Retail 2011: Five Action Items
By Matt Pillar, editor in chief
Last week, Verizon Retail's Ravi Bagal threw down the five most important trends he sees shaping the retail industry in the coming year. While prognostication is risky business, it's hard to argue that his top five aren't sure to change the landscape. That said, I tend to exercise a bit more pragmatism on tech adoption than someone charged with marketing tech solutions for a Fortune 50 company, so this week I've decided to weigh in on Bagal's top five.
Bagal's top prediction for 2011 is that mobile commerce demand will spike. He says consumers have high expectations for m-commerce, and that demand for it will outpace retailers' ability to deliver m-commerce solutions and support. Now, lots of retail insiders are making this prediction, and I certainly don't expect you to take Bagal's word for it – after all, he's in charge of marketing for Verizon. Market stats do back it up though, and a couple of weeks ago I shared some of them with you after reading Lori Schafer and Bernie Brennan's new book, BRANDED! If reading that piece doesn't convince you the mobile consumer presents both a threat and an opportunity, consider that more than 42% of U.S. consumers owned a smart phone at this time last year. As recently as 2006 that figure stood at a paltry 15%, and that number is expected to pass the 50% mark by Christmas 2011. If smart phone adoption among consumers is a harbinger of the market for m-commerce applications, the time to respond is certainly now. In fact, brand-new research suggests that this holiday season, nearly 8% of consumers made purchases on smart phones. Sounds like a small figure, but it wasn't more than a handful of years ago that "only" 8% of transactions were made online. As Bagal suggests, retailers will have to support this new form of interaction with consumers, specifically by getting their back end systems and product information delivered in a mobile-friendly format.
Next, Bagal says the cloud will go mainstream. I just finished a story for an upcoming issue of Integrated Solutions For Retailers highlighting a $4 billion retailer that conducts its entire sourcing operation in the cloud – 1,000 employees speaking five different languages on four different continents – connecting and collaborating via the cloud. And they're thrilled with it. Mainstream? I don't know about that this coming year, but legitimate? Absolutely.
Bagal's third prediction is that social media will propel ownership of the brand from retailer to consumer. This is also a central theme in Schafer and Brennan's new book. Consumers are relying more on social discussions to drive their buying decisions than they are on traditional advertising. This, coupled with the power of information enabled by mobile devices, makes us increasingly independent consumer, empowered to make a purchase in your competitor's store from your aisle, if we're so inclined. Social media is now as woven into our national fiber as retailing is. The two are a match made in heaven for consumers and a match made in hell for retailers if they don't join the conversation.
Security and compliance concerns are the fourth trend Bagal expects to shape the industry in 2011. The propagation – or unification, depending on your purview – of channels create an increasingly complex transaction security challenge that retailers will have to manage effectively to save their skin. Bagal points to the October release of the updated Payment Card Industry Data Security Standard (PCI DSS) and updates forthcoming. Security and compliance challenges have shaped the industry for the past several years and will continue to impact the way retailers do business for years to come.
Finally, Bagal and Verizon say that shopping in "silos" will disappear. I don't think this is going to happen in 2011, but the pace of integration of systems that run disparate business units in retail will certainly accelerate significantly. The industry has been moving away from using distinct resources and business systems to run Websites, brick-and-mortar stores, and catalogs. The increasingly channel-agnostic consumer will quicken the pace of that movement next year, but I suspect there will be more than a few large retailers playing catch-up this time next year.
While the list from Bagal and Verizon is safe – none of these predictions should surprise anyone – it's equally important to note that it's accurate. These trends will shape retail in 2011, whether Verizon Retail sells more of the services that enable them or not.