Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Retail trends 2017: What they don’t tell you

Welcome 2017. Happy New Year to all retailers, customers, suppliers, partners, and service providers. We hope you’re refreshed, revitalised, and full of verve and enthusiasm, ready to take on the New Year.

It’s a time where new promises drive new ambitions for the New Year that in turn compel new resolutions to meet these promises. It’s a time to look back and evaluate trading over the peak period. Equally, it’s an important time to set targets and invest strategically in order to setup for success in 2017.

Many retailers have invested heavily in 2016. It’s a time to capitalise on those bets, course correct if needed, and most importantly place new bets in 2017. So, where will retailers place their bets this year?

It’s all old, it’s all new

There has been a big push to mobile and online commerce in the last few years. Sales in these channels are consistently eating into the market share of traditional retailers. However, the importance of the bricks and mortar store continues as the avenue to touch, feel, and experience products before you purchase.

Retailers are looking to enhance these traditional stores in new ways – embracing digital, virtual, and physical to bring these new experiences to the customer. At the same time, competition abounds, online and offline, onshore and offshore; and while retailers are fighting for customers and sales, they need to also look inward and make sure that they stay profitable.

What’s running hot now

Our bets are based on two considerations.

          1. What we see happening in the market for 2017 (not just futurism). This is grounded on what we know or what we’re working on

          2. We’ll revisit these during the year, and see how we did, what changed, and more importantly why


So here they are, our top retailer trends for 2017 (in no particular order):

The rebirth of loyalty

Most retailers are experimenting with new membership programmes, if not tinkering with already rolled out programmes. The Co-op will give £100m a year back to its members and communities, Bed, Bath & Beyond is testing an invitation only membership service (Beyond), and Walmart’s Savings Catcher app is a pseudo membership that drives additional spend from its shoppers. Retailers are now more than ever thinking about how their schemes can be more sustainable and be built on a reciprocal value exchange with their customers that provides a reason to be loyal.

The rebirth of loyalty will be about the ability for retailers to craft propositions which create and use a deeper understanding of customers, to engage and reward them at a more meaningful level.  Loyalty isn’t built in a moment, but over time, and it needs to be considered as a more holistic outcome, achieved through supporting, inspiring and engaging the segment of one customer. 

See now, search now, buy now, deliver now, return now, review now

Burberry, Tommy Hilfiger, Tom Ford, and Ralph Lauren allow next day purchases on their runway collections.  The time between customer discovery to reward (i.e. see → search → buy → deliver → return → review) is shifting from months to days which has knock on impacts on how retailers need to rethink their supply chains. This immediacy proposes that service is as important as the product itself, and in some cases, the service is the product.

Retailers will have to rethink their relationships with their suppliers, their ordering volumes, and ability to postpone decisions in the supply chain. Enabling high speed supply chains will require a much closer and collaborative relationship between retailers, their customers, their suppliers, and their logistics providers to enable the ideate-to-reward value chain.

Contextual service and sales

Retailers are empowering their sales staff and their customers with a more personalized understanding of what they like, what they have bought, what they have browsed, etc. to enable upsell and cross sell capabilities (beacons, RFID, etc.) at stores and online. Proximity and location technology is proliferating and will allow real-time messaging of offers as customers browse and shop. Retailers will look to incorporating new capabilities in their store to allow employees to better guide their customers through retailer assistants for customers to self-serve enabling an easier shopping and discovery experience.

Store experiments

Retailers are looking for avenues to entice customers into their stores by offering the opportunity for them to experience new products and a wider selection. Sainsbury’s Nine Elms store has a mini Habitat concession, Macy’s new store has revamped its cosmetics department and now provides services, and Amazon may be looking to open pop-up stores in the UK as an extension to their US strategy. Return per square foot continues to be the benchmark for space productivity and a partner with a complementary product or service can also help boost this margin. Retailers will continue to experiment and learn from these formats, partner as needed, to improve the return on their space.

