Fashion Forward: Top 10 Retail Trends for 2016

Business.com / Industry / Last Modified: February 22, 2017

We foresee big changes for retail this new year. Here's a list of 10 trends to keep you up to date on the ever-evolving industry.

Multi-channel, omni-channel, mobile, social, showrooming, internet of things, big data, wearables, gamification - the never ending list of trends and innovations reflects the rapid pace of change in the retail industry.

Customers are much more choosy, but a lot less brand loyal.

New channels are emerging, which retailers must get a handle on or risk losing business.

The store is evolving, the customer journey now more closely resembles a bowl of spaghetti than a straight path, and shrinking budgets make staying on top of all this more challenging than ever.

But - whether you like it or not - the pace of innovation isn’t showing any signs of slowing down, meaning you must keep up with the trends or risk losing out of your competitors. Here we run down the top 10 trends that we expect to see firmly taking hold in the retail industry in 2016.

Related Article: Buying In the Cloud: How Cloud Technology is Revolutionizing the Retail Industry

1. The Workforce Goes Mobile

Technology is moving at such a rapid pace that the devices your customers carry in their pockets are light years ahead of what your employees are using. And with years-old POS systems keeping your customer-facing staff tied to the till, the level of in-store customer service your staff can provide has suffered greatly. In 2016, you need to be equipping your employees with the (mobile) technology that will allow them to get out from behind the counter, and start talking to your customers.

This could be a tablet that links up to your inventory management system so you can see if there are more items in stock or a mobile POS that allows you to take payments anywhere in the store. Not only will this make your customers feel like your store is on the cutting edge, rather than a dusty old relic, it will boost motivation among your employees as you are empowering them to do their jobs better, and tech-savvy millennials will want to come and work for you.

2. IoT: Everything Gets Connected

You might have heard of the internet of things (IoT) in the context of smart appliances - fridges connected to the internet, for example - but 2016 will be the year when it makes its mark in retail.

Location-based beacons, digital signage, and sensors will be joined by innovations such as smart price tags that can change prices in real time, mirrors that allow you to try clothes on virtually, and packaging that monitors how old fresh goods are, alerting you when they are coming to the end of their shelf life. One challenge in this area is the strength of your internet connection, as keeping all of these different “things” online is a must, and security and a privacy must be top of mind in terms of data protection.

If you’re looking for inspiration from retailers that have already got in on the act, Hugo Boss has deployed heat sensors in stores to track customers’ progress through the store. These sensors help understand where the high-traffic areas are, meaning the company can better position its products.

3. Data Gets Bigger

There’s so much data around that it can be difficult to know what to do with it, but the insight you gain can be truly transformative. According to McKinsey, a retailer using big data to the full could increase its operating margin by more than 60 percent. The key is to combine the data you get from traditional sources such as sales transactions with newer sources such as social media, product reviews, weather reports, and data collected from all your connected “things” to unlock new insights.

These insights help you get to know your customers better so you can tailor your services to their desires, as well as forecasting stock levels based on their buying habits, and even developing products according to this data. This even extends to operations, as you can better understand your employees from data you analyze.

4. The Rise of Machine Learning

The use of data doesn’t stop there, and forward-looking retailers will embrace what has become one of the hottest topics in recent years: machine learning and algorithms. These algorithms are getting even smarter as they learn from the data collected to make even better decisions each time and provide more than just recommendations. Think about predictive maintenance, where the data from machines (connected to the internet) - such as your fridges or coffee machines - allows you to predict when they might fail and fix them before they get to that point.

Machine learning can also be applied in the area of fraud by identifying spending patterns that might suggest illegal behavior while also intelligently learning about new patterns to stay on top of evolving methods of fraud. This then extends to store layout, which you can adapt to customer behavior over time, and inventory management.

Related Article: Mobile Retail: What You Need to Know About The Next Big Thing

5. Mobile Moves in Store

Showrooming - where customers use their phones in-store to compare prices with your competitors (and even your own eCommerce store) - used to be seen as a massive threat to the retail industry.

Now, with 41 percent of consumers using mobile apps while shopping, you should be embracing this trend by making sure it’s your app, and that it fits into the overall in-store experience.Your customers are already there, with almost three quarters wanting to use a smartphone to scan products for special customized offers and promotions in the store; while two-thirds thirds would use augmented reality apps to help locate items on their shopping list in the store.

