March 28, 2018, 11:09 AM EDT
Synchrony at Women in Retail Leadership Summit 2018
The Synchrony Trend Spotter Five Retail Trends to Watch in 2018DOWNLOAD
Table of Contents
Synchrony in partnership with CNBC introduce
Join us in Salon 4 to experience the Synchrony Lounge and State of Pay Studio at the Women in Retail Leadership Summit. CNBC will be conducting live interviews with industry experts on the topics and trends shaping retail.
Retailers double down on voice technology
The good news for retailers is that consumers are using these devices to shop. Fifty-one percent of consumers who own the technology report they are shopping using a smart speaker.3 As a result, more retailers are heading down the path originally paved by Amazon. Best Buy, Target and Walmart have forged partnerships with Google to make it possible to shop for some products using Google Home.4 According to Marc Lore, Walmart's head of U.S. Commerce, "You're going to be able to talk to your car, your home, your phone in a very conversational way, as you would with somebody on the floor of a brick-and-mortar retail specialist."5
Voice technology that functions as a speaker for purchases is only the beginning. Retailers who couple voice with artificial intelligence are ahead of the game. Examples of this include using purchase data to automatically order regularly purchased items or customize purchases according to brands most purchased. This trend is set to continue as more retailers get into the voice game. "The reason you see so much excitement around the connected home is because, as a retailer, you have to be everywhere to reach the modern shopper," says Maya Mikhailov, CMO of GPShopper.
The connected car—an exciting new sales channel
Car makers are rapidly developing connected cars in 2018 and beyond. GM is making it possible to shop right from the vehicle's information system, in a system called "Marketplace." This enables purchase options from certain retailers right from the dashboard.7 In addition, Toyota recently announced that it would introduce Alexa in some Toyota and Lexus vehicles in 2018, adding additional vehicle models in 2019 and beyond.8
With the connected car, comes several retail opportunities. According to a study by PYMNTS.com and Visa, 66 percent of commuters who make mobile order-ahead purchases today would do so more often if the technology were available in their vehicles.9 The ability to use the connected car's GPS in order to deliver location-based offers can be an exciting marketing tool for gas stations, coffee shops and other brands. Many retailers are already planning on increasing their investments in location technology. eMarketer recently published a study by IHL Group and RIS News, revealing that retailers are planning on spending 7.3 percent more on proximity/location-based marketing in the coming year.10 The connected car is a perfect vehicle with which to use location marketing to drive additional sales.
Artificial intelligence—the key to creating customized shopping experiences
What does all this have to do with retail? AI leads to personalization and personalization leads to satisfied and loyal customers. Fifty percent of shoppers said if they received relevant offers from a favorite retailer, they would shop there more often.13 Machine learning, a subset of AI, is perfect for using automation to instantly provide customized offers based on past behavior. Other examples of AI in retail include management of stock and inventory levels, personalized offers, gift selections and customized ordering tools.
"All of the stars have aligned to make AI and machine learning impactful," says Greg Simpson, Synchrony's Chief Technology Officer. "Plentiful data, inexpensive computing power, and powerful capabilities at the edge (which in retail, is often the smartphone in the consumer's hand) provides tremendous opportunities. The elements of AI combine to make entirely new, highly personalized shopping experiences possible, while simultaneously reducing fraud."
Retail mobile apps—provide opportunities for increased connection with consumers
What's in it for the retailer? A retailer mobile app creates the perfect opportunity to deepen the relationship with the customer. For example, did they redeem an offer on a cordless drill? Now you know they may be building something, and it may be a good time to present an offer for paint, or nails, or anything construction related. Retail mobile apps not only give the retailer valuable information on offers that are resonating, they enable a retailer to provide a customized campaign that drives the next offer.
Social responsibility—a new imperative for brands
The number of natural disasters that occurred in 2017 have highlighted this trend. Last year produced 15 natural disasters, including floods, freezes, cyclones, hurricanes and wildfires, which was a record in the U.S. Retailers and brands have reacted to these events by increasing their outreach to the communities impacted. For instance, Gallery Furniture used their stores to shelter hundreds during Hurricane Harvey and had over 6,000 people attend a Thanksgiving dinner hosted in a Gallery Furniture parking lot. Owner Joe McIngvale said customers have flocked to his business ever since, and most say it was because of his actions.17 Countless retailers, from Lowe's to Custom Ink donated goods and money to hurricane victims.
The social causes that are attracting retailer attention are not limited to natural disasters. For instance, Patagonia donated all of its Black Friday sales to grass roots environmental organizations, and Eileen Fisher has teamed with Columbus Consulting International to help the brand achieve 100 percent sustainable sourcing and manufacturing by 2020.
As consumers desire more of a connection with the organizations they are buying from, this trend is sure to grow in 2018 and beyond. As a result, retail brands are being challenged to create a plan for community outreach, whether through disaster relief or ongoing commitment to a cause.