2016 STARTED with European countries imposing border controls in a bid to stop a flood of refugees entering their country while 2017 started with the Prime Minister outlining how we will leave the EU. This uncertainty is set to make 2017 an unpredictable year for ecommerce – how high will prices rise, how much will consumers cut back their spending and will shoppers overseas continue to buy from retailers’ localised websites or will they turn to the UK sites where pricing in GBP is lower than their own currency? And that’s before we think about retail costs due to the changing pound and a labour market effected by the introduction of the apprenticeship levy and the national living wage.
Richard Lim, Chief Executive, Retail Economics believes that concerns around Brexit, a weaker economy and rising inflation are likely to define 2017 for many households around the UK.
“Retailers’ hedging strategies protected households from the immediate impact from the collapse in sterling last year but as these contracts begin to unwind inflation will accelerate sharply. While some businesses will take a hit on margins rather than passing on the full impact of rising costs, households will have to share some of the pain. How much pain and how quickly it feeds through will be critical in determining the strength of spending this year.”
In this issue of InternetRetailing will look back over 2016 and forward, away from the economic and political landscape, to digital trends and shopper behaviour across channels.
2016 marked Amazon’s [IRDX RAMZ] embrace of traditional retail. It launched 100 pop-up stores, announced the opening of bookstores in Boston, Seattle, Portland and Chicago in the US and its plans for 2,000 grocery stores. To supply this ecosystem, Amazon has planted dozens of warehouses within 20 miles of almost half of the US population. That number will likely climb to 75% in 2018. Jon Nordmark, co-founder and CEO of Iterate.ai, takes a close look at Amazon’s strategy with innovation and shares with InternetRetailing’s readers how retailers need to be comfortable working with startups, technology, experimentation, and speed if they want to continue to compete. “It’s a matter of life or death,” he warns.
Amazon Go, with its seamless, checkout-free shopping allowing shoppers to just walk in, pick up and walk out has implications for the UK high street and consumers’ thirst for shopping on mobile. The integration of technology into the high street has long been tipped as being transformational for how we shop – but many of those comments were on how actual physical shops would morph into something crossed between pop-ups and coffee shops (or huge town centre warehouses). “But not if Amazon Go takes off,” says Paul Skeldon in his article in the mobile section of this magazine. “In one video and one concept store Amazon might well have shown us all what merchandising in the omnichannel world is set to look like by the end of 2017. It also marks the shift in the role that mobile (and therefore online) plays in retail”.
Also in the mobile section, Katy Howell, CEO, Immediate Future examines social and the changes ahead in 2017. As she says, “anyone with social in their marketing mix is used to constant change. Facebook updates, platforms buying other networks, new formats and the shifting preferences of consumers. 2017 though promises change on a different scale. Change that makes social a serious business.”
Elsewhere, Martec International shares the findings from its survey of the leading 150 UK retailers and looks at what the year holds in store for IT spend, while James Lovell from IBM Commerce explains what the concept of Artificial Intelligence means for retail in 2017.
New to InternetRetailing are the eDelivery Pages. Working with sister publication eDelivery.net, InternetRetailing looks at how ecommerce and omnichannel retailing are altering the supply chain, operations, logistics and delivery landscapes. In this issue, we share insights from operations and logistics directors about changes in retail delivery in 2016 and look at what they could mean for 2017.
Delivery takes on even more importance in the run up to Christmas as shoppers purchase more online and the deadline of Christmas gets closer. Online orders rose by 16% from 13 November through 24 December when compared to 2015’s figures. In total, a massive £25bn was spent online over the six-week Christmas period. Online retailing will continue its rise in 2017 – predicted as a 14% growth rate for the year – so whatever happens in the wider political and economic landscape ecommerce and omnichannel will still be key to retail in 2017.
The IR team will be at the InternetRetailing Expo on 5 and 6 April so look forward to seeing you there and discussing the ongoing issues of Brexit and international trade, Amazon and marketplaces, clicks and bricks, mobile, customers, products, operations and the final mile.