Retail Top 10 Predictions for 2013

[former_member188455]

According to famed Yankee catcher and manager Yogi Berra, “it is difficult to make predictions, especially about the future.”  It’s actually a paraphrase of one by Nobel Prize physicist Niels Bohr and it’s appropriate for this season of annual predictions.  Despite being difficult to predict, it’s important to think about the future so we identify critical assumptions for business planning and for making investment decisions.  In 2011 and 2012 we have experienced first-hand the power of the mobile, social, big data, and cloud nexus on the business.  Moving forward we have the opportunity to translate that experience into winning business strategies. 

Today, I’ll focus on industry predictions and will stay away from prognosticating economic numbers, GDP growth, IT spending and so on (for those you can check out NRF, Shop.org, IDC, Gartner, Goldman Sachs). My basic premise is that 2013 will continue to build on a good 2012 for retailers.  And although the results from the holiday season are still ahead of us, we appear on track to deliver good numbers (as long as the weather cooperates). 

My predictions are not in any particular order.  Some are more likely than others and maybe a couple push “the limits of the possible” - and isn’t that how we get to discovery and innovation? Let’s get started:

1. More store associates will be armed with smart devices. They will no longer be tied to a register for check out or for looking up inventory on a product. They can walk around the store providing better and timely customer service.
2. Customers will interact with products at the shelf more than ever before.  Retailers and brands will enhance the shopping experience with interactive signage, data rich packaging, and augmented reality.
3. Technology will personalize shopping experience. Shoppers are not all the same and technology has magnified the differentiating factors – from age to region to time of day to personal beliefs and social habits.  In 2013, retailers will have the tools to deliver on customer personalization.
4. Big Data will go from buzz word to real world. Using in-memory computing, retailers will get aggressive managing big data which will become a business requirement for retailers wanting to lift shopper satisfaction and improve on inventory performance. 
5. Multichannel is the new Brick and Click.   More retailers will turn their stores into the physical/digital hub for a true multichannel experience and replace traditional channel thinking with a hybrid model to retailing architected with the customer at the center.
6. Your next c-level executive will be Chief Experience Officer (CXO). It’s no longer enough to provide good products and services, it’s about the experience. That’s why more retailers will bring in a CXO with responsibility and authority to manage all the interactions that make up the brand and customer experience. 
7. Expanded same day delivery of online orders. Amazon will continue to push the service envelope for online retailers with faster and more novel delivery models (including partners) coming to a major city center near you.
8. Concierge service will enhance the shopping experience. Affluent shoppers won’t be the only ones enjoying such services.  To differentiate further, retailers will rethink their service model and create customized services that wrap their best customers with innovative value that speaks to each customer’s lifestyle and aspirations.
9. Analytics, analytics, and more analytics.  The drive to gain more (and better) customer insight will put demands on merchandising, marketing, and supply chain areas to make quicker decisions, have shorter plan/execute cycles, and value agility over perfection. This requires predictive analytics, real-time processing platform, and visualization software – and of course a strategy to pull these all together.
10. Augmented reality will transform how you experience shopping. You’ve seen augmented reality (AR) in special issues by Esquire and Atlantic magazines or early Lego’s digital box. AR apps will use location-based services, image recognition capabilities, and motion-capture technology to deliver an even more engaging and richer shopping experience.   

Let me close with a sure-fire prediction:  the upcoming NRF 2013 Big Show in New York City will be the biggest and best ever!  SAP is a proud Chairman’s Circle and we would love to share our thought leadership and innovative solutions with you.  So, check out the Sunday Keynote with The Coca-Cola Company, stop by the SAP Booth and let us hear your story and how you see 2013 unfolding for your company! 

Stay up to date with the latest at NRF and SAP Retail and make sure you follow us on Twitter: @Sisn_Retail

What do you think? You can share your prediction by commenting below.

Happy Holidays and see you in New York!!!

[Former Member]

• Concierge service will enhance the shopping experience. Affluent shoppers won’t be the only ones enjoying such services.  To differentiate further, retailers will rethink their service model and create customized services that wrap their best customers with innovative value that speaks to each customer’s lifestyle and aspirations.

For many retailers I believe that this is a major differentiator.  The Macy's version of this has nothing to do with how much you plan on spending and it is very helpful.  Ethan Allen has been doing this for years - helping people design room layouts and more.  No purchase required, but in the end a purchase seems like a must! 

Tom

[Former Member]

Lori,

Thanks for this. As a student of Retail for decades, I am happy to see the increasing application of technologies that other businesses have used for a long time. Because of the massive brick and mortar investment and the high degree of dependency upon thousands of retail workers to execute - change is slow to come to traditional retailers.

