Jan 11, 2017

What’s Next in Retail Merchandising? Trends to Watch in 2017

menasha retail merchandising trends The end of the year is a time for retrospection as well as thoughts about the future.
 
So, as we close the book on 2016, let’s look at what made waves in retail merchandising and what kinds of trends and changes we can expect in 2017.
 

Physical vs. Digital: The Balancing Act

 
The state of brick-and-mortar retail stores compared to ecommerce operations seemed gloomy in 2016 if you’re only looking at the numbers.
 
Forbes.com cites an October retail sales report that saw year-over-year declines of 7.3% in department stores and a decline of 4% for electronics stores. Early numbers from Black Friday holiday shopping also indicate consumers were more inclined to shop online than in crowded stores, especially if they were getting the same deals.
 
So much for waiting until Cyber Monday. It was internet sales that smashed records in 2016, growing 22% from 2015. Mobile shopping was particularly impressive, making up the majority of visits (55%) and more than one-third of Black Friday sales (36%).
 
Some retail experts say the decline of brick-and-mortar is connected to oversaturation. In an article for RetailDive.com, two different analysts mentioned the surprising statistic that there is 46 square feet of retail space for every man, woman, and child in the United States.
 

What’s Next?

 
While it’s obvious the retail landscape is evolving, that doesn’t mean there’s no place for physical stores in the future.
 
Pop-up retail is a trend to watch. These temporary stores rent spaces in shopping malls or urban centers to provide a real-life experience for shoppers. This strategy has been popular with some online-only retailers as well as brands that want to reach consumers directly.
 
The fashionable eyewear company Warby Parker, which once only sold products online, chose to open permanent retail locations after seeing success with pop-up shops. Find out more in a  story from Inc. magazine.
 
It’s clear that the future of retail should involve both physical and digital efforts to meet the demands of consumers.
 
Most consumers now conduct research online, often using a mobile device, before visiting a retail location to hold and try out a physical product prior to making a purchase. They also continue using that device for comparison shopping while in the store.
 

Technological Leaps for Retail

 
As consumers change the way they shop, new technologies continue to emerge.
 
One of the biggest winners in this race is Amazon. With voice-activated shopping help from Alexa, its intelligent personal assistant, and same-day grocery delivery through the service AmazonFresh, Jeff Bezos and company are breaking new ground.
 
Amazon is bringing its technology into retail as well. Amazon Go will let shoppers skip the checkout line with what’s being called “Just Walk Out Technology.” In December 2016, Amazon opened its own convenience store in Seattle using the innovation – but only to its employees. The public will get a chance to try out Amazon Go in early 2017.
 
It’s unclear whether Amazon will license this technology to other retailers. Whatever the case, it’s likely someone will eventually develop similar systems, and this concept will revolutionize the way people shop.

 
 

More About Amazon Go

 

 
As previously mentioned, mobile is playing a bigger role in the retail path-to-purchase. Consumers are using retail apps more often. A comScore survey shows U.S. smartphone owners have between six and 10 retail apps downloaded on their devices.
 

What’s Next?

 
Some of the most innovative developments in retail technology may happen inside of stores. For instance, location-based marketing through geofencing, geotargeting, and beaconing could help merge the online and physical shopping experience.
 
Yet another technology trend to watch for in 2017 involves virtual reality (VR) and its cousin, augmented reality (AR). An article from the Harvard Business Review suggests these digital experiences will revolutionize the way people shop.
 
“Applications using either technology stand to eliminate customer pain points, elevate customer service, and create a differentiated, personalized customer experience.”
 
Mobile technology is coming to grocery stores as well. Mintel’s report on 2017 Packaging Trends says half of U.S. consumers are interested in scanning food packages with smartphones to get more information, like where and how fresh produce was farmed.
 

Packaging Design: Simplicity, Authenticity, and Nostalgia

 
Even as technology barrels forward, many consumers are displaying a longing for simpler times. That’s demonstrated in the way throwback packaging design has become quite popular.
 
Take, for example, Miller Lite’s decision to bring a retro look to the beer’s cans and bottles. The brand discovered its customers thought the beer tasted better in the old-school packaging. This shows the power nostalgia has on perception. Packaging that reminds people of good times can actually make food and beverage products taste differently.
 
Besides the vintage look, many brands are also opting for a more natural, artisan, or locally-made feel with their packaging designs. The Brandfolder blog says the handmade appearance comes across as less corporate and more authentic to consumers.
 

What’s Next?

