoreMedia

"Online shopping often suffers from comparisons with the in-store experience as, unlike your favourite High Street shop, an online retailer has no-one to greet you when you enter, no one to signal to when you have a question and no one to help you when you encounter a problem (like a voucher code not working or being stuck in an item of clothing that may have been a little too tight). The majority of online customer interactions take place after something has gone wrong, unlike in-store where assistants can witness a shopper’s struggles and act accordingly. As a result, online conversion rates are much lower than in-store conversion rates, one to three per cent versus 20 to 30 per cent. This will change in 2016, where online retailers instead will actively engage consumers on product pages, helping to guide them through the customer journey. We’re already seeing brands, like Shinola, engaging more customers and, as a result, seeing greater conversion rates. By offering engagement tools such as live chat and sharing relevant information with customers to provide immediate assistance when shoppers encounter a problem, retailers can unlock greater conversion rates themselves." Alf Saggese, MD EMEA, Moxie

“Artificial Intelligence (AI) is not as futuristic as it sounds as there are already UK businesses embracing the benefits of this technology. We predict that 2016 could be AI’s biggest year yet, especially within customer services. It’s algorithms can process Big Data far more efficiently than humans and it can recognise speech, images, text, patterns of online behaviour, for example to detect fraud as well as appropriate advertisements. Smart machines and technology can turn data into customer insights and enhance service provisions, bringing the digital experience closer to the in-store interaction for consumers.” Gideon Hyde co-founder, Market Gravity

"The real value of the Internet of Things (IoT) lies in its ability to make your life simpler and easier. This doesn’t work if the devices themselves are complicated to use. It’s essential that IoT devices seamlessly integrate into our lives. This is why we will increasingly see technologies like NFC used in the IoT. It’s a very simple technology that consumers already use and is perfect for pairing products together with a single tap. For the same reasons voice activation will be a feature that technology companies will look to perfect and integrate into products so devices can be easily controlled by those with little technical know-how or ability." Asit Goel, senior vice president, NXP

"Over the past year we have already seen collaboration between some retailers take place, and next year these partnerships are to continue to develop and become more selective. With increasing competition from their High Street counterparts, this type of partnership will become an increasing priority for online retailers looking to establish a physical presence with a partner that has a ready-made customer base and guaranteed footfall. For the High Street retailer, working with an online counterpart offers an added convenience to their customers. Presenting customers with a viable alternative to simply shopping online, there is an expectation of a wider customer base, which will in turn result in more sales. Retailers considering this avenue would be wise to spend time researching a partner that best fits with them. One that is different enough not to simply take their customers, but similar enough to drive conversion." Rupal Karia, managing director of retail and hospitality, UK and Ireland, Fujitsu

"With IoT comes better customer experience and that’s what our clients are hoping to achieve. They have been using new technology to broaden their understanding of location analytics, geofencing and beacons. They all want to do something innovative to improve customers’ relationship with their brand. Retailers in particular are looking to provide ‘stores of the future’. Some of these experiences will be visible to the customer. For example, they may become aware that the retailer knows where they are within the store when they login to the free WiFi. This will become obvious as they receive relevant information, offers or vouchers while they are in the shop.

Conversely there will be areas of IoT usage where a customer will reap the benefits but be entirely unaware of what’s going on behind the scenes. These are the operational benefits to retailers or those in the hospitality or leisure industry. IoT technology allows staffing levels to be adjusted so the right people are in the right place at the right time. It stops both overstaffing and understaffing. Real-time awareness of the supply chain will be possible. If a customer comes into a store looking for a certain product, the member of staff will be able to discover exactly where it is and when they’ll have it. Stock levels should become much more accurate." Gavin Wheeldon, CEO, Purple WiFi

"There will be more variety in delivery services. Argos has really raised the bar with its same day delivery. Those customers who valued the speed of their delivery were always pretty loyal to Amazon Prime, but now there’s an option that can get their item delivered even quicker. Of course they’ll make the switch to another retailer if their expectations have been raised. To keep up, retailers need to leverage what they’ve got. For example, timed delivery slots can be introduced into the Click and Collect process without any real changes to infrastructure. It’s about passing on information you’ve already got to hand, like expected arrival times, weather conditions affecting the delivery, or the number of customers ‘in front’ of them in the queue on delivery day.

If Amazon is already delivering to a small local newsagent three times a day, for example, then it should be possible for these customers to be told which of these deliveries their parcel will be on. There’s no point keeping them waiting till 5pm if their product is in store at 11am. Not all customers want Saturday morning delivery – just like not all customers are interested in collecting their parcel from a locker. By offering as many options as possible, retailers can make sure no customers are abandoning their shopping carts due to their desired delivery choice being unsupported." Andrew Hill, commercial director, Electio

“The United Kingdom will pass the Investigatory Powers Bill requiring a backdoor in strong encryption. As a result, other major internet companies will follow Yahoo!’s lead and move their operations out of the UK to avoid being subject to this law.” Andrew Conway, research analyst, Cloudmark

"2015 did not see the great development in omnichannel retail that many (including me) had predicted. It appears that vendor presentations of application and systems capability far outstrips reality. Coupled with this many retailers' IT systems are clogged up with a legacy of bespoke applications and complex integration that was deployed when individual channels were almost seen as separate businesses. Some of these are cultural/ business issues as opposed to technical. These need to be un-done to really facilitate anything approaching true omnichannel capability.

