What the IoT Shopping Shake-Up Means for Retail Trends and Tech Gifts
Today’s Retail Environment
When checking off gifts on your shopping list this holiday season, where do you turn? 2016 brings us a whole new world of retail, and a slew of smarter gifts that our great-grandparents could have never imagined.
While after two decades, e-commerce has far less hurdles in terms of limited online sales, high delivery costs, competitions, and more. In 2014, U.S. Internet sales had grown 18 percent over 15 years and hit $300 billion. That being said, International Council of Shopping Centers estimates that 91 percent of holiday shoppers anticipate spending money in a physical store in 2016—$683 on average for each individual shopper, to be precise.
The bottom line is: retail is still very much alive and kicking, albeit in a very brave new world.
According to the Consumer Technology Association, 68 percent of U.S. adults have their hearts set on purchasing more tech gifts this year than ever before. With consumer credit on the rise, 170 million people are on the hunt for savvy gifts for their loved ones, over a quarter of which are planning to buy wearables.
The Internet of Things isn’t only altering our gift options, it’s changing every aspect of the way we shop. According to a Think with Google report, over 50 percent of holiday shoppers said they were open to purchasing from new retailers. Thanks to an easily-discoverable plethora of shopping choices, perusing catalogs or window shopping is quickly being replaced by mobile search.
“We continue to see positive consumer spending intentions ahead of the holiday season, with an emphasis on shopping in physical stores,” Tom McGee, the ICSC’s President and CEO, shared.
“Throughout 2016, consumers have demonstrated a tendency to shop across both digital and physical retail. Even shoppers who purchase online favor retailers with a physical presence and an increasing number of consumers are buying online and collecting in stores.”
Sixty-four percent of these smartphone shoppers reach for mobile search to research where to do their brick-and-mortar shopping. And mobile search has serious influence over these deliberations: 76 percent of mobile shoppers hop from which retailer or brand they’d like to shop after Google searches. Simply put, Google claims “mobile is their muse.”
Another term for this? Supershopping.
“Supershoppers are a new breed. They’re savvy mobile users who are open to new products and brands. They’re constantly on a quest for the best. And they keep on shopping well after the holiday crowds have dissipated.” –Think With Google
What do people want? Cheapest options do not always equate to in demand. Supershoppers seek out unique, cool gifts: “Mobile searches related to ‘unique gifts’ grew more than 65 percent, while mobile searches related to ‘cool gifts’ grew more than 80 percent. They’re also willing to do the research to make the best decision: On YouTube, mobile watch time for product review videos has grown 60 percent year over year.”
What Consumers Really Want
Big brands have been taking notice of this, offering emotional consumer experiences that include down-scaled size, curated goods, and millennial, commuter, and tech-oriented features.
Take Target’s mini-Targets, for example. Similar to many retailers across the U.S., Target is trying to discover a means to reverse 2015’s declining foot traffic and revenue. Part of their strategy is rolling out small shops with only enough room for key products marketed towards the nation’s largest living generation, millennials, like apartment-sized home goods, fast fashion, tech gear, and grab-and-go eats.
Target will also boast toy demos, red stage curtains, and other theatrical elements. Similarly, Wal-Mart is featuring selfie booths, “holiday helpers”, and an overall effort to step up its in-person consumer experience that online merchants just can’t offer. Both stores are slated to offer in-store exclusives that won’t be available on the web. Home Depot and Lord & Taylor have developed convenient apps to troubleshoot any holiday shopping woes.
The way retail connects with consumers is embarking on an ongoing journey, making deliveries more rapid, ensuring mobile sales are more convenient, and leaving shoppers happier.
While retail pace enables flash promotions, sales, and quick shipping, the online retail economy and its effects on warehouse labor conditions are under growing scrutiny.
Tapping into consumers’ shopping needs is not only defining the next phase of brick-and-mortar retail, but the future of online selling, too.
