Digital Transformation Defines Retail in 2017
In more ways than one, the digital transformation that has reshaped retail in recent years continued to exert its considerable forces on the market in 2017. Retailers around the globe sought to hone their omnichannel strategies and bridge the online and offline shopping experience for customers and sales associates alike.
Many will look back on 2017 as the year of retail right-sizing. Some restructuring plans initiated in 2016 played out through much of 2017, and a few new names were added to the list of bankruptcies and store closures. Venerable brands from Macy’s to Marks & Spencer endeavoured to lock in the right brick-and-mortar footprint to most profitably and efficiently meet consumer demand. And they invested more resources to integrate their digital commerce platforms with store operations. Meanwhile, online juggernaut Amazon gobbled up Whole Foods, and Wal-Mart continues its own shopping spree, buying up trendy fashion showroomer Bonobos, etailer Shoebuy and logistics start-up Parcel.
Millions More Connected Consumers
But perhaps the bigger story of 2017 was that of the consumers who are driving retail’s revolution. As 2017 wrapped up, We Are Social estimated there are now 2.56 billion global mobile social media users. That’s about 34 percent penetration globally and growing, as 1 million new active mobile social users are added every day, reported DreamGrow. In their 2017 report on global digital trends, We Are Social and Hootsuite said more than half of the world’s population is now using the Internet.
As the reach of the World Wide Web and social media has expanded, consumers are exposed to fashion trends much more rapidly. There are far fewer barriers between fashion’s runways and the rest of the world. In the past year, many leading brands responded by making social media campaigns — and the end consumer, not just elite journalists and buyers — an even more important part of the fashion week experience. See-now, buy-now collections, a bit tentatively tested in 2016, became more commonplace in 2017, with innovators such as Burberry and Tommy Hilfiger leading the way.
For all retailers, the year presented many opportunities to connect with consumers digitally on social media, in the store and online. This meant breaking down barriers between channels and delivering a more seamless shopping experience.
Luxury Enters ‘New Normal’
Luxury brands, in particular, made great strides in 2017 to build on their traditional customer service strategies with the savvy use of technology for greater personalisation. A Bain & Co. report predicted the luxury market would finish 2017 with 5 percent growth in sales, setting the stage for a “new normal” period of annual growth of 4 percent to 5 percent through 2020, according to a Forbes article. “It’s an interesting time in the world of luxury — the millennial state of mind has changed the way purchases are made across generations and has pushed luxury brands to redefine what they deliver to customers,” said Claudia D’Arpizio, a Bain partner and lead author of the study, as quoted by Forbes. “For brands that manage to get this right, there is significant potential growth in the market for personal luxury goods in the years ahead.”
According to Bain, while online purchases currently represent about 10 percent of luxury good sales, that digital share is expected to grow to about 25 percent by 2025, making it all the more important for luxury brands to enhance their omnichannel strategies. Luxury customers want to feel welcomed and recognised when they visit stores anywhere in the world, the report noted. And it’s particularly important to forge one-on-one relationships with Millennials.
Heading into 2018, luxury, apparel fashion, beauty and jewellery brands no doubt will see further growth if they can leverage centralised data to offer even higher levels of localised service to loyal customers around the globe.
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