WALKER SANDS FUTURE OF RETAIL 2016

REINVENTING RETAIL: FOUR PREDICTIONS

FOR 2016 AND BEYOND

EXECUTIVE SUMMARY

For the past few years, the Walker Sands Future of Retail study has analyzed the
rise and adoption of emerging retail technology, with a heavy focus on gauging
consumer reaction to potential game-changers like drones, virtual reality and
mobile commerce. The annual report has also documented the changing habits of
todays shoppers as more buying has shifted to e-commerce. Its been a whirlwind
couple of years in retail technology, and our findings have reflected that.
In our third annual consumer survey, the shifts arent quite as dramatic, but that
doesnt make them any less important. Instead of consumer fascination with the
latest headline-grabbing technology, we discovered much more subtle shifts in
consumer opinion and behavior with equally large implications.
On the surface, it might feel like the future of retail has stalled. For example, this
years study shows that e-commerce has reached a saturation point in many ways,
and consumer excitement has waned for some of the sexiest emerging tech. And
unlike recent years, which brought us plenty of big news like Apple Pay, Amazon
Prime Air and Alibabas IPO, much of the past year has seemed like the same old
story.
But digging deeper into the data, we see that the retail technology space is still
undergoing a major transformation its just happening mostly behind the scenes.
The Walker Sands Future of Retail 2016 study, based on a survey of more than
1,400 U.S. consumers, outlines four key areas where retailers should focus their
attention this year:

Growing importance of the supply chain

Over the past three years, our findings have shown that seamless shipping,
delivery and returns have become more and more important to consumers,
making them primary future drivers of e-commerce growth. So its no wonder
fulfillment has become a top investment area for retailers, with 29 percent of
capital expenditures last year going toward solutions like transportation and
logistics, delivery options, order management, inventory visibility and returns
management.1

The rise of luxury e-commerce

Luxury goods have been the clear laggard when it comes to consumers
willingness to shop online. But the product category saw a dramatic spike
this year, with the number of consumers who have purchased a luxury item
like high-end jewelry in the past year more than quadrupling from 2014. This
finding lines up with analyst predictions that online sales of luxury goods
will triple to around $80 billion by 2025, making it one of the fastest-growing
areas of e-commerce.3

Integration of in-store and online experiences

While e-commerce is now a routine part of consumers lives, this years study
reveals theres still a clear preference to shop in physical stores for most
product categories, but a receptiveness to blending the online and brick-andmortar experiences. While less than a third of retailers had implemented
beacon technology in 20152, we found that seven in 10 consumers would
be willing to opt into in-store tracking and mobile push notifications if they
were properly incentivized by retailers. Although beacons have been slow to
take off, this area seems ripe for adoption as retailers like Macys, Target and
Lord & Taylor roll out their beta beacon programs to the masses. And in a
case of bringing the in-store experience online, virtual reality e-commerce
or v-commerce seems to be entering the early-adoption phase and could
represent the next big integration area for the in-store and online shopping
experiences.

Slow mobile payments adoption

Privacy and security concerns remain the primary reasons that consumers are
hesitant to use mobile payment applications. This could explain why adoption
has essentially remained flat year over year, with about a third of consumers
having used these applications. Still, U.S. mobile payment transactions are
expected triple in 2016 to $27 billion,4 a sign that a few eager early adopters
and the growth of Apple Pay could eventually force more widespread changes
in consumer behavior.

The future of retail hasnt plateaued; were simply in an investment and adoption
phase during which retailers practices and consumer behavior hasnt caught
up with technology. As a result, this years study is much more pragmatic than
visionary, focusing on practical recommendations over aspirational technology.

GROWING IMPORTANCE OF THE SUPPLY CHAIN

While e-commerce seems to have reached a saturation point when it comes to the

KEY FINDINGS

number of consumers who shop online, the Walker Sands Future of Retail study

Nearly a third of consumers (31 percent) now shop online at least once a
week, an increase of 41 percent from two years ago.

continues to show a steady increase year-over-year in the frequency of purchases.

Only 9 percent of consumers have used same-day shipping in the past year,
but almost half (49 percent) say same-day shipping would make them shop
more online if it were offered more frequently.

compared to 22 percent in 2014, and almost three-quarters do so at least once

Almost a third of consumers (31 percent) now shop online at least once a week,

Forty percent of consumers expect to receive their first drone-delivered

package in the next two years or less. Less than a third (31 percent) think it
will take more than five years.
Among consumers who dont trust drones to deliver packages, theft and
damaged packages are the top concerns (72 percent each), but safety (68
percent) and privacy (60 percent) seem less risky than they were a year ago.

a month. And the number of consumers who shop less than once a month has
dropped from 38 percent to 27 percent over the same time period.
Our research over the past three years has made it clear that consumers want
their online shopping experiences to be fast and convenient, indicating supply
chain and logistics improvements are fueling growth of online commerce by
making it easier for consumers to shop online more often and receive their orders
faster. Consumer expectations are higher than ever for free and fast shipping,
making flexibility with returns and fulfillment more important than ever.

HOW OFTEN DO YOU SHOP ONLINE?

