Evolving Retail Trends to Watch in 2016

Dec 28, 2015 5:30 PM  By

2015 has come and (nearly) gone, and for the retail industry, it has been a year of big change. From a variety of new payments options and requirements to new ways to sell online, there are a number of trends propelling the industry forward. Here are my predictions for which retail trends will bubble to the top in 2016, and how winning retailers will react.

Main Street Retail Will Strut Its Omnichannel Chops

Big box retail brands have long been developing robust ecommerce destinations to match their brick-and mortar superstores, but many independent retailers have been more internet-averse due to the seemingly overwhelming task of opening an online store. Thanks to a new class of tech tools, however, online stores are more affordable and easier to build than ever. In fact, a recent survey we conducted of more than 1,500 independent retailers found 61 percent plan to increase their ecommerce budget in 2016, and 39 percent predict more online sales will be the biggest revenue driver next year. This coming year, independent retailers will shed their outdated notions and prove that they are an omnichannel force to be reckoned with.

Social Will Gain Ground, But Won’t Replace Ecommerce

2016 will be the year social media tries to take on ecommerce. We’ve already begun to see efforts from Facebook and Twitter. Facebook is keen on developing itself as the small business owner’s trusty sidekick, with new click-to-buy options, small business concierge messaging apps and the testing of their new “Local Market” feature. This year will be an important time for retailers to get involved in social media channels, testing and experimenting as much as they can to find out what works best, before social ecommerce becomes the accepted norm among consumers.

That being said, Facebook is like a shopping mall — a great place for convenience and discovery, but full of distractions and not necessarily representative of a retailer’s ideal brand experience. Merchants will add social commerce to their ecommerce playbooks next year, but they won’t be using it as a replacement channel.

Apple Pay Will Be Off to a Slow Start in 2016

Whether it’s researching products or looking for coupons, smartphones have become an integral part of the shopping experience. It’s somewhat surprising to find out then, that as of October 2015, only 16.5 percent of iPhone 6 users have ever tried Apple Pay. Even among those who have tried it, only about a third (35 percent) reach for their phone before their wallet. Consumers are dragging their feet when it comes to using Apple Pay and only 34 percent of retailers planning to accept Apple Pay by the end of 2016.

The promise of points and miles lead hoards of consumers to instinctively reach for the plastic. Apple and other mobile payment providers will need to think similarly about incentives that will drive widespread adoption. In 2016, mobile payments providers will implement new ways to drive adoption including strategic partnerships with retailers to offer discounts in exchange for using mobile payments, or rewards points for customers who choose to pay with their mobile devices. Android Pay has already enabled easy storage of retailers’ loyalty cards, and Google recently partnered with Coca-Cola so consumers can earn loyalty points directly through Android Pay vending machine purchases. As retailers develop their own loyalty programs, they’ll look to Apple Pay to offer seamless integrations that help capture the return customer.

Independent Retailers Will Begin to See Value in Amazon-like Subscription Models

Amazon relies heavily on its Amazon Prime memberships to provide the convenient experience that keeps their customers shopping online. In 2015, we saw the rise of similar brand loyalty programs with brands like Instacart, Fabletics and Sephora, which have all designed membership programs that promise discounts and perks in exchange for an up-front fee.

In 2016, we can expect growth in the number of upfront fee-based loyalty programs, even from smaller retailers. But merchants need to be sure the program is profitable – both in terms of bringing in revenue, and as a successful tool to build customer loyalty. Achieving that has been a challenge to date: data shows just a quarter of independent retailers currently have a loyalty program in place. Retailers see the future value in them though, with 30 percent more planning to implement one in 2016. Providing free shipping is far from free for the retailer, and similar perks that come with the subscription model mean increased overhead cost. Smaller merchants will need to support those programs with sound business management software to ensure they prove to be smart decisions.

Consumers are constantly raising the bar on shopping expectations and retailers have plenty of options when it comes to meeting those expectations with technology and innovative business models. But not all trends were created equally. As 2015 comes to a close, retailers should reflect on what has worked so far, what customers have been asking for and what will really make an impact on the business. Only after a thoughtful look back and clear view of what’s ahead can retailers  make the smartest, most profitable decisions for the new year.

Dax Dasilva is CEO of Lightspeed POS.