What can retail expect from 2014? Rebecca Thomson takes a look at what the industry will be doing – and talking about – this year, as well as the key trends

In-store technology, as at Argos in London, will hit its stride this year

Every year brings its own set of buzzwords – from multichannel to big data to the space race, the last few years have been defined by buzzwords as the retail industry hunts for terms that accurately describe some of its fastest-changing trends.

This year, multichannel, omnichannel and cross-channel will of course be present again. The multichannel trend has become more synonymous with the decade than with a single year, but there will be another shift in the way retailers think about it.

“One of the key trends is more – and better – omnichannel integration,” says UK Google managing director Dan Cobley. “Done right, the combination of a store network and online is a winning formula that pure-plays can’t match.”

Other key trends likely to affect retail include growing use of in-store technology, 4G networks, customer experience and Asian economic growth. Some are new and some have been around for a while, but all of them are set to have an impact in the coming year.

1) 4G

Mobile phone companies are keen to tell anyone who’ll listen what a difference 4G is making to mobile retailing. Tanya Lawler, vice -president of UK marketplaces at eBay, agrees, and says it could generate a whopping extra £1.8bn of consumer spending. She says: “The arrival of universal 4G will bring with it a more immersive, instant and intimate shopping experience than ever before, putting the most exciting features of mobile retail as we know it into high definition. It has the potential to turbo-charge mobile retail spending.”

2) In-store Technology

Cobley says mobile phones in particular will continue in their stride in store this year. He observes: “The average smartphone user checks their phone 150 times a day. 45% of those people look at their phone during the in-store shopping process, and 20% will change what they’re going to buy as a result. Smart retailers are recognising and embracing this.” Offering quality wi-fi in store is a start – beyond that, targeted marketing campaigns and providing incentives to buy there and then in store will be important.

3) Inspiration

Online shopping won’t just be about trawling through pages of products. Increasingly, retailers will need to inspire shoppers and help them cut through the online clutter. Lawler says: “This is shopping through browsing, inspiration and even entertainment. It sis less about fulfilling a mission – a need – and more about fulfilling passion, a want or a love. It is about being inspired, and about the joy and serendipity that often comes from physically shopping in stores.”

4) Geofencing

Marina McKeever, senior director of sales at VoucherCodes.co.uk, says geofencing is poised to be a big mobile trend. “Geofencing uses location-based technology to create virtual perimeters around physical retail locations. It will allow retailers to intelligently target consumers with in-store promotions through smartphone apps and could prove to be a significant driver of footfall in 2014,” she explains.

5) Aggregated social media

Martin Butler, UK head of retail at IBM, says social media will come into its own this year. “Social listening at an aggregate – trend and sentiment – level will help retailers plan and assess activities based on information that will be accessible earlier than from market research or the press. It will become quicker and more accurate to spot and act on trends as they emerge.”

6) Wearable technology

Google Glass will fully launch this year – although there’s no UK debut date yet – and wearable technology continues to develop. 2014 will be the year it starts to have more of an impact on how consumers use mobile technology in their day-to-day lives.

7) Internet of things

The full impact of the ‘internet of things’ – devices and appliances connected to the internet – will be felt throughout 2014 and beyond. The presence of these devices in people’s lives, such as smartwatches, will have implications for retailers both in the way they interact with shoppers and in the opportunity it creates for further innovation. Butler says: “Wi-fi and video cameras in stores, energy measurement systems around buildings, data flowing between customers, retailers and suppliers will underpin further innovation. Multimedia analytics will mature massively in the next 12 months and new business models will emerge.” He adds that the key to maximising the potential of all the above is fostering a culture of innovation across an organisation.

8) Crowdsourcing

Building the power of social elements of the web into retailing will be another area for development. Lawler says: “Crowd-sourced shopping inspiration – such as Topshop’s partnership with Pinterest – shows the power of social in inspiring people to buy, while PayPal’s check-in app allows retailers to build relationships with local customers in store. There’s a huge opportunity for brands to capitalise on the sweet spot between utility and engagement.”