Employee experience to the forefront

For too long employee experience has lagged behind customer experience. Retailers invest in highly skilled employees but do not empower them with modern, intuitive tools to support new customer propositions. Therefore, retailers are now looking at simplifying user journeys to maximise business outcomes by providing an “experiential innovation layer” that provides actionable insight. The benefits of these changes is an improvement in employee and customer experience while also improving employee satisfaction (also reducing attrition) and productivity.

Bottom line over top line

The looming impact of living wage laws will affect far more retailers than the headline grabbing consequences of the EU referendum. In an uncertain market, with the core cost of the retailer poised to grow, retailers will need to ensure that they invest in those products and services that will drive margin. Too many retailers offer customer propositions without a clear understanding on the impact on margin. There will be a renewed focus on understanding what these end-to-end costs are, aligning prices and propositions to these costs, while driving down costs for to meet margin expectations. Retailers will look to increase their productivity and change their operating models in order to meet these changing customer propositions.

What else is around the corner?

In fairness, we struggled with prioritising the long list of trends. But in blogs, as in retail, there have to be some winners and some who didn’t quite make the list.

The losers broadly fell into two categories. Those in emerging stages that are being prepped for prime time and others that were specific trends for types of products, services, or industries. A few of the ones we considered were:

  • Artificial intelligence
  • Virtual and augmented reality
  • No touch and low touch retailing
  • Peer-to-peer retailing
  • Smart Fabric
  • Payment methods & cyber security


So buckle down retailers as 2017 could be a great year

Much gloom has been forecasted for the retail sector in 2017, as was forecasted in 2016. Retail has never been easy, but in 2016 there were many in retail that have made this a successful year. Their mantra for success is that fortune favours the brave, the quick, and the nimble.

What this means is that retailers need to make use of the assets they have and tweak their operating models and propositions in innovative ways to align with costs and customers. They need to invest in their employees and to support these newer and faster propositions. They need to understand what makes their customers tick and establish long-term, value based symbiotic relationships through these propositions.

But most of all, they need to do this in a new way of working that allows for quick decision making, failing fast, testing and learning. The best teacher is the market and the customer. Retailers should take heed and try and move forward with speed.

So, in conclusion my good retailer friends, I wish you new propositions, new customers, new ways of working, new employee experiences, and success with your new year’s resolutions.

About the author

Shashi Subramanian
Shashi Subramanian
Shashi is an experienced Management Consultant with Capgemini with expertise in creating and implementing strategic solutions in large organisations in the retail and consumer goods industries. He is especially interested in how new technologies disrupt consumer driven supply chains resulting in better and more informed decision making across retailers and their partners
2 Comments Leave a comment
Shashi, I came across your post you recently wrote about trends in 2017. Very nice piece. I had a few reactions to some of them. For instance on the rebirth of loyalty, I have seen customers being loyal to brands more than retailers. Being the ceo for bed bath & beyond in Mexico, I would constantly see customers go to our competition for a lower price. No matter if our customer service was better. Now online loyalty is much more difficult. The membership BBBY is testing at $29 per year is to try to imitate Costco model to make money on memberships if customers want to get access to better prices. Not sure what the outcome will be. The other trend I had a comment on was the speed in supply chain. I am currently a vendor for large retailers who have heavily invested in their supply chain (processes and IT). The thing is that they don't take into account their vendors and don't mind if our logistics are best in class or not. That's why it's called a chain; and the chain is as strong as its weakest link. I'd suggest you work with your customers in integrating extended supply chains. Having a retailer with a very strong supply chain and his vendor with a subprime chain doesn't make sense. Finally, I would probably add 1 trend to your list to increase bottom line and create more productivity for retailers; that's Personalization. You mentioned BBBY in your post. They have just acquired that serves to personalize any item bought online and help to get rid of their 20% coupon that has hurt so much their earnings lately and add value to the customer, beyond price. Great analysis, congrats on your article! Marc

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