As pharmacy giant Walgreens knows, mobile apps can also improve the in-store experience before the customer even arrives at your shop, with customizable shopping lists, location-relevant promotions, and product and inventory information all available in-app.

6. The Store Gets a Makeover

A few years ago there was a notion that the store was dead and customers only wanted to shop online. While this hasn’t been the case, if you want your store to succeed, it needs to better engage shoppers by providing an experience, not just a product showcase. Mobile is one, but you should also aim to educate shoppers and bring a sense of community that appeals to our inherently social nature.

The store needs to incorporate the latest technologies that we’ve already mentioned, along with excellent customer service, a drive to educate, and an interactive component that fully involves consumers in a way that is unique to your brand. Nike is a good example here, having turned some of its stores into spaces akin to sporting museums.

7. On Demand: Shopping Goes Social

Pinterest was the latest social network to throw its hat into the social shopping space in 2015 with the introduction of buyable ‘Pins’, which allow you to purchase products via the site, This follows Twitter’s ‘Buy Now’ button, Amazon’s ‘Dash’ buttons, and Facebook’s mobile storefront.

As we live in an increasingly on-demand economy where consumers want to purchase the product they see at that very second, even more social apps look likely to get into the game, with Snapchat and Instagram being likely contenders.

The upside is that it gives you another channel to sell through and a new way to reach your customers, especially millennials and Generation Z. But If you’re new to this space, the challenge will be how to handle orders and ensure you have a hold on your inventory to ship for to meet demand.

8. Customer Personalization Increases

With all the data around today and the plethora of analytics tools to help you make sense of it, there’s really no excuse for not knowing your customers. However, currently only 37 percent of retailers use internal and external data to create a 360-degree customer view. The one-size-fits-all approach that was so common in the past is giving way to a level of personalization that takes into account customer interactions across all channels to provide more contextual, local, and tailored experiences.

However, providing this personalization relies on consumers sharing key data, which is easier said than done. According to research from Accenture, nearly 60 percent of consumers want real-time promotions and offers, yet only 20 percent want retailers to know their current location and only 14 percent want to share their browsing history. So while personalization is a true differentiator for your business, you must first navigate the stormy waters of data privacy and security.

9. Wearables Go Mainstream

With almost three-quarters of consumers believing that wearables are the future of retail, it’s hard to imagine that they won’t make an impact on the industry in the next year. While they haven’t yet reached the mainstream, one in six US consumers already use wearable devices on a regular basis.

Linked to both increasing omni-channel integration and the rejuvenation of the store, use cases include payments and location-based offers, as well as more futuristic applications such as viewing products in 3D through wearable glasses with real-time product information, and using digital eyewear in the warehouse to locate products. There is also the potential for productivity gains, such as better in-store collaboration between employees, and digital visualization of store layouts right from the shop floor.

If you think this sounds all pretty futuristic and a long way off, Virgin Atlantic is already using Google Glass to improve customer service at London Heathrow airport.

10. Making a Game Out of It

The Candy Crush effect is not just limited to the video game industry, retailers too can learn from the hugely successful and highly addictive game.

Gamification - where video game techniques and strategies are used for other business purposes - really took off in 2014, with one-third of retailers using it in their loyalty programs. By rewarding shoppers for purchases, social media shares, and checking in at stores, retailers can better engage customers and drive greater loyalty. It’s also a useful PR and marketing tool, with GameStop promoting the launch of a new video game with a gamified promotional video.

The use of gamification in 2016 will extend beyond increasing customer engagement and loyalty, and move into employee training. Bloomingdale’s runs a program to teach store associates about safety that allows employees to play short, brain teaser-style games while on the checkout that incorporate training questions. The initiative has saved the retailer $2.2 million a year.

What do you think 2016 will hold for retail?

Related Article: Beacons are Beckoning: How Mobile Technology is Changing Retail

As well as these major trends, we also expect to see a continued push for true, seamless omni-channel integration; the arrival of same-day delivery; an increasing number of consumers looking for products and brands that align with their core values (eg sustainability); new ways to sell to not just millennials, but also Generation Z; and more focus on selling through influencer marketing.

What do you see as the major trends that will affect retailers in 2016?

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