Payment has been a significant area of investment for retailers over the past few years on the basis of keeping up with the ever changing PCI standards. More recently the potential to outsource this challenge to Payment Service Providers at a reasonable cost has become more attractive. Retailers that only have a UK presence often have a different payment providers for web sales from their provision in-store. Those that have driven into other territories often have separate payment providers for each of their channels in those other territories. Incursions into new territories often do not have integrated payment. Different standards across the regions; chip and PIN in the UK versus chip and Signature (or swipe and PIN) in the USA doesn’t help the situation. The introduction of new payment methods such as ApplePay, contactless, etc, serves to complicate things further.

My key prediction for 2016 is that retailers will properly address the ability to pay (and refund) via a common platform across all channels and regions of operation. Today’s mismatch of payment providers across the channels and regions inhibits the basic process of returns across different channels and is a big driver of customer dissatisfaction with a retailer. Resolving this situation will go a long way towards enabling omnichannel retailing. The next piece to be addressed is that of stock but that is a much bigger and expensive task to be tackled." Huw Thomas, managing director, PMC

“Starting first with IT strategy, three big trends will continue: (1) building a two-speed IT capability by merging agile development alongside large waterfall projects for their SAP-type systems, (2) moving from retailing to instead try and become technology companies that happen to sell things (i.e. ‘doing an Amazon’), (3) rolling back the customisation on big IT systems to try and return to an out-of-the-box deployment of their big IT systems. A prediction for 2016 therefore will be that firms are increasingly thwarted in these efforts, as they recognise that their technical debt is so large that it requires eye-wateringly high levels of capex and very challenging conversations with shareholders. Additionally they will all be chasing a limited number of talented engineers, such that several firms will find themselves building development organisations staffed by mediocre individuals. And these changes will be happening within an operating model that comes from a textbook or competitor, rather than being customised and landed through an effective change programme. But one or two firms may successfully make the transformation and emerge as a new digital poster child to rival Shop Direct or AO.com. Really sticking my neck out and naming names, it may perhaps be a retailer such as N Brown, Dunelm or Maplin. And one other big retailer may be famous in 2016 for suffering a major security breach.

With regard to specific technologies, we’ll continue to see most efforts on the unglamourous back-end, and a continuing focus on the fundamentals and the ‘single view’, which started with ‘…of the customer’, and then encompassed ‘…of stock’ and is now including ‘…of the transaction’ to round out the perspective. Supply chain will remain a key investment area, possibly through partnering, be it for hub-and-spoke, same-day or something else that supports the multi-channel, on-demand world we now live in. As a consequence, 2016 may be the year that RFID finally comes of age, as a core enabling technology. CRM too will become more commonplace, as a key underpinning of the drive towards personalisation (which will remain a top priority for the customer-facing teams) and as personalisation starts to enable truly differentiated experiences, we might anticipate greater use of beacon-type technologies to recognise individuals. That will retain the focus on Big Data and terms like ‘propensity modelling’ will enter commonplace parlance. Wearables too will move from beyond the hype and start to be used in some very real applications. But again, behind the scenes, in order to improve efficiency and effectiveness of colleagues, as organisations continue to lose less appetite for shiny customer-facing toys that don’t work at scale nor deliver real customer experience improvements.” Joe Tarragano, director, Transform

“Technology continues to evolve at break-neck speed and service providers across the e/m-commerce industry are deploying ever more innovative and personalised experiences. This evolution holds true in the payments space where new and innovative solutions continue to proliferate. In 2016 we’re likely to see continued deployment and mainstream adoption of payment methods and experiences that are considered ‘new’ today. Mobile will continue to grow as a channel through continued growth in tablet/smart-phone devices. Consumers will be exposed to new technologies designed to streamline the payment experience and reduce friction in the payment flow. This will be key to the success of new payment methods, convenience and security are king, and consumers need to feel comfortable with both the physical process of making a purchase and the sense that their payment and personal data are secure. Biometrics are already mainstream and it is likely that new forms of authentication that further speed the end customers experience will start to be trialled. Many merchants are pushing ahead with contactless payments and promoting mobile payment services that build on the familiarity and provide opportunities for additional value added services. The real forward-thinkers will be putting the building blocks in place for future innovations. 2016 is really just going to be the beginning.” Rob Fish, strategic architect, The Logic Group

    Share Story:

Recent Stories

The Very Group
The Very Group transformed range and assortment planning using Board.

Watch the full video

Smarter merchandise planning across the retail value chain
In this webinar, Matt Hopkins, Head of Retail Solutions, Board, Catherine Tooke, SVP Product & Planning, Sweaty Betty, and Subir Gupta, Managing Principal, Thought Provoking Consulting join Retail Systems Editor Jonathan Easton to discuss the findings of the recent Retail Systems report The Merchandise Planning Challenge: How are retailers harnessing technology to optimise planning and retain customers? and examine the innovations that are improving retail planning.