Retail's 2017 Resolutions
2017 presents new possibilities and priorities. Just as consumers set personal resolutions for themselves, retailers will resolve to achieve milestones as well. Looking forward, we predict retailers will be focusing on three main areas in the year ahead:
Find right (and consistent!) presence – in stores and online
Having a seamless omnichannel strategy will continue to grow in importance this year. According to our 2016 Retail Compass Survey of CMOs
, last holiday season 42 percent of retailers focused equally on brick-and-mortar and e-commerce promotions—we expect this number to rise. Additionally, given the recent news of store closures from brands across nearly all categories, 2017 will have retailers taking a hard look at rightsizing their store footprints to complement their digital strategies.
In 2015, retail sales through digital channels, including mobile, increased by 23 percent. Almost three-quarters of consumers self-report as omnichannel shoppers, according to a recent Harvard Business Review study
. To keep up, businesses will look for omnichannel strategies that work for them, leading to many experimenting with new digital and in-store experience techniques. Look for an increase in smart fitting rooms and more tablets in-store allowing retailers to more seamlessly integrate their e-commerce and brick-and-mortar businesses.
Retailers find strength in M&A
Also ahead, retailers will likely look to deals to make up for areas they want to expand. Some companies may be excellent at developing the customer experience in-store but have troubles online so they’ll be looking for M&A opportunities to buy companies who excel in those areas. A great example of this in 2016 was the Walmart and Jet.com acquisition. Currently, online sales are only a small fraction of Walmart’s business, but now with Jet.com many expect that to change. In fact, we are already seeing positive effects of this deal as Mobile Commerce Daily
recently named Walmart “mobile retailer of 2016.” Walmart’s biggest competitor, Amazon, came in second place.
High consumer confidence creates cautious optimism for the industry
Less than two weeks into 2017 we’ve seen announcements of store closings and layoffs coupled with reports
that consumer confidence is at a 15-year high. Our upcoming survey of 100 retail CFOs will provide a clearer outlook for 2017 results, but we still expect to see a modest uptick in sales, with online being a significant contributor. Retailers with unique concepts and differentiated marketing strategies are best positioned to capitalize on consumer spending, but it may be a tough year for brands who are overstored or behind in tech or digital strategy. Meanwhile, all eyes remain on the new presidential administration, including potential legislative changes like the proposed destination-basis tax system with border adjustments that could affect the industry.
Stay tuned for our observations during 2017 as we watch the continued evolution of omnichannel, M&A activity, legislative changes and sales trends in the retail industry. In the meantime, be sure to follow @BDOConsumer
for timely insights on real-time trends and developments.