40%

40%

42%

2014
2015

20%
12%
6%

5%

12%

10%

17%

17%

21%

13%

4%

1-3 times/year
Source: Walker Sands Future of Retail Study 2016

2016

24%

5%

4-6 times/year

7-12 times/year

1+ times/month

1-2 times/week

7%

7%

3+ times/week

WHICH OF THE FOLLOWING WOULD MAKE YOU

MORE LIKELY TO SHOP ONLINE?
SPEED OF SUPPLY CHAIN MATTERS MORE TO FREQUENT ONLINE SHOPPERS
80%
Free
shipping

83%
88%

62%

past two years and has become significantly more influential than other logistics considerations,
even as same-day shipping becomes more prominent. One-day shipping (69 percent) and free

The biggest jump over the past three years has been easier online returns, 58 percent saying a
simpler process could make them shop more online.

69%

While nearly half of consumers (49 percent) say same-day shipping would make them shop

64%

Free
returns /
exchanges

free shipping would make them shop more online. This number has steadily increased over the

returns (68 percent) also continue to be top drivers.

66%
One-day
shipping

Free shipping continues to be the top incentive, with almost nine in 10 consumers reporting that

more online, it appears that relatively few are being given the option. Only one in 10 consumers

65%

(9 percent) have used same-day shipping in the past year, compared to 29 percent for one-day
shipping, 70 percent for two-day shipping and 86 percent for regular shipping. More than half

68%

(51 percent) say they have placed an order online and picked it up in store, which speaks to the
rising popularity of click and collect.

48%
Easier online
returns

51%

While free shipping continues to be a top incentive,

58%

its now a given across the board, with no meaningful

statistical difference in expectations between consumers

41%
Same day
shipping

who shop online multiple times a year and those who

make web purchases only a couple times a year. But

42%

as consumers shop online more frequently, they are

49%

Easier in-store
returns

increasingly persuaded by the speed of the supply chain.

39%

As Amazon and third-party logistics providers make infrastructure improvements that lead to

39%

more efficient inventory management, fulfillment and delivery practices, consumer expectations
44%

Source: Walker Sands Future of Retail Study 2016

As consumers shop
online more frequently,
they are increasingly
persuaded by the speed
of the supply chain.

2014

continue to rise, especially among frequent online shoppers. In fact, consumers who shop online

2015

more than twice a week are twice as likely to be persuaded by same-day shipping as consumers

2016

who shop online only a few times a year (63 percent vs. 32 percent).
5

TOP PURCHASE DRIVERS VS.

FREQUENCY OF ONLINE SHOPPING

The same holds true for consumers who have actually used fast shipping options
over the past 12 months. Among the most frequent online shoppers, half (50
percent) have used one-day shipping and 85 percent have used two-day shipping;
88%

83%

81%

one in 10 have used same-day shipping over in the past year. And two-thirds of those
who shop online multiple times a week have used click and collect (66 percent), which
is four times higher than the most infrequent shoppers. Together, these findings
suggest that in order for retailers to capture their share of future e-commerce growth
which is being driven primarily by increased frequency they need to offer these

68%

habitual online shoppers multiple shipping and delivery options.

63%
58%
53%
47%

45%
40%
38%

An obsession with speed explains why consumers are so excited about the possibility
of drones delivering their packages within the hour. Despite the fact that the FAA

32%
1-3X
/year

CONSUMERS LESS WORRIED ABOUT SAFETY OF DRONES,

AND MORE CONCERNED ABOUT THEFT

likely wont publish its low-altitude airspace regulations for commercial drones until
4-6X
/year

7-12X
/year

1-2X
/month

1-2X
/week

>2X
/week

2019, 40 percent of consumers expect to receive their first drone-delivered package

in the next two years or less. Less than a third (31 percent) think it will take more
than five years.

Source: Walker Sands Future of Retail Study 2016

Furthermore, more than three quarters of consumers (79 percent) say its likely they

Free shipping

Easier online returns

One-day shipping

Same-day shipping

within an hour. And among the most frequent online shoppers, 80 percent are more

Free returns

Easier in-store returns

likely to shop with a retailer that offers drone delivery as an option, compared to half

would select drones as a delivery option if it meant they could receive packages

(53 percent) of the infrequent shoppers.

Almost three-quarters of consumers (73 percent) would be willing to pay for drone
delivery, with the majority saying they would pay up to $10.

WHEN DO YOU THINK YOU WILL ORDER YOUR FIRST

DRONE-DELIVERED PACKAGE?
The number of consumers saying they dont trust
drones for delivery at all held fairly consistent (13
14%
In more than
five years

In the next year

31%

percent in 2016 vs. 12 percent in 2015), but those

objectors are less concerned about safety, privacy
and cost than they were a year ago. Theft and
damaged packages are now the top concerns (72

26%

In the next
two years

percent each), which suggest consumers may now be

more comfortable with the idea of drone technology

Consumers may now

be more comfortable
with the idea of
drone technology but
uncertain about the
personal risks involved
in actual practice.

but uncertain about the personal risks involved in

actual practice.
In the next
five years

30%

WHY WOULD YOU NOT TRUST DRONES TO DELIVER

ANY ITEMS?
(Among those who don't trust drones)

ASSUMING DRONES COULD DELIVER YOUR PACKAGE

WITHIN AN HOUR, HOW LIKELY ARE YOU TO SELECT
THIS AS A DELIVERY OPTION?

