Added to the perfect storm of cost pressures, rising inflation and slowing wage growth could impact consumer confidence and therefore dampen demand.
Retailers will also have to contend with ongoing disruption from the next wave of digital technologies and will need to prioritise investment in the technologies that will really add value for their customers or increase the efficiency of their operations. Retail has been through a period of unprecedented upheaval in the last 10 years, however in 2017 retailers will need to focus on accelerating change in their businesses.
Troubled times ahead for retail?
As we look forward to 2017 we note a number of headwinds for the retail sector in 2016. Rising costs pressures signal more challenging times ahead for UK retailers. We believe that the following will all impact on profitability in 2017;
- Increases in business rates
- Rising staff costs
- Depreciation of sterling
- Rising fuel and commodity prices
- Increases in pension cost
Retail Trends 2017
So what do we think will be big in 2017?
- E-commerce – the next big thing
2017 could see another tipping point in e-commerce, driven by the ambitious growth agenda of the leading pure-players. The growth of online isn’t over and is likely to have a greater impact on traditional players as they continue to scale. It’s only just begun.
- Store 4.0 – fulfilment, inspiration & friction free
The retail store is being re-imagined for the digital consumer. A new balance needs to be struck between transaction and fulfilment. We believe the store experience will increasingly focus on one of two things: inspiration or convenience.
- Conversational commerce
Voice user interfaces (VUI) provide consumers with a more natural and intuitive way of engaging with digital technology. This combined with the growing popularity of connected devices in the home and car will have a profound impact on how we shop.
- The robots have their “AIs” on the jobs
Robotic technology has long played a role in retail but in recent years we have seen the number and scope of user cases (moving from the back to the front office) increase dramatically fuelled by the incorporation of ever more powerful AI.
- Agile at scale- the new normal for retail
How can retailers really accelerate change in their businesses? While some may have experimented with agile methodologies at the periphery of their businesses we believe that in 2017, more retailers will implement agile across their business as scale as they try and respond to structural change in the marketplace and improve innovation, responsiveness and the quality of their delivery.