State of the Retail Industry: The Trends that Defined 2015

2015 was a year of mixed blessings for retailers. Though overall sales consistently exceeded those of 2014, month-to-month growth remained minimal and volatile. A confluence of factors led industry observers to believe consumer confidence was on the up-and-up, but consumer confidence actually declined over the course of the year.

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With 2016 well under way, and with our tenth annual Retail Compass Survey of CFOs just around the corner, we thought we’d take a look back at the top trends shaping retail in 2015—and assess what they might mean in the year ahead.

Mobile commerce became increasingly prominent. As we discovered in our 2015 Retail Compass Survey of CMOs, many retailers have begun to think about how they can leverage mobile technology to reach their customers. Online shopping and social media marketing have become table stakes for retailers pursuing an omnichannel strategy, but mobile is the next great frontier for innovation. In 2015, we saw many retailers seek to up their game in the mobile space: Amazon introduced a same-day delivery service and accompanying app to cater to consumers on the move, while beauty subscription service Birchbox rolled out an Android-compatible version of their popular, iPhone-friendly app.
  • We included “harnessing the power of mobile” among our list of top 2016 resolutions for retailers, a recommendation that remains as salient as ever. The growth of mobile commerce, and consumers’ increasing reliance on it, will require retailers to get ahead of the opportunities this shift provides, from finding ways to leverage the rich data gleaned from mobile to thinking about how to link the full spectrum of their sales channels to create a seamless, integrated customer experience.
Low commodity prices produced mixed results. Conventional wisdom suggests that, as oil prices go down, consumer spending will go up thanks to the savings realized at the gas pump. Oil prices declined precipitously over the past year, but retail sales overall did not increase proportionately. On the bright side, however, many auto makers saw sales growth, particularly in the previously sluggish SUV market. It appears that consumers have been chastened by the unsteady economy over the past eight years, and they remain generally cautious about growing their discretionary spending despite finding more dollars in their pockets. However, they did seem willing to pop for investment items—such as vehicles—that became more affordable as a result of low fuel prices, suggesting that they’re focused on the near- to medium-term when it comes to purchasing decisions.
  • In 2016, we may see consumer spending continue to fluctuate independently of commodity price shifts. But this may ultimately be a good thing—with oil prices reaching fresh lows at the outset of the year, it’s clear that pricing challenges will remain unpredictable for months to come. A steady pace of consumer spending in the face of that volatility may help retailers more effectively plan for the year ahead.
Cybersecurity snapped into focus. After several high-profile data breaches over the course of 2013 and 2014, retailers committed to shoring up their systems in 2015. We’ve written extensively about EMV compliance on our blog, and that was an important part of this process. But that is only one piece of the puzzle, and retailers were eager in 2015 to identify additional steps they could take to guard consumer data and protect their businesses. In March, the National Retail Federation presented to Congress a number of proposals to help address cyber threats, which included the recommendation that retailers employ the most up-to-date, end-to-end encryption technology for transmitting data, as well as a call for a federal breach notification law.
  • Cybersecurity is a constantly moving target, and evading threats must be a continuous process for retailers. In 2016, we can expect to see continued momentum on this front, and the most ambitious of consumer businesses will be trying to identify the next cyber threat on the horizon, as opposed to reacting to what has already occurred.
Though 2015 wasn’t a blockbuster year for sales, it was an important transition year for retailers as their industry continues to evolve. What’s ahead in 2016? Stay tuned to this blog in the coming weeks as we begin to roll out the result of our 2016 Retail Compass Survey of CFOs.