Very
unlikely
Somewhat
unlikely

2015
2016

72%

72%

74%
68%

58%

64%

69%
60%

57%

53%

9%

52%

11%
40%

Very likely

N/A
Somewhat likely

39%

Source: Walker Sands Future of Retail Study 2016

Theft
concerns

Damaged
packages

Safety
concerns

Privacy
concerns

Technology
concerns

Cost

Source: Walker Sands Future of Retail Study 2016

TAKEAWAY: RETAILERS MUST INVEST IN SUPPLY CHAIN

AND LOGISTICS
According to a survey of retail and consumer goods CEOs
conducted by PwC and JDA Software, only 19 percent of the top
250 retailers can fulfill omni-channel demand profitably, with the
biggest challenges being transportation and logistics specifically,
shipping, delivery and returns.5 It makes sense then that 71 percent
of the executives in that study cited omni-channel fulfillment as a
top or high priority for future investment.
The Walker Sands Future of Retail study shows why supply chain
and logistics technology is such an important area of focus. Its
one of the places that will make or break retailers in the years
ahead, especially as emerging tech like drones inflate consumer
expectations even more.

INTEGRATION OF IN-STORE AND ONLINE EXPERIENCES

KEY FINDINGS
While the pace of online shopping continues to accelerate, consumers still

The majority of shoppers prefer to make purchases in physical stores for all
product categories except for books (68 percent prefer online), consumer
electronics (67 percent) and office supplies (51 percent).

prefer to shop in store for most products, which emphasizes the importance of

Consumers have the strongest in-store preference for food and groceries
(92 percent), but more than two-thirds would be willing to buy groceries on
Amazon (68 percent) or a grocers website (70 percent).

opportunity for retailers that are able to bring together a hybrid strategy that

Only 6 percent of consumers have used in-store beacons; however, among

shoppers who have never used the technology, 70 percent would be willing
to opt into the service if retailers offered the right incentives.
More than half of consumers (55 percent) think virtual reality e-commerce
will impact their buying decisions, and 62 percent are interested in trying
VR shopping. Nearly a quarter (22 percent) plan to buy a VR device in the
coming year.

combining convenience with experience. And yet, our research also shows that
shoppers are open to buying almost anything online, highlighting the potential
combines the best of both worlds linked through technology.
In-store technology like beacons have received a lot of attention over the past
few years but have been slow to take off. However, the stage seems set for
widespread adoption as consumers warm up to the idea and retailers roll out
broader programs. This growing emphasis on the marriage of in-store and
online retail environment also extends to technology like virtual reality, another
area of excitement for consumers and retailers alike.

PHYSICAL STORES STILL RULE MOST PRODUCT CATEGORIES

Despite more consumers shopping online on a regular basis, they still shop for most products
in physical stores. In fact, in the past year, more consumers have purchased items in store than
on Amazon or a brands website for most product categories everything except for books and
electronics. Clothing and apparel is the only product category where brand websites make a strong
showing, demonstrating the uphill online battle most retailers face against Amazon and other thirdparty retailers.

Clothing and apparel is the only product category

where brand websites make a strong showing,
demonstrating the uphill online battle most retailers
face against Amazon and other third-party retailers.

THROUGH WHICH OF THE FOLLOWING CHANNELS HAVE YOU PURCHASED

THE FOLLOWING PRODUCTS IN THE PAST YEAR?

6%

42%

17%

2%

3%

10%

10%

7%

5%

11%

6%

67%

55%

70%

23%

17%

39%

22%

39%

27%

28%

31%

42%

78%

51%

86%

90%

77%

30%

65%

62%

40%

68%

20%

4%

9%

7%

6%

13%

54%

20%

32%

47%

24%

Books

Clothing and
apparel

Electronics

Consumer
packaged goods

Food/grocery

Household
goods

Luxury
items

Office supplies

Pet supplies

Sporting goods

Tools

Brand website

Amazon or other third-party online retailers

Physical store

I have not purchased this product

Source: Walker Sands Future of Retail Study 2016

10

The same trends hold true when it comes to consumer preferences. The majority of shoppers prefer to
make purchases in store for all product categories except for books (68 percent prefer online), consumer
electronics (67 percent) and office supplies (51 percent). Consumers have the strongest in-store preference
for food and groceries (92 percent) and the closely related consumer packaged goods category (77 percent),
a sign that grocers and CPG brands still have a long way to go to establish a viable e-commerce presence.

DO YOU PREFER TO SHOP IN STORE OR ONLINE FOR THE FOLLOWING PRODUCTS?

