2017 Retail Predictions
As the new year gets underway, it’s time to look forward to the changes and trends 2017 will bring. For retailers, that includes some new consumer behaviors in addition to the always-expected technological advances.
While change might seem overwhelming, it can also provide fresh opportunities for sales. And with a little planning, retailers can stay ahead of competition to meet the demands of their customers.
To help guide you into the new year, here are a few of our 2017 retail predictions.
Non-Traditional Revenue Sources
As we enter 2017, many retail organizations are beginning to explore non-traditional revenue sources to keep profits up. One of the easiest turnkey ways to build revenue? Credit protection and warranty solutions. These products not only offer a positive impact on the bottom line, but they’re also a great way to build customer loyalty — the sort of loyalty that keeps customers coming back and turns them into brand advocates.
Automated Online Returns
Throughout 2016, online shopping experienced enormous growth — and there’s no sign of a slowdown. As online shopping continues to become more common, you can anticipate a push for easy, automated return processes from online retailers. Convenience can help breed confidence, allowing customers to make a purchase online knowing they can easily return if they’re not satisfied.
From manufacturing details to corporate values, the average consumer desires greater transparency from retailers recently. This is especially true of Millennial shoppers, many of whom would rather purchase from a socially conscious brand over a luxury retailer. Businesses that embrace the same values as consumers can anticipate a boost to brand loyalty, which is a great reason to let your customers know you’ll always be up front with them.
Renting vs. Buying
The year 2017 may also see a rise in rentals — especially when it comes to larger or generational electronics. Knowing that a product’s lifespan lasts only until the release of next generation model may give consumers pause before taking the full purchase plunge. For example, full two-year phone contracts are becoming more expensive. With consumers aware the next iteration comes out in just in six short months, there’s far less incentive to sign up long term and more mobile customers are leasing devices rather than buying them. Be on the lookout for this trend to hit other industries as well.
Over the last several years, there’s been a growing demand for niche, independent retailers. Why? It starts with personalization — having access to a retailer that simultaneously caters to individual needs and likely knows their customer inside and out. For both new and existing brands, this trend leads to improved, more personalized service as well as a smaller store footprint. Going forward, the desire for unique and customized service is only going to go up — so get on board.
Mobile, Mobile and More Mobile
The growth of mobile is no longer a secret, and incorporating a mobile strategy can only benefit your brand — regardless of your company’s size. Simply ensuring a website is mobile friendly, or enabling mobile purchase, creates a sophisticated mobile interaction that improves the customer experience.
Get ready, retailers. The new year is here!
Kevin Cundiff is VP of retail for Fortegra Financial Corporation, a Tiptree Financial Inc. company. Fortegra and its subsidiaries comprise a single-source insurance services provider that offers a range of consumer protection options including warranty solutions, credit insurance, and specialty underwriting programs.
FirstData: Strong holiday — but some retailers left in the cold
Despite disappointing results from some retailers, overall holiday sales are shaping up to be in line with industry projections.
That is according to First Data’s “Holiday 2016 SpendTrend” study, which reported retail spending increased 3.6% during the holiday period, in line with the National Retail Federation’s forecast. When non-retail spending (including travel, restaurants, beverages and leisure) is in included in the mix, consumer spending rose 4.7%, according to First Data. (The report is based on First Data proprietary transaction data and includes only actual card-based forms of payment across online and brick-and-mortar channels.)
The biggest winner was online, where sales rose 12%, accounting for 21.3% of all holiday spending, up 15.4% from last year. Other winners included electronics and appliances which saw significant growth this year, up 8.5% overall compared to being down 2.2% during the holidays last year.
But as the report makes clear, not all retailers had a happy holiday. Department stores were down 4.8% overall, while clothing and accessories saw modest growth of 0.1%. Women’s ready-to-wear retailers saw a decline of 3.7% in year-over-year growth.
Overall brick-and-mortar growth was up slightly, posting 1.6% year over year, with the growth primarily driven by spending in the West and Midwest regions of the United States. The Southwest experienced a decline in growth rates as it was down 0.6% in retail spend, data showed.
“Consumers were actively spending this holiday season however, retail stores had mixed results, with some categories posting high growth rates while others lagged behind,” said Rishi Chhabra, VP, information and analytics at First Data. “We continue to see a strong shift to online shopping, and were impressed with the significant growth in e-commerce transactions. More and more, shoppers are opting to stay home to avoid the crowds and make purchases on their own time.”
Discounter has better-than-expected holiday sales
Ollie's Bargain Outlet Holdings raised its full-year outlook after shoppers flocked to its stores in search of its signature “good stuff cheap” during the holiday season.
For the nine-week period ended December 31, 2016, Ollie’s total sales increased 16.3%, with a same-store sales increase of 1.9%. The discounter said it now expects full-year net sales to total about $888 million, ahead of the FactSet consensus of $874 million. It expects same-store sales growth of about 3% and per-share earnings of about 93 cents.
“We are thrilled with our holiday sales results, as well as the underlying trends and consistency of the business,” said Mark Butler, chairman, president and CEO. “Despite an extremely challenging same store sales comparison of 14% on a two-year stacked basis, we believe our sales results through the first nine weeks of the quarter position us well to deliver another solid increase in comparable store sales in the fourth quarter."