The Shake-Up Underfoot
Twenty-eight percent of surveyed shoppers told CTA they intend to buy more holiday gifts online this year, but plenty of mobile devices will be used for research before any sales even happen: 61 percent, to be exact. Mobile online sales are estimated to hit 24.4 percent of seasonal shopping this year, valued at around $20.1 billion.
Where are buyers finding online deals? Online search and social media—52 and 30 percent, respectively—still lag behind the tried and true method: family and friends’ word of mouth. This year, 52 percent of shoppers are set on scoring online-specific holiday sales events. In-store events like Black Friday are still influential, with 41 percent of shoppers looking to save at brick-and-mortar events. Half of shoppers will make a sporadic purchase when a good deal presents itself.
But Thanksgiving sales and Black Friday are losing their luster to shoppers, and retail titans like REI, Barnes & Noble, Costco, Crate & Barrel, IKEA, and Nordstrom are among over 50 retailers who closed on Thanksgiving Day. However, retail relevancy is getting a big boost from the Internet of Things.
With a retail shakeup underfoot, a surge in holiday spending spending, and emerging technologies unlocking the “endless aisle,” the shopping experience is morphing into something between commerce and entertainment.
The language of retail lust features key emphasis on exclusivity, flash sales, season-long deals, in-app purchases, online wish lists, price-matching, in-store pick up, and—of course—free shipping.
Once upon a time in 2011, web pioneer Marc Andreesen claimed that “software is eating the world.” IoT isn’t only altering our gift options, it’s changing the way we shop.
That’s not all shocking today. Factories, self-serve online stores, and every corner of e-commerce is hooked to new methods of production.
Three major driving forces are making this holiday season like no other in history. The landscape of the customer experience, supply chain, and new channels and revenue streams are introducing new IoT strategies to retailers.
No longer will shoppers have to guess how a kitchen remodel, pair of new running shoes, or other online catalog items will look in-person. Augmented reality and virtual reality can even provide shoppers with additional excuses to visit physical stores thanks to loyalty programs, effective visualization of products, and seamless purchasing paths.
AR and VR transform the customer experience with plenty of room for experimentation.
“Just doing this stuff gets a brand a lot of attention,” he added. “It’s a cheap and effective way to get into the news.” Augmented and virtual reality also are increasingly used for training exercises, reducing costs and creating more engaging education.”
IoT devices are making their debut in physical stores, too. Smart mirrors allow shoppers to avoid fitting rooms by virtually trying on clothes. Smart shelves help store managers by monitoring store merchandise and signaling when inventory is low, saving managers precious time during holiday shopping, avoiding an oversupply, or even product shortages.
And how could we forget the Dash Button? Amazon’s handy Wi-Fi connected device that helps customers re-stock up on any of their favorite items—Cheez-It, Folgers, Fresh Kitty, Meow Mix, Milk Bone, PoopBags, Pop-Tarts, Powerade, Purrell Hand Sanitizing Wipes, and more, all with no need to log onto the website—has not only added 60 new brands to their repertoire of over 200 buttons, but sales of the devices have jumped five times over the last year.
But what about robots, you say? Between 2016 and 2021, 2.8 million enterprise robots are set to ship, with the majority of these slated to be industrial robots for manufacturing, but in-store robots are included in the mix. Target has already tested bots earlier this year to aid with keeping shelves stocked and other inventory needs. The LoweBot has been introduced at Lowe’s to offer navigation assistance and added efficiency for ensuring backend operations and inventory information is up-to-date.
What this all boils down to is how this evolving world of retail has a chance to better serve shoppers across every medium, channel, or device, 24/7. The supply chain industry, e-commerce, and traditional retailers alike can all benefit from optimizing these new facets of product flow.
While the retail of tomorrow may be difficult to envision, with the help of the IoT, brick-and-mortar and e-commerce can both thrive equally year-round.
Be sure to let us know about your standout holiday shopping experiences this year.