Books
Electronics
Office
supplies
Sporting goods
Luxury items
Pet supplies
Tools
Household
goods
Clothing and
apparel
Consumer
packaged goods
Food/grocery

32%

68%

33%

67%
49%

In store
Online

51%
56%

44%
65%

35%

66%

34%

67%

33%

71%

29%

76%

24%

77%

23%
92%

Source: Walker Sands Future

of Retail Study 2016

5%
11

When asked which products they would never buy online, the majority of

These findings present a major opportunity for retailers able to

offer a blend of innovative e-commerce and in-store technology that
work in tandem. In particular, beacons and virtual reality seem to
hold the most potential for offering consumers a hybrid shopping
experience.

consumers (66 percent) said they are open to making purchases from any channel,
including brand websites and third-party retailer sites. Again, consumers are
most resistant to buying food and groceries online, with almost a third saying
they would never do their grocery shopping on a brands website (30 percent) or
Amazon (32 percent). But 56 percent of consumers say they would do their grocery
shopping on any channel, showing potential even for this laggard category.

THROUGH WHICH OF THE FOLLOWING CHANNELS WOULD YOU NEVER CONSIDER PURCHASING THE FOLLOWING PRODUCTS?

10%

8%

17%

18%

30%

10%

13%

8%

12%

7%

8%

5%

9%

6%

15%

32%

9%

16%

7%

11%

7%

8%

5%

5%

6%

6%

8%

5%

7%

5%

6%

5%

5%

84%

84%

86%

73%

56%

83%

76%

76%

81%

86%

85%

Pet supplies

Sporting goods

Tools

Books

Brand website

Clothing and
apparel

Electronics

Consumer
packaged goods

Amazon or other third-party online retailers

Food/grocery

Household
goods

Physical store

Luxury
items

Office supplies

I would buy this product from any of these channels

Source: Walker Sands Future

of Retail Study 2016

12

BEACONS COULD TAKE OFF WITH THE RIGHT INCENTIVES

FROM RETAILERS

WHAT WOULD CAUSE YOU TO OPT INTO IN-STORE MOBILE

TRACKING AND PUSH NOTIFICATIONS?
(Among those who have never used the technology before)

Although location-based technology, such as geo-targeting and beacons,

hasnt taken off as soon as some retailers expected, our research shows
that the majority of consumers are open to the mobile technology if
offered the proper incentives. So while more than 60 percent of shoppers

Discounts/coupons

say they are not currently receptive to push notifications from retailers or

Loyalty rewards

in-store mobile tracking, two-thirds (67 percent) say it could improve their
in-store shopping experience; in most cases, a discount or better in-store

61%
47%
34%

Faster checkout

experience would persuade them to give the technology a try.

New product
notifications

11%

When it comes to location-based smartphone technology that would

Personalized recommendations

11%

improve their in-store shopping experience, consumers point to coupons

Nothing: I will never opt into instore tracking

(52 percent); additional information, including product content and reviews

(36 percent); and indoor store mapping showing them aisle layouts and

30%

Source: Walker Sands Future of Retail Study 2016

product locations (30 percent). Only a third of consumers (33 percent) say
theyre not open to any location-based store technology.
Currently, only 6 percent of consumers have used in-store tracking
technology through beacons; however, among shoppers who have never
used beacons before, only 30 percent say they will never opt into the
service. When asked what would cause them to opt into in-store mobile
tracking and push notifications, those consumers cite discounts (61
percent), loyalty rewards (47 percent) and faster checkout (34 percent).

Whats holding consumers back from opting in? Most say they are worried about
privacy (64 percent), message overload (64 percent) and security (55 percent)
all factors retailers can control. Almost half (46 percent) say they find it creepy, a
perception challenge that will be much more difficult for retailers to overcome.
More than a third of consumers cite the hassle of downloading the retailers
app, but this appears to be a relatively minor obstacle compared to the other
objections.

13

WHAT IS PREVENTING YOU FROM RECEIVING IN-STORE

PUSH NOTIFICATIONS WHILE SHOPPING IN STORE?
Privacy concerns

64%

Fear of message overload

64%

With relatively few retailers experimenting

with in-store technology like beacons and
so few consumers having experienced it
so far, this is still a huge area of potential
growth for the future of retail. If retailers can

55%

Security concerns

figure out the right balance of incentives and

discretion, we could see beacons explode in

46%

Creepiness factor

If retailers can figure

out the right balance
of incentives and
discretion, we could see
beacons explode in the
near future.

the near future.

39%

Hassle of downloading retailer app

CLOTHING HOLDS THE MOST POTENTIAL FOR VR COMMERCE

Nothing: I have used in-store
tracking technology

6%
Virtual reality is another area of emerging technology that presents retailers
an opportunity to bring together online and in-store experiences. However,

Source: Walker Sands Future of Retail Study 2016

while more than half (55 percent) of consumers say they expect VR will impact

HOW DO YOU ANTICIPATE THE INTRODUCTION OF

VIRTUAL REALITY TO E-COMMERCE WILL IMPACT YOUR
BUYING DECISIONS?
45%

their buying decisions, consumer interest may be waning, down from 63

percent a year ago. This is likely due to the slow and unimpressive splash VR
has made so far in the retail space.
But if done correctly, virtual reality has the opportunity to be an effective
e-commerce driver, with a third of consumers saying they would likely shop

33%

more with retailers that offer a VR experience and a quarter saying it would

24%
17%

cause them to purchase more online. And it could be a good way to bridge
the gap between in store and online, with only 17 percent of consumers
reporting they think VR would make them less likely to visit a physical store.

