It’s time, with a little snow finally on the ground in the U.S. and even the delayed gifts finally delivered, to look ahead to retail in 2016. With a little help from a few experts, Retail Dive has identified some key trends that we think will be major in the upcoming year.
1. Mobile, mobile, everywhere
Mobile is going to be such a factor for retail in the coming year that, at this point, it’s too large a category to stand by itself. Rather than just a mode of commerce, it represents, instead, how people research, communicate, and purchase, on several channels.
As Ralph Dangelmaier, CEO of global commerce services and payments company BlueSnap, says, “People are always holding their phones in their hand.”
This ubiquity is helping drive what Pat Dermody, president of deal-aggregator Retale and former VP of Sears, calls “the expectation of seamlessness," which she says will continue.
"We talk about mobile as being the remote control of people’s lives, and they want it to do exactly what they want, when they want it," Dermody told Retail Dive.
2. Mobile payments will push aside EMV
The Oct. 1, 2015 deadline for EMV was meaningless to consumers. After all, the liability shift—where retailers that couldn’t or wouldn’t accept new, more secure chip-enabled credit cards take over the responsibility of any card-related data breach that would have previously fallen to banks or card issuers—still doesn’t touch the customer.
What does affect the customer is the significantly slower, more clunky process of using a chip-based credit card in store. Confusion also remains as many point-of-sales systems still aren’t activated to accept the new EMV cards, and many consumers have yet to receive them.
Laurence Cooke, founder and CEO of loyalty and payment platform nanoPay, told Retail Dive last year that mobile payments, already seeing some momentum with the adoption, however slow, of Apple Pay, would likely accelerate as EMV came on in the U.S. “When you use a mobile app,” Cooke says, “it’s a more secure way, but as easy as swiping or tapping.”
3. Digital wallets are the future
Beyond this use, though, is how mobile payments will stick. “All of the data you see around mobile—data traffic data and bandwidth data—is reporting how mobile is accounting for a third to half the traffic during peak periods,” says Profitero VP of strategy and insights Keith Anderson. “But the share of sales is still a fraction of that, and the reason is it’s just a little too cumbersome converting on mobile.”
Several sources, including Anderson, tell Retail Dive that the answer can be found in digital wallets.
Few people will tolerate having a slew of standalone, retailer-specific apps on their phones. Those, says Dangelmaier, will be reserved for retailers that are either extreme favorites of the most loyal customers, or retailers that, like Starbucks or perhaps a grocery store, are daily destinations.
“We believe in these ‘super wallets’ or non-closed wallets like those from Apple, Samsung, Visa, or MasterPass, that you can use across all your apps,” Dangelmaier says. “Plus PayPal and the international guys. There will be two or three of these wallets on your device, not six or seven. We’re predicting the wallets are going to gain more momentum.”
Certainly, then, retailers that haven’t optimized their checkout for mobile will increasingly experience a new form of abandonment—checkout abandonment. That is, shoppers may get past the shopping cart, but will ditch the process if it takes too many minutes, too many clicks, or too many steps.
“We’ve found an average of, once you click to buy, there are five clicks to checkout,” Dangelmaier says. “We found a lot of it isn’t localized—checkout is not in Spanish in Mexico. These series of little cuts were costing merchants up to 30% abandonment in checkout.”
But wallets will be helpful in store as well, and for marketing more broadly.
“I do think what both Amazon and Apple are doing with the wallet space has huge potential for the mobile space payment mechanism in general,” Anderson says. “The nuisance of entering in payment info vs the convenience of putting your phone on the sensor — pretty profound.”
“Retailers ask, ‘What role should my app play?’ and our take is ‘You need both,’” he told Retail Dive. “It’s a symbiotic role. But all marketing roads lead to mobile wallet.”
4. Amazon, the once and future king
After two decades in retail, Amazon will hardly be passing the disruption or innovation batons this year. Expect the e-retailer to continue to set the bar in terms of price, search, assortment, order placement, and fulfillment.
“They’ve often been the first to introduce things like free shipping, they were the first membership-based online retailer, the first to have same day delivery,” Anderson told Retail Dive. “I feel pretty comfortable to say, if you read between the tea leaves with their recent logistical moves like buying up truck fleets, it points to their continued commitment to being 18 to 24 months ahead of everyone. That includes not just having the convenience of fulfillment centers but, increasingly, last-mile logistics.”
There’s enough tension in the department store and teen-apparel spaces that change seems inevitable, though whether that means consolidation or not is a mystery. We’ve already seen consolidation among flash-sales retailers, after that concept rose and fell like a fast-moving comet, and that could easily continue.
But consolidation will also be a way for retailers to achieve more dimension in an increasingly omni-channel environment, says Anderson. More brick-and-mortar retailers will acquire pure-play online retailers for their technology and talent, he says. And there may be a significant amount of consolidation among last-mile delivery services.
“If you’re a big retailer looking at the way the market is developing, there’s very little growth in the brick-and-mortar business, but as a retailer you have to grow,” Anderson says. “Many retailers are going to need to start to grow and the quickest way to that is acquisition.”
A once pure-play retailer like Warby Parker may be an ideal takeover target, although its own fundamentals and ambitions may be so strong that, Anderson says, a company like that may be less likely to want to sell out. Anderson believes that vertically integrated brands like the Dollar Shave Club, Blue Apron, and Birchbox will continue to see strong sales, and may be attractive to brick-and-mortar players that want to flex some new muscles.
In some ways, 2016 won't so much be a year of surprises, but more a culmination of predictions that have been made for years now.
"Some of the things that have been predicted for several years and have been slow to materialize have really begun to happen," Anderson says. "Omnichannel has been the mandate among most brick-and-mortar retailers over the last 24 months. And they have been getting better at it, but the financial benefits haven’t yet materialized."