9) International

Jon Copestake, chief retail analyst at the Economist Intelligence Unit, says 2014 will be a year of transition as retailers grapple with evolving channels and markets: “We expect global sales volumes in 2014 to increase slightly as all regions register sales improvements. The biggest swing in fortunes will take place in Western Europe, which will see sales volumes move from negative figures to modest growth as some economies recover and others see decline slow. But despite talk of slowing demand in China and retail uncertainty in India, the biggest opportunity remains in Asia.”

10) Predictive analytics

Butler says the emerging power of forecasting analytics will drive personalised services. “Systems that learn and predict, based on cognitive computing, will help make shopping experiences more individually compelling, for instance through instant personalised promotions in-store.” In the back-office, meanwhile, predictive analytics will help marketers, buyers, merchandisers and supply chain managers make better decisions.

11) Interactive apps

Tammy Smulders, managing director of trends and marketing insights consultancy SCB Partners, says inspirational apps will play an important role in categories such as fashion this year. Fashion Kaleidoscope, for instance, allows shoppers to take a picture of something someone is wearing and the app will tell users what it is and where it can be bought. Pose, meanwhile, enables shoppers to take a picture of their outfits in a store dressing room and friends can instantly vote on whether they should buy it.

12) Convenience

Convenience will continue to be a central part of the grocers’ strategy this year, but the word will also start to infiltrate the rest of retail. Lawler says: “Convenience will form an even greater part of the shopping experience. According to research, 5% of online retail is already picked up away from home and this is expected to grow to 50% in five years.” Cheaper and faster delivery, better returns and a wider range will all be crucial.

13) Experience

The way that people shop and what they want from a shopping experience is changing. Charles Maudsley, head of retail at British Land, says physical stores are increasingly acting as powerful drivers for demand across all channels. He says: “Enhanced emphasis will be placed on the whole retail environment to help extend dwell time and hopefully spend. The key for landlords is working out how to utilise digital tools to help amplify the retailer’s voice and deliver an experience to the customer.”

 

And what won’t happen in 2014 – headlines we’re unlikely to see

Bill Grimsey and Mary Portas go for dinner

The two titans of high street reviews were at loggerheads in 2013 – this year is unlikely to bring friendship.

John Lewis halves its marketing budget

John Lewis’ run of successful advertising in the past five years – particularly its Christmas campaigns – and the associated marketing around them have enabled the retailer to sail through the recession, cementing its position in shoppers’ minds as a middle-class favourite. If anything, its ambitions and budget are likely to get bigger – maybe Brangelina will star in 2014’s Christmas ad?

Malcolm Walker says nothing all year

Iceland boss Malcolm Walker is one of retail’s best-known and most opinionated characters, and his controversial comment about the Irish during the horse meat scandal led to backtracking and apologies. Thankfully, it’s unlikely to keep him down – Walker is as likely as ever to give a vocal opinion on the issues that matter.

Google goes bust

Or Amazon. Or eBay. The titans of the online era are riding high, setting the agenda and are hugely successful. They are, at this stage, about as far from going bust as it’s possible to be.

Apple starts selling books

Having comprehensively overturned the music industry, and having helped to transform other areas of the entertainment industry, Apple probably won’t start stocking paperbacks – unless its new head of retail Angela Ahrendts decides on an entirely new strategy.

Amazon wins military contract

Amazon’s news that it is testing delivery drones was one of 2013’s more surprising stories but we think – we hope – that it won’t extend Amazon Prime to military drones.

Tesco re-enters the US

Tesco’s international endeavours will continue – it has just announced ambitious expansion plans in India – but its plans for growth are unlikely to include America after it had to sell its Fresh & Easy chain.

Aldi awarded a Royal Warrant

Aldi’s unstoppable march will continue – it keeps convincing middle-class consumers to shop at its discount stores. Whether the German supermarket manages to convince the Royal Family, however, is yet to be determined.