I would be more
likely to shop with
retailers that offer a
VR experience

I would be more
likely to purchase
more online

Source: Walker Sands Future of Retail Study 2016

I dont believe
I would be less likely
virtual reality would
to visit a physical
impact my shopping
retail store
experience

14

FOR WHICH OF THE FOLLOWING PRODUCTS WOULD

YOU CONSIDER SHOPPING VIA VIRTUAL REALITY?

Among those who would consider virtual reality shopping, the product categories generating
the most interest include clothing and apparel (57 percent), consumer electronics (41 percent)

Clothing and apparel

57%
41%

Electronics

Household goods

40%

Books

34%

Sporting goods

33%

Tools

32%

29%

Office supplies

Consumer packaged goods

Food/grocery

I would not shop with VR

In another indication that consumers want their online and in-store shopping experiences to
merge, 63 percent say they would be interested in fitting rooms outfitted with VR technology
that would allow them to virtually try on items while in store. As the lines between the two
retail worlds get blurrier, VR could bring them together in a seamless and integrated way.

34%

Luxury items

Pet supplies

and household goods (40 percent).

25%

24%
20%

28%

TAKEAWAY: CONSUMERS EMBRACE THE BEST OF ONLINE AND

IN-STORE EXPERIENCES
More than half of retail executives (56 percent) increased their store operations technology
budgets in 2015, including a quarter who implemented beacon technology, according
to Retail Touchpoints.6 And BI Intelligence estimates that beacon-influenced sales at top
retailers will grow tenfold in 2016 from approximately $4 billion last year.7 Clearly, beacons
are poised for prime time.
Virtual reality, on the other hand, is still in its infancy, with early applications mostly
focusing video and gaming. But VR e-commerce solutions are already hitting the market,
with Gear Commerce predicting that v-commerce will grow to more than $425 million in
sales in 2016.8 And our Future of Retail findings show that consumers are intrigued by
the technology, even if they havent experienced it yet 22 percent plan to purchase a VR
device in the next year, including Oculus Rift (8 percent), Samsung Gear (4 percent) and Sony
Playstation PR (4 percent) making it an area to watch in the next couple of years.
In the coming years, we expect to see that consumer preference for buying specific products
in a brick-and-mortar store or on a website will decline, and most shoppers will gravitate
toward the best brand experience, regardless of physical or virtual location, and embrace
the best of both worlds.

Source: Walker Sands Future of Retail Study 2016

15

THE RISE OF LUXURY E-COMMERCE

While luxury commerce has had a slow start

KEY FINDINGS

in the online space, more than four times

A quarter of consumers (27 percent) purchased a luxury item online in the
past year, up from 10 percent in 2015 and 6 percent in 2014.

as many consumers made luxury purchases

A third of consumers ages 18 to 25 have purchased a luxury item online in

the past year, compared to only 6 percent of those 61 and older.

years ago. With estimates that online sales

Among consumers who have purchased luxury goods in the past year, 38

percent say they would consider buying luxury products via virtual reality.

THROUGH WHICH OF THESE CHANNELS HAVE YOU

PURCHASED LUXURY ITEMS IN THE PAST YEAR?
2015

22%

2016

online in the past year compared to two

could make up to 40 percent of luxury sales
by 2020,9 the luxury industry is seeing much

Luxury players have

reached a tipping point
where they can quickly
scale their e-commerce
operations

larger growth than many other areas of

e-commerce.
The Future of Retail 2016 findings show that 27 percent of consumers
purchased a luxury item online in the past year, up from 10 percent in 2015
and a mere 6 percent in 2014. In particular, Amazon and other third-party
retailer sites have come on strong, jumping from 5 percent to 22 percent year
over year.

10%
5%

7%

With a report from McKinsey predicting that luxury players have reached a
tipping point where they can quickly scale their e-commerce operations now
that online sales have reached 6 to 7 percent of revenue this area is ripe for

Amazon or other third-party online

retailer

growth over the next decade. 10

Brand website

Source: Walker Sands Future of Retail Study 2016

16

PURCHASED LUXURY ITEMS ONLINE IN THE PAST YEAR,

BY AGE GROUP
32%

MILLENNIALS DRIVING GROWTH IN LUXURY

E-COMMERCE SALES

31%
25%
22%

Not only are consumers ages 35 and under the most likely to say theyve
purchased luxury goods in the past year in any channel (59 percent, compared
to 46 percent of those over the age of 35), theyre also most likely to have
purchased luxury items online. This indicates the massive growth analysts
6%

have predicted in the next few years is likely to come primarily from younger
shoppers.

18-25

26-35

36-45

46-60

61+

Despite the sharp increase in younger generations shopping for these products
online, our research also reveals that older generations are open to online
shopping channels for luxury products, indicating major opportunities for

WILLINGNESS TO PURCHASE LUXURY ITEMS ON ANY

CHANNEL, BY AGE GROUP
70%

space. In all age groups except the 61 and older segment, more than half of
consumers say they would purchase luxury items on any channel, including
brand websites and third-party retailers.

