UK: Retail Trends 2016 - Redefining Convenience

Last Updated: 24 February 2016
Article by Ian Geddes and Ben Perkins

A new definition of convenience is emerging as customers demand that retailers immediately fulfil or even predict their needs. Retail Trends 2016 reviews how retailers fared over the 2015 Christmas trading period and examines the six top trends transforming retail today.

Our Retail Trends 2016 story starts with a review of Christmas 2015 and the themes we saw emerge. We then identify and examine the top trends we believe are transforming retail today and in the future, as well as look at the role of the high street in 2016.

In this redefinition of convenience, the transaction itself will no longer be an event, but more part of a seamlessly integrated experience. Retailers will need to make sure they understand how to engage shoppers according to their context and specific needs, and at the same time the physical store will continue to change as retailers adapt their services to this new way of interacting with customers.

CHRISTMAS 2015: WHAT HAPPENED?

Christmas Update

Christmas 2015 proved to be a difficult one for UK retail. A perfect storm of events lead to high levels of pre-Christmas discounting as the warmest December on record made it hard for clothing retailers to shift winter lines. Floods disrupted trading in the North of the UK and the terrorist attacks in Paris impacted footfall in major cities and shopping centres as consumers chose to stay at home and shop online.

Retail sales for the month fell by 0.6%, the first December decline for over 20 years. Store sales fell by 1.5% as we witnessed a shift online with e-commerce rising by almost 8%. The growth of e-commerce continues to be driven by consumers shopping on mobile devices, with sales through mobile up by 40% year on year.

The four Ps of retail

We identified four themes that are key to understanding the dynamics of the current retail market and provide a framework for realising exactly the disruption caused by the growth of online. These are:

  1. Profitability: this has always been important to retailers! However, the traditional model of retail has been challenged and as sales increasingly migrate online, the economics of retail are shifting.
  2. Productivity: rising costs, particularly staff costs with the introduction of the National Living Wage looming, are placing a greater focus on productivity – of people, productivity of stores and retail space.
  3. Payment: the growing consumer uptake of mobile payment and digital wallets is challenging retailers to rethink the in-store experience and the way in which checkout is managed.
  4. Personalisation: consumers increasingly demand personalised products and services that are relevant to them.

TRENDS 2016: LOOKING AT THE YEAR AHEAD

Retail trends 2016

Here is what we think will be significant this year:

  1. The subscription economy

    This concept has been around for a while but is now starting to move beyond the niche. Subscription businesses aim to either make things easier for shoppers, e.g. by delivering the exact food they will need for three specific recipes that week – or more fun, such as services that deliver five new make-up samples to try every month.
  2. The power of the crowd

    The democratisation of same-day delivery. Innovation in delivery is crucial for consumer-facing companies wanting to gain an edge, and new services are lining up to help. For example, pairing a parcel with a driver who's already heading in the same direction. This crowd-sourced approach is set to play an important role in delivery.
  3. The age of truly personal commerce dawns

    Data-based personalisation is one thing, but personal service can make all the difference. A new wave of businesses are emerging, ones which offer personalised advice and support as part of a purchase. Some are fashion-led, offering personal styling services, while others offer advice and support on which technologies to buy and how to make the most of them in your home. The trend reflects the growing importance of putting the customer's specific needs first, and of investing in staff who really understand their products.
  4. Social influence

    Social media is finally starting to play a more direct role in commerce. Shoppers have shown themselves to be keen to buy straight from social media, and networks are starting to provide them with ways to do this, by introducing 'buy' buttons and integrating commerce in a much more successful way. Likewise, the brand-building side of social channels is now one of the biggest sales influencers for web-savvy consumers.
  5. TV shopping reinvented

    The Clarkson effect. Television is set to play a big role in commerce in the future, and the line between being a huge retailer and being a huge media company will blur. Content will be more important for some than others, but few can completely ignore it. Elsewhere, new e-commerce platforms are emerging as the makers of game consoles start to innovate in the online retail space. In the future, we can expect to see gadgets that will provide shoppers with a way of buying products they see in TV shows directly via their TV.
  6. The rise of the omni-organisation

    Companies have begun to fundamentally restructure their organisations in response to omnichannel retailing, and much more work is to come. They are now designing their businesses around customer experience rather than by channel, and are bringing traditionally disparate departments together in order to enable real- time trading.

Priorities as we move into 2016

2016 will be all about delivering a relevant and personalised experience, with services designed so they can be tailored to suit individual customers.

Retailers will need to make sure they understand how to engage shoppers according to their context and specific needs. At the same time, the role of the physical store will continue to change as retailers adapt their services to this new way of interacting with customers.

As part of this, a new definition of convenience is emerging as customers demand that retailers immediately fulfil or even predict their needs. As a result, the transaction itself will no longer be an event, but more a part of a seamlessly integrated experience.

FURTHER READING:

  • Retail Showcase
    What are the key forces driving change in the retail sector? Where does the opportunity with the consumer lie? In our Retail Showcase, we share with you our vision of what it takes to win in retail today.
  • Consumer Review: Consumer data under attack
    The latest Deloitte Consumer Review found that consumers are becoming distrustful about corporate motives and practices around the collection and use of personal data. How can consumer businesses respond?
  • Consumer Review: The rise of mass personalisation
    Offering personalisation might require a rethink of business operations but businesses that embrace personalisation have an opportunity to create a differentiated proposition that may command a price premium, and improve consumer traffic and conversion.
  • Transformers: How machines are changing the UK economy
    This report re-examines the impact of automation and robotic on work and employment. The new research shifts focus from the future of occupations to the outlook for industry sectors.
  • Consumer Tracker Q4 2015
    The latest Deloitte Consumer Tracker shows consumers ended 2015 in a buoyant mood, with the strongest fourth quarter reading since the Tracker began.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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