As the consumer environment continues to evolve, traditional models of supply and demand are also evolving to keep pace. Brick-and-mortar retailers are faced with new customer shopping preferences and technologies that they must incorporate, or risk getting left behind, like those who have been forced to close their doors under the “retail apocalypse.”
A couple notable examples of these shuttered retailers include Toys ‘R Us, which entered bankruptcy in September 2017 and liquidated all 735 of its existing properties, and Rite Aid, which will close 600 locations as a result of its acquisition by Walgreens. Additionally, a 2017 Credit Suisse report found that 20-25% of American malls are expected to close within the next five years. These large-scale closings across the country are requiring retailers to change the way they sell to customers, and suppliers to change the way they work with retailers.
So, what do retailers and suppliers need to watch out for in this consumer environment? Consider the following five product inventory trends that will impact the hardline retail space.
1. Focus on experiences
Shopping is no longer a task for consumers; it’s an experience made up of a variety of factors, such as product relevancy, information accuracy, online visual aids, and level of product detail provided. Their experience will influence how they continue to shop. Personalization tools and tactics will be critical in creating tailored experiences for each customer segment that secures the customers’ loyalty to brands and retailers.
Microsoft executive Christi Olson stated, “Mass, generic marketing is officially getting subsetted by more evolved, effective one-to-one campaigns.” In the age of personalized, targeted advertising, customers don’t want to waste time searching online or in a store for something that doesn’t meet their needs. They want a retail experience in which they are valued.
This all starts with suppliers; it’s important that they deliver high-quality content that can be used by retailers and shared with customers. Such content should incorporate all relevant details customers need to make their purchasing decisions. When retailers have all of this content organized in a structured format, they’ll be able to spend more time creating the experiences their customers are asking for.
2. Unified customer experience
Amazon and the success of eCommerce have necessitated a unified approach for conducting retail business. This means merging traditional stores and online shopping, so customers can participate in both settings. For example, DSW provides online ordering but allows customers to pick up their orders in the stores. Home Depot also excels at this approach and was named the 2017 Omnichannel Retailer of the Year by Internet Retailer due to its numerous online purchase fulfillment options and mobile app that includes a 3D map for store shoppers.
As other retailers follow these examples, they’ll need to implement changes to inventory management, staff roles, and distribution channels in order to successfully execute unified customer marketing. Suppliers, on the other side, will need to organize their product content so it can be accurately displayed by retailers both in stores and online.
3. Use of AI and IoT
Continuous digital transformation is changing shopping in all industries. The two tech trends making the biggest waves in retail are artificial intelligence (AI) and the Internet of Things (IoT). With AI, retailers can gain insight into trends such as the time of day customers buy, the frequency of purchases, and even the impact of weather on sales. And IoT technology and devices provide data that links to other data, connecting online and offline customer behaviors. According to Coresight Research CEO and founder Deborah Weinswig, “AI technology can help companies use all of these data to deliver better experiences to their customers…We think that the sooner retailers adopt the technology, the greater edge they’ll have versus their peers.”
Both AI and IoT can be used to guide a retailer’s marketing efforts which ultimately impacts the content the retailer requires from its suppliers. These digital innovations are requiring both entities to deliver the most targeted and personalized customer experiences possible.
4. Rise in showrooms
Many retailers are turning to a showroom option to streamline inventory. With this setup, the retailer can showcase its products, offer items for inspection, and take orders, without actually selling anything from the endless aisle. Retailers that sell products that vary significantly from their competitors may want to consider showrooms as a new way of operating in the omnichannel age. This will also affect how suppliers sell to their retailers; they will need to provide content specifically used for showrooms, rather than traditional sales.
5. Increased delivery demands
As retailers approach the fourth quarter of the year, they will be full-steam ahead on preparations for the holiday season. Part of this will include implementing strategies to meet customers’ increased delivery demands, as Dropoff’s annual survey found that on-time delivery of gifts is a concern for 92% of consumers this year, up 6% from 2017. Suppliers will need to deliver product content to retailers quickly, so they can keep inventory fully stocked, and improve return efficiencies. These efficient inventory processes can then facilitate strong product experiences that build long-term brand loyalty.