76%

69%

retailers able to create a more personalized shopping experience in the luxury

Compared to the average shopper, luxury

60%

buyers (categorized as those who have

made at least one luxury purchase in the
40%

past year) are more likely to make frequent

online purchases at least once or twice per
week (39 percent, compared to 31 percent).
But theyre no more likely to say they are

As more consumers
complete their shopping
online, they become more
comfortable with the
thought of purchasing more
expensive items online.

open to purchasing luxury goods online

across channels, or say that they would
18-25

26-35

36-45

46-60

61+

spend any more online without seeing goods first. In other words, as more
consumers complete their shopping online, they become more comfortable with

Source: Walker Sands Future of Retail Study 2016

the thought of purchasing more expensive items online.

17

VIRTUAL REALITY COULD PRESENT OPPORTUNITY

FOR LUXURY BRANDS
So how can luxury retailers best take advantage of this online-ready market?
Perhaps the answer to bringing the two together lies in virtual reality. Luxury
buyers are more likely than the average consumer to say theyre interested in
using an online shopping device (71 percent), such as Oculus Rift, compared
to the average consumer (63 percent). Theyre also more likely to think VR
will impact their shopping experience (64 percent, compared to 55 percent of
average consumers; that number dips to 48 percent for those who have not
purchased luxury in the past year). More than a quarter of consumers who
have purchased luxury in the past year (28 percent) say they plan to purchase
some kind of VR device in the next year, in addition to the 2 percent who say
they already own one (compared to 15 percent for consumers who havent
purchased luxury).
But VR could also represent an opportunity for luxury to take advantage
of new shoppers. Of those who have purchased luxury goods in the past
year, almost two in five (38 percent) say they would consider buying luxury
products via virtual reality, and those who havent purchased luxury in the
past year arent far behind with more than three in 10 reporting they would
be interested in shopping luxury via virtual reality (31 percent).

TAKEAWAY: LUXURY BRANDS TURNING

INTO DIGITAL NATIVES
While its clear consumers are open to luxury shopping online and
that emerging technologies can offer new and personalized ways to
bridge the online and in-store gap, Bain Consultants reported in a
recent Bloomberg Businessweek article that, an estimated 40 percent
of luxury brands still dont sell online.11 Many moves within the past
few months show a changing attitude from some late adopters. First
steps for retailers in this space will be figuring out where they can
best add value to their shoppers in the online market.
But thats not to say some retailers havent already gotten started.
Super-luxury brand Chanel has announced that it will be opening an
e-commerce store later this year, and companies such as Burberry
and Estee Lauder are now essentially natives to the digital space.12
Like many retail sectors, consumers still want access to the instore experience, so luxurys biggest challenge lies in bringing the
two together. New and emerging technologies, such as VR and
personalization capabilities offered by online browsing and shopping,
could not only help online growth of luxury, but also introduce more
online-savvy shoppers to the market. Its no surprise millennials
expect the online experience theyre used to with the luxury market, so
in the years to come brands will need to go online to keep customer
loyalty from younger generations.

18

SLOW MOBILE PAYMENTS ADOPTION

KEY FINDINGS

Despite the rise of mobile payment apps like Apple Pay and Android Pay over
the past couple years, traditional payments still reign supreme. This years

More than a third of consumers (36 percent) have used a mobile payment
app in store in the past year, and 33 percent have used a peer-to-peer
payment app.
The majority of consumers cite security (61 percent) and privacy (58
percent) as the two primary factors that make them hesitant to use mobile
payment applications.
At 19 percent, Android Pay tops the list of mobile payments consumers are
using, followed by a retailers mobile app (12 percent) and Apple Pay (11
percent).

findings show that consumers still largely prefer credit and debit cards for retail
purchases, and very few have accepted mobile payments as the norm.
A little more than a third of consumers (36 percent) have used some sort of
mobile payment applications in the past year, up slightly from a year ago (34
percent); however, shoppers consider them the least secure form of payment.
This distrust could be one of the main reasons that mobile payments have
been slow to reach mainstream adoption.

19

WHICH OF THE FOLLOWING FORMS OF PAYMENT DO YOU

FEEL IS MOST SECURE?
Check
Cryptocurrency

1%

1%

Mobile payments

2%

SECURITY CONCERNS MAKE CONSUMERS HESITANT TO EMBRACE

MOBILE PAYMENTS
When asked about which forms of payment they find most secure, cash topped
the list at almost half (46 percent), followed by credit cards (27 percent) and debit
cards (22 percent). Surprisingly, consumer trust in both credit and debit cards has

Debit card

22%

46% Cash

increased year over year, which might indicate that banks have regained some
consumer trust despite recent retail hacking scandals. Mobile payments ranked
last each of the past two years at 1 percent.

2016

So what are the barriers to mobile adoption? The majority of consumers cite
security (61 percent) and privacy (58 percent) as the two primary factors that make
Credit card

27%

them hesitant to use mobile payment applications. Some consumers also blamed
retailers, saying they are not prepared for the technology, or mobile payments
arent accepted in enough locations.

