The retail industry is undergoing a massive transformation driven by consumers' adoption of new digital technologies. By 2020, brick-and-mortar retailers will need to fundamentally change how they do business to survive. Seven key trends will impact brick-and-mortar stores: leveraging social media data; embracing "showrooming"; tailoring store inventories; rationalizing store sizes; using mobile technologies; fulfilling online orders from stores; and developing "dark stores" for online order fulfillment. To adapt, retailers must implement an integrated online and in-store shopping experience, understand demand across all channels, customize product assortments for each customer, and enable flexible, real-time supply chains.

1. T H O U G H T L E A D E R S H I P
The retail industry is in the midst of a massive transformation
driven by consumers’rapid adoption of new digital technologies.
By the year 2020, the retail landscape will have fundamentally
changed how every retailer will go to market. No segment of
retail will be more impacted than the brick-and-mortar store.
Here are seven trends brick-and-mortar retailers should consider
and what they can do to leverage their stores to become
retail winners.
1. Social networks – the wealth of information about
consumer shopping behavior and preferences available in
social networks is untapped gold for retailers. By leveraging
the right customer analytics tools, retailers can effectively
mine this data to gain insights into what consumers want
to buy and channel these insights into more effective
merchandising plans and promotions. Conversely, retailers
Retail 2020: Seven Trends Impacting
Brick-and-Mortar Retailers
BY SCOT T WELTY, VICE PRESIDENT, RETAIL STRATEGY, JDA SOFT WARE
can leverage social networks to build relationships and
become trusted brands to influence what and how
consumers buy.
2. Showrooming – the phenomenon of shoppers coming to
brick-and-mortar stores to examine merchandise they later
buy online is a paradigm shift that is here to stay. Rather than
trying to prevent the inevitable, brick-and-mortar retailers
must embrace it as an opportunity to engage shoppers in
their stores to grow revenue and loyalty both online and
in physical channels. This will require better trained and
equipped store associates with clienteling and assisted-
selling tools, new service-based store layouts with curated
assortments, and greater store autonomy to leverage local
events, negotiate prices, and cater to local demographics and
shopping preferences.

2. T H O U G H T L E A D E R S H I P
3. Store-specific assortments – This is an extension of
embracing“showrooming”and the local consumer. The
era of“push-based”mass merchandising is a thing of the
past. Retailers must cater to the local consumer, segment
and curate assortments according to their preferences as
gleaned from their all-channel purchases, and create store-
specific planograms that maximize shelf-level performance.
4. Store-size rationalization – With the changing role
of stores from big boxes jammed full of inventory to
destinations for entertainment, socializing and the
total shopping experience, retailers will quickly need to
reevaluate and rationalize their entire real estate strategy.
Will the traditional mall anchor stores move to smaller
strip centers? Should once abandoned rural locations be
reconsidered? Retailers must understand the new role of
physical channels in an all-channel commerce environment
and adjust store sizes, layouts, assortments, fixture
arrangement and“entertainment”factors accordingly to
deliver a seamless brand experience.
5. Near-field communication – In addition to mining
social networks, retailers must begin leveraging near-field
communication technologies within their stores to better
understand how shoppers move through the store to online
purchasing decisions, where their interests lie and to offer
them contextual, real-time options through mobile apps
and interactive store displays that contribute to exciting and
relevant new customer shopping experiences.
6. Growth in order fulfillment from stores – one aspect of
the all-channel shopping experience that is popular with
consumers is the ability to order online and then pick up the
merchandise from their local store. This requires traditional
retailers to re-examine policies on staffing, compensation,
task assignment, inventory planning and sales reporting.
Fulfilling online orders from stores raises new issues such
as not cannibalizing inventory at the expense of foot traffic
and how to measure and compensate store associates and
managers for sales made online, but fulfilled in the store—for
example, where is revenue for the sale assigned?
7. Growth of the“dark store”- Retailers have started to turn
strategically placed, but underperforming stores into non-
selling“dark stores”designed to fulfill online orders for same-
day or next-day deliveries. This practice will require massive
changes to the retail space and tremendous focus on how
they source, fulfill and deliver products in a timely fashion
through supply chain planning and warehouse management
execution. It must also be combined with a flexible and
dynamic transportation network in order to move goods
profitably with greater emphasis on collaboration
with suppliers.

3. T H O U G H T L E A D E R S H I P
Scott Welty is vice president,
retail strategy, JDA Software.
With widespread retail
experience and a focus on
business process optimization,
Welty has helped hundreds of companies
select the proper solutions to attain
increased revenues, profits and efficiencies.
Profit-based distributed inventory management – As
retailers evolve supply chain operations from single channel
transactions to all-channel order orchestration, processes
become more complex, and thus, more prone to escalating
costs. Therefore, to ensure the profitability of all-channel
operations, supply chain solutions must carefully balance
the cost and service variables in distributed inventory
management. This requires a real-time view of orders, inventory
and expected deliveries from suppliers.
There is no question that life for brick-and-mortar stores in 2020
will look vastly different than it does today. But the change
is already in full swing. Retailers who want to survive and be
winners must start their transformation now. Do you have
the right people, the right infrastructure, and the real-time
supporting systems for all-channel commerce, store operations
and supply chain management to compete and thrive in 2020?
It would be unwise to let your competitors get there first.
www.jda.com | info@jda.com | +1 800 479 7382
Brick-and-mortar retailers who want to not only survive these
seven trends, but also leverage them to become retail leaders in
2020 must consider the entire shopping ecosystem to excel in
the following five disciplines.
Deliver an all-channel shopping experience – Consumers
want a single, consistent shopping experience regardless of
which channel they choose to engage your brand at any given
moment. But this entails more than providing a consistent look
and feel across channels. It requires that retailers have a 360
degree view of the customer, using contextual data to create
personal marketing strategies that engage the customer based
on their unique shopping patterns and preferences.
All-channel demand sensing – Creating a seamless all-channel
shopping experience begins with accurately sensing demand
across all channels simultaneously to create a single forecast
of consumer shopping behavior. Using disparate forecasts
from each channel is no longer an efficient or effective practice
because that is not how consumers shop today. Therefore,
retailers must break down the demand silos and create a
single, unified version of demand truth to feed the all-channel
forecast engine.
Customer-centric channel assortments – By leveraging
the all-channel demand forecast and 360 degree view of the
customer, retailers can create curated assortments tailored
to the customer’s shopping patterns and preferences. It is
important to recognize here that the channel of demand
(where the order is placed) may often be different from the
channel of fulfillment (where the merchandise is picked up or
shipped from). The curated assortments must be coordinated
with the customer’s channel of demand while inventory and
distribution operations must be coordinated with the
channel of fulfillment. Based on the customer and their type
of purchase, these could be the same or separate channels.
Flexible, real-time and responsive supply chains –
Fulfilling the brand promises made to consumers in the
all-channel shopping experience requires supply chains
that are immediately responsive and flexible. This can only
be accomplished with real-time supply chain solutions
encompassing all channels and directing all distribution centers
concurrently. Inventory must be pooled virtually across the
network to support these real-time operations. Segregating
inventory and distribution operations by channel will no longer
be efficient, nor will it provide the level of customer service
demanded by the all-channel shopping experience.