2012 Predictions for Retail - Part 1
By David Dorf-Oracle on Dec 05, 2011
2012 is less than a month away, so this is the time of year we start seeing annual predictions.Susan Reda at Stores just published her take and I know IDC and Gartner have also released theirs. Many of last year's predictions could easily move forward to this year's: we'll continue to see lots of new alternative payment types, more engineered systems, better social analytics, more 2-D barcodes, greater adoption of cloud, and improved f-commerce.
In past years we've seen the rise of Apple, Google, Facebook, and Amazon but 2012 will mark a year of war between these juggernauts on the retail battlefield. They will fight over NFC, tablets, digital content, and most importantly, trust from consumers. Retailers must keep a close eye on all four companies.
1. Mobile Loyalty
Often, loyalty cards are just a way for retailers to give away margin in the hopes that consumers will select them as their preferred store. But strong programs involve a trade-off: consumers get discounts, and in return retailers get to learn more about their customers (and serve them better), and have the opportunity to influence their behavior. The loyalty card was a blunt instrument that worked well for the consumer, but didn't deliver for most retailers.
The concept of geo-fencing has been around a while, but there are few retailers that have really adopted it. The smartphone, with geo-fencing enabled, needs to become the consumer's loyalty card where retailers can incent, learn from, and communicate with customers. In 2012, geo-fencing will take off and deliver value for both consumers and retailers. Look for new loyalty programs built around smartphones.
2. Facebook Levels Off, Google+ Stalls, Groupon Withers, Amazon on Fire
To put Facebook's 800 million users in perspective, that the same number of people that were using the internet in 2004 worldwide, which incidentally is when Facebook got its start. Only India and China have bigger populations. That kind of growth just can't continue, nor do I think engagement can increase. The novelty is wearing off, so while there are lots of users, I believe the engagement of those users will wane.
Some of those users will feel more at home with Google+, but I seriously doubt many will close their Facebook accounts and make a permanent move. Google+ may continue to grow is user base, but users will spend more time on Facebook. Google will continue to dip its toes in retail with more small stores, a possible free-shipping program (similar to Amazon Prime), and of course Google Wallet and Google Offers. Other than Wallet, these efforts will go nowhere.
The potency of Groupon offers will dilute with all the "me-toos" that pop up, and retailers will learn that their exchange of profits for new, disloyal customers isn't sustainable. Not taking $5.75 billion from Google will down in history as a huge mistake.
Amazon's success with the Kindle will translate into more Prime customers and greater loyalty. The trend for shoppers to skip Google searches and go directly to amazon.com will continue, and Amazon will get more aggressive with books, movies, and music. Look for Amazon to acquire in the digital content area. Also, expect Amazon to have another AWS hiccup that gives retailers pause about using the cloud, but overall AWS usage continues to grow.
3. Apple Payments
With all the news about alternate payments, this isn't a stretch at all. Apple will finally release the iPhone 5 with NFC support and start to leverage their iTunes customer base for payments in non-Apple stores. I don't see how this will be financially viable with both Apple and credit cards taking a cut of each sale, so look for Apple to push customers toward ACH (debit/checking) as PayPal does. Look for Apple to start a loyalty program to incent consumers to use the new payment vehicle.
While we're on the subject of Apple, I'm betting they will release a new Apple TV product in 2012. Retailers should care because it will eventually allow viewers to "click on commercials" to get more details on products and sales.
4. Mobile Self-Checkout
Self-checkout, especially at grocery stores, has been around for a while. Some love it, and some don't. Smartphones now make it possible to simulate an e-commerce experience in the physical store. As you add items to your physical cart, you can scan them into your transaction, then pay and walk out the store. No need to stand in line at all.
Retailers are already putting mobile POS in the hands of its associates, so its not a huge step to expose that functionality directory to customers. As Apple leads the way, look for grocery chains to quickly add the capability followed by home improvement stores.
More predictions in my next post.