Check
Cryptocurrency

Debit card

1%

2%

Mobile payments

Only 14 percent of consumers say they have no hesitation to use mobile payment
services.

3%

WHICH ONE OF THESE FACTORS MAKE YOU HESITANT TO USE

MOBILE PAYMENT SERVICES?

16%
Cash

56%
22%

2015

Credit card

61%

Security concerns

58%

Privacy concerns

31%

Not accepted widely enough

28%

Retailers not prepared

Convenience of current payment method
No hesitations

Source: Walker Sands Future of Retail Study 2015/2016

24%
14%

Source: Walker Sands Future of Retail Study 2016

20

WHICH OF THE FOLLOWING MOBILE PAYMENT APPLICATIONS

HAVE YOU USED TO PURCHASE A PRODUCT IN STORE?

At 19 percent, Android Pay tops the list of mobile payments consumers are
using, followed by a retailers mobile app (12 percent) and Apple Pay (11
percent). While the number of Android mobile payment users held steady from

19%

Android Pay

Windows Phone Wallet

mobile payments ranked low across the

3%

Samsung Pay

CurrentC

methods for different kinds of purchases,

11%

Apple Pay

MasterPass

When asked about preferred payment

12%

Retailer mobile app

board. But there are a few categories

that stand out where mobile payments

2%
1%
1%

last year, the number of Apple Pay users almost tripled from 4 percent.

are the favorite way to pay, namely

Source: Walker Sands Future
of Retail Study 2016

household bills (6 percent), rent/mortgage

These findings suggest

that peer-to-peer payment
applications may be taking
off faster than point-of-sale
mobile transactions.

(5 percent), and paying others for goods

and services (3 percent). These findings suggest that peer-to-peer payment
applications may be taking off faster than point-of-sale mobile transactions.

21

Street vendors

Grocery
shopping

Restaurant

Bar

Retail
purchases

Entertainment
venues/tickets

Paying others
for goods and
services

Cabs or other
transportation

Coffee shops

Paying
mortgage/rent

Household bills

PREFERRED PAYMENT METHOD BY PURCHASE TYPE

80%

60%

40%

20%
Source: Walker Sands
Future of Retail Study 2016

0%

6%

5%

3%

3%

3%

2%

1%

1%

1%

1%

1%

Credit card

21%

11%

19%

16%

20%

36%

30%

20%

32%

27%

6%

Cash

6%

9%

43%

62%

41%

18%

19%

51%

23%

17%

84%

Cryptocurrency

0%

0%

0%

0%

1%

0%

0%

0%

0%

0%

0%

Debit card

38%

23%

34%

17%

27%

42%

49%

25%

43%

53%

7%

Check

23%

45%

1%

1%

7%

1%

1%

1%

0%

1%

1%

Mobile payment

22

WHICH OF THE FOLLOWING PEER-TO-PEER MOBILE

PAYMENT APPS HAVE YOU USED IN THE PAST YEAR TO
SEND MONEY TO ANOTHER PERSON?

Indeed, peer-to-peer payment (P2P) apps like mobile banking applications, Venmo and
even Snapchat continue to be on the rise, led primarily by younger shoppers. While a
third of consumers overall have used a P2P app in the past year, 44 percent of those

16%

Bank payment app

ages 18 to 25 and 38 percent of those 26 to 35 have done so. That compares to only 17
percent of consumers ages 46 to 60.
Millennials are also most likely to have used any mobile payment app, with 64
percent of 18- to 25-year-old consumers making a mobile purchase over the past

7%

Google Wallet

year, compared to only 25 percent of the 61 and older crowd. While younger
consumers also have concerns about privacy and security when it comes to
mobile applications, they are much more likely than their older counterparts to

5%

Venmo

report concerns with retailers preparedness and acceptance of mobile payment

technologies. This bodes well for the mobile payment space as the technology
becomes more ubiquitous.

3%

Square Cash

Popmoney

3%

With U.S. mobile payment transactions are expected in triple in 2016 to $27
billion,13 payment options such as Apple Pay could eventually force more
widespread changes in consumer behavior. For now, though, consumers
remain hesitant to give up the payments methods theyve been using for
years to embrace unproven technology.

2%

Facebook Messenger

2%

Dwolla

Snapcash

TAKEAWAY: MILLENNIALS WILL PUSH MOBILE PAYMENTS

INTO THE MAINSTREAM

1%

Source: Walker Sands Future

of Retail Study 2016

Led by millennials, however, mobile payments are rising in popularity for

POS and P2P payments. Because many of these younger consumers are
more likely to blame retailers for the slow adoption rate, its important for
companies to accept as many payment forms as possible.

