What are the Top 3 Challenges Facing Retailers in 2016?

In SEO, The Digital Marketing Blog by Dave0 Comments

In this post we’re looking at:

  • Customer Acquisition & Retention
  • Messaging Apps
  • Mobile Experience & Engagement

It goes without saying that the online retail & Ecommerce market continues to evolve and head in new directions. It’s also become clear over the 20 or so years of ecommerce that those retailers who don’t adapt and keep the pace tend to disappear very quickly. Does anyone remember Woolworths, MFI and JJB? To varying degrees, all three went out of business as a result of their poor online performance.

With that in mind, we decided to highlight some of the major challenges retailers will face in 2016 as we see them. It’ll be interesting to see how people tackle these.

1. Customer Acquisition & Retention

This isn’t a new problem for a retail business, far from it, but the solutions to this problem have changed dramatically and continue to do so.

20 or 30 years ago, gaining customers was much simpler; if you had the budget you simply opened the biggest, most prominent stores and bought the best advertising space. If your products were good or desirable enough, you’d probably get the customers. This approach still exists online: it’s called paid search and it unquestionably works.

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But how do you attract and retain customers when you don’t have the budget equivalent of a developing nation’s GDP? If paid search is the giant, flagship high street store (and purely for the purposes of this analogy, it is), then modern marketing campaigns are the equivalent of the independent shop down the side street that everybody is talking about.

This coming year, brands will be looking to attract new customers and most importantly, get those customers talking to other potential new ones. Online PR and outreach campaigns are set to continue to grow in 2016. In short, retailers will need a constantly evolving and updating content marketing & PR strategy that fits their customers and their brand. But that throws up another problem…

For tips on acquisition and retention listen to our recent Podcast with Simon Swan on the importance of knowing your audience.

2. Messaging Apps

For a long time there’s been an elephant in the room. We know that billions of people around the world use messaging apps like WhatsApp, Viber, Facebook Messenger etc. but as marketers and retailers there’s been comparatively little discussion on how these platforms can be integrated into our marketing strategies. The fact that the big 4, messaging apps now have more active monthly users than the big 4 social networking apps should be evidence enough that this will not only be on the agenda at marketing meetings across the globe, but will also be one of the biggest challenges of 2016 for retailers.

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In his excellent post, Chris Messina talks about 2016 being the year of ‘Conversational Commerce’ and cites Uber’s integration into Facebook Messenger as one of the first big examples of this. WhatsApp are also openly developing and testing tools that allow retailers and consumers to communicate.

How brands and agencies approach this conversational commerce could be the differentiating factor between those retailers who have a good 2016, those that have a bad one and those who take it to another level.

As we’ll discover in the next point, this again opens up another can of worms.

3. Mobile Experience & Engagement

This isn’t news to anyone but we’re going to say it anyway, mobile is essential to any business that operates online. In 2013 in the US, mobile accounted for nearly 25% of ecommerce revenue, or in real terms, $60billion. In 2015 in the UK, retailers missed out on a potential £6.6billion by not going mobile. By 2024, that it’s estimated that UK consumers will spend £53.6 billion using smartphones or tablets.

But, simply being there isn’t enough; one of the biggest challenges in 2016 will be how well retailers utilise mobile. We know that many people use their phones and tablets to research products, sometimes looking for cheaper prices on an item while they are in a store, but how can retailers take it further, without going too far?

A hypothetical example: push notifications or emails with a discount code can work well for ecommerce, but what about sending these when a user walks past your store in the high street? Would that be considered too intrusive/creepy/annoying for a customer?

That’s an extreme example and there might even be some data protection and privacy issues there… I haven’t checked, but the point is, mobile has huge potential for retailers to be incredibly successful but it also creates opportunities for disaster not seen since Eve decided she fancied an apple… It has to be done, but it has to be done right.

I get annoyed at being spammed by companies who I’ve actually signed up to receive notifications and emails from, let alone those I haven’t. While having permission certainly makes it legal, it doesn’t make it effective and will those retailers who take on a more passive role be those who are most effective in the idea of conversational commerce? Or will it be those who go and actively talk to consumers, despite risking annoying people?

It remains to be seen how retailers are going to handle these challenges in 2016. More interesting though, perhaps, is how will we, the consumer, react to the potentially intrusive nature of these changes?

If you enjoyed reading this, you may also enjoy our post looking at the Top 3 Challenges Facing Hotel Companies in 2016. You can read that here.

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