World Retail Voice Blog Post
2015 - The Year of Differentiation
Guest piece from Natalie Berg, Global Research Director, Planet Retail (published here)
Here are Planet Retail's 5 predictions for 2015:
1. A race for most convenient instore experience
The digital war is truly set to overtake the price war. Retailers are looking to mobile technology in a bid to differentiate and improve the instore experience. Mobile payments in particular will be a key area to watch in 2015, with both Sainsbury’s and Asda rolling this out in the first half of the year. Utilising instore Beacon technology, retailers will also look to create a far more personalised experience for customers. Meanwhile, apps that enable shoppers to more easily navigate aisles will make grocery shopping quicker and more convenient.
2. The death of the loyalty card
The notion of rewarding loyalty will never go away. However, we believe loyalty cards are losing relevance with today’s shopper. Customers want instant value without having to jump through hoops and - let’s face it - shoppers are no longer loyal to one particular supermarket. They are promiscuous, they shop around and buy little and often.
From a retailer perspective, loyalty schemes are expensive to run and add an unnecessary layer of complexity to the business. In 2014, Sainsbury’s halved its Nectar reward points, while there is talk of possible changes to Tesco’s Clubcard scheme. We expect more changes in 2015.
3. Greater collaboration
It might sound counterintuitive but, as they seek to stand apart, we expect more retailers to join forces in 2015. Sainsbury’s is looking to add concessions to its stores, having already partnered with Jessops and - looking beyond the grocery sector for a moment - the eBay/Argos partnership has led to additional shopper choice while Mothercare concessions have recently begun popping up in selected Debenhams stores. We believe the addition of a babycare or a homeware retailer would be a logical fit for one of the Big Four.
Concessions can also help make use of what is otherwise dead space in larger outlets. However, as evidenced by Tesco’s attempt to bring restaurants, yoga rooms and gyms into its stores, you simply can’t force shopping habits on consumers.
4. Home scanning
Cupboard replenishment isn’t the most exciting of tasks, so if retailers can make it even easier for their shopper it’s likely to drive loyalty. This year, Waitrose will trial the Hiku home-scanning device, enabling us to scan barcodes from the comfort of our own kitchens.
Sainsbury’s new mobile app also allows barcode scanning whether instore or at home. Similar tests are underway overseas, the most notable being the Amazon Dash device in the US. We foresee this gaining momentum in 2015 and - despite ultimately remaining quite niche - it enabling retailers to offer additional customer choice.
5. (Even more) alternative collection points
2014 was a major year for grocery click & collect. Even retailers that had long resisted finally surrendered and joined in. Compared to non-food retail, click & collect in grocery is inherently more complex due to product perishability and there is arguably less consumer demand (given that most grocers offer one-hour slots for home delivery). Nevertheless, convenience is defined by the individual and retailers are in a race to make grocery shopping as convenient as possible. Building from the progress made with alternative collection points, mainly via the London Underground, we anticipate more innovation in 2015. We are especially looking forward to Asda’s new temperature-controlled collection pods, due for roll-out this year.