You may have read about our new Retail Guest Blog Series: Trade Secrets in which we are seeking out the brightest and most innovative minds in retail to share their insights and expertise. It is quite fitting that we’d begin this series with Bill Davis, a retail “soothsayer,” journalist and Director at MB&G Consulting. Bill’s expertise lies in retail and information technology, and his interests surround spending time with family and traveling across the globe. So, he brings to the blog a unique perspective on the 2014 holiday retail season as well as what lies ahead in 2015.

We sat down with Bill to discuss a few key questions that will give retailers cues for success in 2015:
DynamicAction: Who do you think came out on top during holiday retailing in 2014 and why? 

Davis: Pure play eTailers and eCommerce/mCommerce focused retailers won this year’s race, as this is where the major growth is found³. Of the more traditional retail names, Macy’s and Old Navy saw solid growth², and we can assume Apple did well based on the exceptional progress of their component suppliers for the iPhone 6. I haven’t seen any numbers for Nordstrom or T.J. Maxx, but I would be interested to see how they performed based on their efforts this year.

While I have seen the National Retail Federation’s (NRF) numbers³, there is not enough detail surrounding that data - I think 2014’s overall growth numbers are lower than NRF predicted and now suggests, and online was higher.⁴

DynamicAction: What lessons do you think retailers learned over the holidays, particularly in terms of Black Friday and Cyber Monday? 

Davis: Black Friday is diminishing in importance to the overall holiday shopping season as retailers open their stores on Thanksgiving and online shopping grows. With the explosion of eCommerce and mCommerce, people can shop 24/7, so there remains little need to rush out and battle the crowds on Black Friday (and was it really all that much fun anyway?). Cyber Monday is growing, but I believe over time this will flatten as eCommerce and mCommerce eliminate the time constraints that physical retail imposes.

DynamicAction: What are your top predictions for retail in 2015?

Davis: eCommerce and mCommerce will continue to grow into the double digits. In-store customer engagement via mobile devices will also continue to establish itself as physical retail attempts to level the playing field against online. For this to happen, though, data must be more effectively used and customer privacy and permissions need to be adhered to at all times. Furthermore, the number of retailers that will continue to close physical locations will increase as online becomes a bigger part of their business. I’m not entirely sure how the excess commercial real estate will be managed and allocated, but this issue will snowball in 2015.

DynamicAction: What will be the biggest challenges for retailers and brands in 2015? 

Davis: Solidifying and stabilizing their technology infrastructure (and this is a multi-year effort). It’s not exciting, and that’s part of the reason why it will prove difficult, but retailers traditionally haven’t been on the leading edge of technology investment and now they are being forced to play catch up with Amazon, Alibaba, eBay and other pure play eTailers. Additionally, customer data and inventory management are two specific areas that come to mind as these will be key omnichannel enablers.

DynamicAction: Give us an example of a retailer or brand who is doing it ‘right’, and tell us why. 

Davis: While I don’t shop there frequently, by all accounts it sounds like Macy’s is making real strides towards becoming fully omnichannel enabled–having pursued multiple initiatives in-store, online as well as via mobile for several years now. That being said, omnichannel retail is an evolutionary process, so they are just further along in their development than their counterparts right now.

Others worth mentioning are Zara’s (Inditex) for its use of item level RFID tagging, Starbucks for their mobile app and payment, Apple and others for their use of in-store beacons, and Rebecca Minkoff’s efforts for their dressing room display. Costco is still crushing it even without eCommerce/mCommerce acting as primary drivers of their business today, which is one reason they are definitely worth watching in my opinion.

DynamicAction: How do you typically shop (online, offline, browse online/shop in-store, browse in-store/shop online). Is there a reason for this?  

Davis: Personally, I am 80%+ online, excluding grocery, as I have been involved in eCommerce since 1994. The convenience just frees up my time and in-store is more work than engaging right now. When I do go into a store, it’s usually to try on new clothing styles that I haven’t purchased before – once I know my size I generally move the transaction online. I also go to stores with my daughters at least once every few months as they find it entertaining. I consider grocery predominantly an in-store necessity, except for some specialty items that I can’t find. The aromas usually make it worth the trip!

DynamicAction: Data understanding is clearly a cornerstone of retail success. Just how important is it?

Davis: Huge. HUGE. Data will need to become a key driver for retailers going forward or they will find themselves at a competitive disadvantage. eCommerce and Amazon have changed the rules of the game here, and physical stores had better find ways to level the playing field, or the migration to online will continue to occur at the same rate, if not higher, over the next several years. Data needs to become information that can drive a retailer’s business.

DynamicAction: Do you have any advice for retailers and brands of today?  

Davis: Experiment. Try something different. Be willing to make mistakes, preferably small ones, and be prepared to modify and change your business model, as the past is not an indicator of the future.  Realize eCommerce and mCommerce are here to stay–and only growing–and adjust your business accordingly.

I was reading an article recently on Tommy Hilfiger about how the company had been struggling during its attempt to move downstream in its efforts to serve a broader customer base. Since then it’s been bought out by a private equity group in London, repositioned back upstream by the two gentleman who ran the European side of the business, aligned with Macy’s, and as a result the company is doing quite well! While it’s best not to wait until the business is on the rocks, retailers and brands have to change things up or risk being marginalized.

DynamicAction: Where do you see retail being in 5 years? 

Davis: Assuming we’re at roughly 7.5% of all U.S. retails sales happening online today, and its taken 20 years to get there, I believe that number will grow to 12%+ for eCommerce/mCommerce, and I think that will have a troubling effect on the commercial real estate market. For physical retail to stem this exodus, the in-store experience needs to become far richer than it is today, and I see only a handful of retailers capable of making that transition. It’s not to say more won’t, but today’s in-store experience has lost a great deal of its luster, and it’s in need of reinvention.

DynamicAction: Please give an example of when you have been affected by the ‘Ghost Economy’. Do you think this is a major problem in retail? 

Davis: I don’t like to single out a retailer, but here’s a perfect example of how I have encountered the “Ghost Economy”.  I absolutely think this is a legitimate problem in retail and will continue to be until retailers can more effectively manage their in-store inventory, which will take several years at least, even for the best ones!

[1]  Holiday season U.S. stores sales down 8 percent in 2014: http://www.reuters.com/article/2015/01/08/us-usa-holidaysales-idUSKBN0KH01P20150108
[2]  Winners and losers of the holiday shopping season: http://www.washingtonpost.com/news/business/wp/2015/01/09/winners-and-losers-of-the-holiday-shopping-season/
[3]  Retail Holiday Sales Increase 4 Percent: http://www.reuters.com/article/2015/01/08/us-usa-holidaysales-idUSKBN0KH01P20150108
[4]  Holiday 2014 in Retrospect: http://omnichannelretailing.com/holiday-2014-retrospect/