For Immediate Release
Chicago, IL – November 21, 2016 – Today, Zacks Equity Research discusses the Retail, Part 2, including Target Corp. (NYSE:(TGT - Free Report) -Free Report),Wal-Mart Stores Inc. (NYSE:(WMT - Free Report) -Free Report),Amazon.com Inc. (Nasdaq:(AMZN - Free Report) -Free Report),Macy’s Inc. (NYSE:(M - Free Report) -Free Report) and Avis Budget Group Inc. (Nasdaq:(CAR - Free Report) - Free Report).
Industry: Retail, Part 2
The U.S. market is gearing up for the holidays. Retailers have already flooded the market with offers for the soon-approaching Thanksgiving and Black Friday shopping bonanza, marking the busiest shopping days of the year. Though retail outlets are generally closed on Thanksgiving Day, many operators have been opening stores Thursday night to cash-in early on Black Friday enthusiasm.
Right after Black Friday is Cyber Monday, giving special online deals and coupons. Cyber Monday is generally an ‘online only’ day, whereas the Black Friday deals are available both in stores and online. Some of the strategies adopted by these retailers include early store openings, extended holiday deals to tempt customers to shop ahead of the traditional Black Friday and Cyber Monday weeks, free shipping, price matching and many more.
Among retailers that have already kicked off their holiday offerings, the notable ones are Target Corp. (NYSE:(TGT - Free Report) -Free Report) andWal-Mart Stores Inc. (NYSE:(WMT - Free Report) -Free Report). Also,Amazon.com Inc. (Nasdaq:(AMZN - Free Report) - Free Report) has started its Black Friday Early Countdown Deals Week, which features lightning deals for its prime members.
At this time of the year, consumers spend -- no holds barred. As per data compiled by Prosper Insights for the nation's largest retail trade group, National Retail Federation (NRF), the American consumer estimates to spend an average of $935.58 during the holiday season this year.
NRF expects retail sales in the holiday season (November and December) to jump 3.6% to $655.8 billion, above the 3.2% growth registered last year. Online sales for the season are expected to increase 7–10% to approximately $117 billion.
Long-Term Trends Ruling the Sector
As revealed by Marian Salzman, CEO of Havas PR North America on the final day of Retail’s BIG Show 2016, there are two trends that are here to stay. The first is the growing uneasiness in everyone’s lives and the second is an addiction to the tech world. With these trends ruling the minds of people, it is essential that retailers innovate new ways to make life easier for consumers and complement their digitized ways.
With the increasing influence of technology on the buying patterns of consumers, the general retail sector trends set to rule the future are jotted below:
Omni-channel Eliminates Retail Pure-Plays: Omni-channel, which emerged as an option to offer more touch points and multiple channels to customers, has gone beyond this simple definition. The cross-channel sales mantra now requires every retailer, whether online or brick and mortar, to bring together both physical and digital systems to serve omni-customers. As a result, retail pure-plays, both online and offline, are now turning omni-channel. This means online retailers are coming up with physical stores or pop-up shops to satisfy customers and vice versa.
Here, the prime objective is to bridge the gap between a physical and an ecommerce store of any particular retailer. For example,Macy’s Inc. (NYSE:(M - Free Report) - Free Report) makes the most of its omni-channel presence with services like click-and-collect. Additionally, the company’s site allows customers to access the inventory at its local stores, so that they can check the availability of a product at the nearest store, purchase it and have it picked up or arrange for same-day delivery. In another online feature, Macy’s mobile app allows customers to scan bar codes of products at stores and check online reviews, promotions and the like.
Growth of Off-Price Retailing: A recent trend shows that apart from e-commerce, the rise of off-price retailing is making competition fiercer for retailers. Off-price retailers are doing a good job, unlike department stores and specialty clothing retailers. Customers today are looking for value, which means reasonable and quality merchandise. Off-price retailers offer immense value as they purchase their inventory at discounts.
In contrast, department and specialty retailers have to resort to mark downs from time to time in order to clear their inventory. This has driven a major shift in consumer preferences to off-priced merchandise, making department and specialty store irrelevant to consumers.
Expanded Payments Options: With retail undergoing a sea change, the modes of payment while shopping have also evolved dramatically. The increasing use of mobile payments and the EMV mandate in the U.S. induced retailers to remodel their payment terminals to accept multiple options like mobile payments and EMV cards.
Some of the available payment solutions are PayPal’s PayPal Here Chip Card reader, Mercury and Poynt, which equip retailers with different payment accepting options. These devices or hardware ensure compatibility with iOS and Android devices, magnetic cards, EMV, QR codes and NFC payments such as Apple Pay, Android Pay and Samsung Pay.
Car rental company, Avis Budget Group Inc. (Nasdaq:(CAR - Free Report) - Free Report), recently introduced a new payment option with MasterPass by Master Card, wherein travelers can make advance payments for their rentals while making reservations on Avis.com and Budget.com.
Technology-Friendly Brick & Mortar Stores: With shoppers increasingly becoming tech savvy, brick and mortar stores need to leave their old-fashioned layout behind and improvise by adopting innovative in-store technologies. With rising demand for convenient delivery and alternative payment solutions, all at affordable prices, technology is bound to play a key role in growth. This is because consumers are becoming increasingly dependent on their mobile phones and other digital devices to buy goods.
The simplest way to execute this is through in-store mobile devices, through which customers can make payments, see product demonstrations, gather information and connect to social networks. Further, retailers are exploring new ways to use mobile devices in store. As a result, they intend to develop mobile apps that will track customers as they shop and send them tailored offers on products in sections they are in; recommend items based on past purchases; or allow them to program automated shopping lists.
In-store technologies, that customers look for these days include mobile point of sales, price checkers, self-checkout payment lanes, information kiosks, and digital signage among others. Other innovative technologies to engage customers both in store and elsewhere are smart shelves, Wi-Fi hot spots, point-of-sale (POS) systems, virtual storefronts and endless aisles.
Reinvention of Loyalty Programs: With perpetual changes in industry trends, the importance of rewards and promotions for customers has been taken over by value, track record and convenience. Hence, the traditional loyalty programs have to be clubbed with customized rewards, great products and buying convenience in order to be successful.
Further, adding the tech aspect to these programs will enhance their value. Hence, the traditional loyalty scheme needs to be replaced with customer-friendly and easily redeemable rewards.
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