23

RETAIL TECHNOLOGY
PREDICTIONS

SAME-DAY SHIPPING WILL LAY THE GROUNDWORK FOR DRONES

Lets face it; despite the hype, drone delivery is still at least a few years away.
Same-day shipping, on the other hand, is starting to take off now, with about one

The growth of e-commerce over the past few years

has transformed the way we shop. And its not
just Amazon changing the game anymore. While
98 percent of consumers have made an Amazon
purchase in the past year, almost two-thirds (61
percent) have shopped on eBay, and a quarter (26
percent) have bought a handmade item on Etsy.
Even Jet.com (6 percent), Alibaba (4 percent) and
Rakuten (3 percent) are starting to get consumers
attention.
But the future of retail isnt just about pure
e-commerce anymore. With a growing emphasis
on in-store technology and omni-channel
strategies, the pendulum has swung back in the
other direction, and its important for retailers to
focus on finding the sweet spot in the middle.
Based on the Walker Sands Future of Retail 2016
findings, we predict these four trends will shape
the future of retail in the years ahead:

in 10 consumers selecting the option at least once in the past year. As it becomes
a more commonly offered delivery option, same-day shipping will further heighten
consumer expectations for speed of delivery and drones that drop off packages
within the hour wont be too far behind.

THE PHYSICAL AND ONLINE SHOPPING WORLDS WILL COLLIDE

As retailers pursue omni-channel strategies, the digital experience will bleed
into brick-and-mortar stores through technology like beacons, and the in-store
experience will come to e-commerce through virtual reality. As a result, consumers
channel preferences will disappear, and retailers that offer the most consistent
brand experience across the board will rise to the top.

LUXURY COMMERCE WILL EXPLODE

While some luxury brands have been hesitant to embrace e-commerce,
consumers are more willing than ever to buy big-ticket items online. With
millennials leading the way and virtual reality offering the ability to bring a luxury
experience to consumers homes, we expect this will be the next rapid growth area
in e-commerce.

MILLENNIALS WILL FORCE RETAILERS TO ADOPT

MOBILE PAYMENTS
Despite lingering concerns over security and privacy, millennials are embracing
mobile and peer-to-peer payment apps, so its only a matter of time before
consumers turn to them as a primary payment method. Mobile payment adoption
will continue to grow slowly for the next couple years, but adoption will become
more widespread as retailers accept more payment methods.

24

STUDY METHODOLOGY
The Walker Sands Future of Retail 2016 study surveyed 1,433 consumers across
the United States on their shopping habits, preferences and views on emerging
retail technology. The survey was conducted online in February 2016, and has a
2.59 percent margin of error at a 95 percent confidence level.

AUTHORS
DAVE PARRO

RETAIL TECHNOLOGY IS EVOLVING AT

AN INCREDIBLY FAST PACE.

Vice President and Partner

Dave oversees the retail technology practice at Walker Sands, serving as senior
strategist and industry thought leader. A storyteller at heart, he has more than
15 years of experience in public relations, digital marketing and journalism.
[email protected]

READ OUR CASE STUDIES AND VIEW OUR CLIENT LIST TO

SEE HOW WE USE AN INTEGRATED APPROACH TO PUBLIC
RELATIONS AND DIGITAL MARKETING TO HELP RETAIL
TECHNOLOGY COMPANIES KEEP UP:
WALKERSANDS.COM/RETAIL-AND-E-COMMERCETECHNOLOGY.

ERIN JORDAN
Account Director

Erin leads the retail technology PR team at Walker Sands, managing strategy across
a diverse group of B2B clients, focusing on the intersection of retail, marketing and
technology. Her teams areas of expertise include e-commerce, supply chain and
logistics, product content and data management, digital marketing and marketing
technology.
[email protected]

25

SOURCES

1.

Global Retail and Consumer Goods CEO Survey: The Omni-Channel

Fulfillment Imperative, PwC, December 2014

2.

The New Age of Store Operations, Retail Touchpoints, August 2015

3. Altagamma-McKinsey Digital Luxury Experience Observatory, July 2015

ABOUT WALKERSANDS
Walker Sands is a public relations and digital marketing agency for
business-to-business technology companies. With an integrated
approach known as the Digital Ecosystem, Walker Sands helps clients
build brand awareness, enhance credibility and drive new business.
Walker Sands is a three-time Inc. 5000 honoree and regular recipient
of some of the industrys most prestigious awards from organizations
including PRSA, Holmes Report and PR News. Walker Sands was
founded in 2001 and has offices in Chicago and San Francisco.
To learn more, visit http://www.walkersands.com.

4.

Mobile Payments Will Triple in the U.S. in 2016, eMarketer, Oct. 26, 2015

5. Global Retail and Consumer Goods CEO Survey: The Omni-Channel

Fulfillment Imperative, PwC, December 2014
6. The New Age of Store Operations, Retail Touchpoints, August 2015
7. The Beacons Report: Sales-influence forecast, retail applications, and
adoption drivers, BI Intelligence, January 2015
8.

Gear Commerce Launches Virtual Reality eCommerce Software,

BusinessWire, April 2016

9. How 3 high-end brands balance luxury with e-commerce,

Digiday, April 2015
10. Is luxury e-commerce nearing its tipping point?,
McKinsey, October 2015
11. Luxury Brands Cant Avoid the Internet Any Longer,
Bloomberg, November 2014
12. 5 Luxury Brands That Are Now Digital Natives,
Say Daily, May 2014
13. Mobile Payments Will Triple in the U.S. in 2016,
eMarketer, Oct. 26, 2015