I wonder how the retailers who HAVE adopted these tactics that deliver a more efficient shopping experience will tell us about it? So much of the messaging is about price/savings/clearance that a shift to this more customer-experience-centric message will pull customers like me in droves. I suppose this is the responsibility of this role?:

Your next c-level executive will be Chief Experience Officer (CXO). It’s no longer enough to provide good products and services, it’s about the experience. That’s why more retailers will bring in a CXO with responsibility and authority to manage all the interactions that make up the brand and customer experience.

Eager to hear the news from NRF and which retailers are ready to lead with messaging beyond price.

Can anyone point to any retailers leading the charge on this today - in an effective way?

Thanks.

[Former Member]

Hi Lori, thanks for this great post. As a retailer, brand building is very important to us and is being practiced religiously. But I doubt that we will hire a CXO. Currently, such responsibility has already been shared by our CEO, COO and CMO. Furthermore, in my humble opinion, brand building needs to be led by someone who has some history with the brand. It is rather difficult for an outsider to understand the brand and its culture. But of course, an outsider will be perfect when it is a complete rebuilding of a brand.

Augmented Reality has always been on the retailers' wish list for the past few years, but it did not materialize. I am not sure if it will happen in 2013, especially when the economy is still rather fragile and retailers tend to be extra cautious on committing such expenditures.

I think Near Field Communication (NFC) has a bright future in the retail space. Unfortunately, at this time, only a handful high-end Android devices sport the NFC, and none of the Apple devices (i.e. iPhone and iPad) has such feature. So it will take another year or two for it to take off.

simon

[former_member188455]

Thank you for the comment Tom.  Some retail segments such as home furnishings can flourish if they apply concierge service in the way that Ethan Allen has done.  It goes beyond being helpful and knowledgeable (as a retail customer we expect that) to a dedicated program that differentiates the brand experience.  At least the potential is there.

Lori

[former_member188455]

Hi Gail and thanks for the commentary and question.  Retailers have always known it's about the customer but now with technology and rising demands/expectations by those same customers, retailers have to take "customer-centricity" seriously with a roadmap of investments and process changes to get there. 

I'm eager to hear at NRF from more retailers on how their plans and ideas in these areas!

Lori

[former_member188455]

Hi Simon,

Thanks for your feedback and prediction!  You bring up a good point on the CXO prediction.  The logic behind a CXO is to find a single point of responsibility and authority to take care of the customer experience, it elevates it to a higher level than as a "shared service" among multiple c-level executives.  And why can't the next CXO be an internal one?!

The entire area of payments in retail is undergoing some major changes where different technologies, banks, retailers, social media platforms, traditional card companies, etc. are vying for that mobile future.  Will be interesting (jotting this down for my 2014 predictions).

Lori

[Former Member]

Hi Lori,

Makes for some interesting reading for the more developed market economies. I predict that Big Data is the primary area for uptake in 2013 in the emerging or developing economies and will be taken up, particularly in the BRICSA countries as they start to fuel China picking up and even perhaps the US coming out of recession after the "fiscal cliff" was averted.

All the best,

Chris

[former_member188455]

Hi Chris,

Thanks for your comment.  It's good to put the "fiscal cliff" behind us and get focused on growth and opportunities ahead. I see Mobile as another area that will continue to have big impact across the "emergent-developed" economy spectrum. 

Lori

[Former Member]

Hello Lori,

Your point about analytics is well-taken. And with big data, it is likely to continue for the foreseeable future.  However, I suspect that the state of analytical skills in retail industries limits abosorption capacity and represents a significant adoption challenge. 

As an Education partner, I have run the SAP Simulation Game from Baton Simulations with hundreds of managers in retail industries since 2008 around the world. The game has teams of 3-4 participants run a food distribution business on a live SAP system,competing in the same market against the other teams in the room. Key to winning the game is the ability to make decisions based on real-time reports.

I must confessed to being initally surprised (dismayed actually) at how  large a percentage of participants (key users and managers) initally struggle with simple data analytical tasks. As they play the game, they do get better, but aside from dedicated data analysts and strategy types, a significant percentage of managers have a learning curve, especially those transtioning from silo legacy applications.  However a huge eye-opener for me has been how vizualization and dashboards (recently introduced in the game) impact team performance and accelerate learning, especially moving from standard table reports. For many people, visualization is "nice-to-have". It's obviously a lot more than that. It's a key adoption enabler that also accelerates team communication and ultimately strategy formulation.

I know this forum attracts innovators and early adopters, for whom sophisticated data analysis is in their DNA . Well, unfortunately, you are still a minority. 

Guy

[former_member188455]

Hi Guy,

Great insights from your work as an Education Partner.  I appreciate your specific view on how a considered "nice to have" (visualization) is actually a great accelerator for learning.  Coming back from NRF I found a similar topic popping up, specifically around the new quantitative skills necessary for the marketing function as they get more and more into IT decisions and working with "big data." 

Let's see if we can increase the number of that early adopter minority!!!