 
With so many choices and purchasing decisions to make, packaging design offers the opportunity for differentiation, especially for commodity products.
 
Look for 2017 packaging trends that help brands stand out by adding value and creating a better user experience. This can be done by making packaging more ergonomic, more intuitive, or more personalized.
 
For instance, there are now innovative color-changing labels that tell consumers how fresh a food product is without trying to read confusing sell-by and use-by dates. In Japan, people can send KitKat candy bars that are ready to mail like postcards, pre-printed with space for addresses and messages.
 
Mintel Senior Food and Drink Analyst, Beth Bloom, says whether it improves functionality or communicates a message, packaging design clearly influences what people choose to buy.
 
“The majority of consumers are paying attention to package format and design, and purchase drivers are either being directly related to, or being communicated through, packaging.”
 

Sustainability: Do the Right Thing

 
In 2016, more brands started going green making major sustainability commitments in regards to their packaging.
 
McDonald’s introduced more environmentally friendly packaging and pledged to source all its fiber-based packaging from recycled or certified sources by 2020.
 
Walmart recently revealed its Sustainable Packaging Playbook, which Packaging Digest describes as a way to reignite the passion around sustainability. It’s meant to serve as a guide for the retail giant’s brand-owner vendors, private label manufacturers, and packaging suppliers.
 
Sustainable packaging is something consumers want. Research from Nielsen shows 41% of consumers it surveyed said sustainable packaging is a key purchasing driver. 66% said they would pay more for products from brands committed to making a positive social and environmental impact.
 
Paper-based packaging is making great strides in sustainability. The American Forest & Paper Association (AFPA) points out that paper is the most-recycled material in the United States. In 2015, the industry recovered 66.8% of paper and cardboard products, which is already very close to its goal of a 70% recovery rate by 2020.
 

What’s Next?

 
The quest for sustainability could bring some unique innovations in the near future. Bioplastics are a potential packaging material derived from renewable sources like vegetable fats and corn starch, agricultural byproducts, or used plastic bottles. Analysts expect the global market for bioplastics to grow at more than 29% annually through the year 2020.
 
Edible packaging is another interesting way to reduce waste. One example is a packaging film being developed from casein, which is a protein found in milk. U.S. Department of Agriculture researchers claim this film is 500 times better than plastic at keeping oxygen away from food … and you can eat it.
 

Consumer Confidence After the Election

 
There’s a lot of speculation about what will happen to the U.S. economy following the results of the 2016 presidential election, which surprised many.
 
At first, it was assumed the election of Donald Trump would create economic uncertainty among consumers, which might hurt retail sales. However, the opposite seemed to occur. Consumers appear quite optimistic about America’s economic future.
 
As Bloomberg reported, consumer confidence soared in November. The University of Michigan’s Consumer Sentiment Index rose by 8.4% from October, the highest one-month gain since 2011. However, the director of the survey says it’s possible the jump reflects relief from the election being over.
 

What’s Next?

 
46% of respondents in the November Consumer Sentiment Index believed “continuous good times are ahead” in the next year. That’s up 11 points from the previous month. This soaring confidence could indicate consumers will be ready to spend in 2017.
 
Analysts point out that President-elect Donald Trump’s proposed reduction of the corporate tax rate to as low as 15% would benefit many retailers, but only over the short term. Bloomberg columnist, Shelly Banjo, says while the rate reduction would boost a retailer’s earnings per share in 2017, that doesn’t necessarily mean an increase in sales.
 

Why Consumers Crave Retail “Experiences” in 2017

 
Whether it’s a creative retail display, an innovative packaging design, or a push towards improved sustainability, the experience brands and retailers deliver is becoming increasingly important.
 
Today’s consumer is more likely to spend extra money on things like travel and fine dining than on material things. That’s especially true among Millennials, and it’s why both online and physical retail efforts should strive to make the shopping experience unforgettable.
 
An amazing retail display creates an experience that makes people glad they got off their couches and into the store. Packaging that provides an experience designed to enhance a consumer’s lifestyle and reflect their values generates loyalty.
 
Packaging is contributing to the online shopping satisfaction, too. Consider how subscription services use the package to provide a unique experience, and how unboxing videos shared online begin with the way a product is packaged.
 
At Menasha, we’re proud to partner with innovative brands that want to use retail displays, packaging design, and graphics packaging to do something unique. Contact us today to find out how Menasha’s end-to-end solutions for product packaging, retail merchandising, and fulfillment services can help your company.