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After retail’s big week, what does 2016 have in store?

The festive forays of the country’s top supermarket chains have thrown up some surprises and some inevitabilities, ensuring that there’s still all to play for in 2016 as they get to grips with shopper first, technology second. 

Christmas yielded mixed results for the grocery market; ; Tesco and Morrisons struck back with a sales rise over the key period, while Marks and Spencer’s food offering continued to shine. On the flipside, Sainsbury’s and Waitrose were less stellar, the latter of which posted its worst performance since 2006. Analysts have also predicted a sales slump for Asda, down 3.5 per cent. 

And yet despite the varying performances, most of the supermarkets posted better than expected figures, suggesting that the millions invested in price cuts and marketing – at the expense of margins – are starting to take effect.

It wasn't coincidence that all three attributed their festive gains to a renewed focus on the customer, which they were guilty of losing sight of as they rapidly expanded to chase profits. . It might not be the most glamorous of strategies but like Tesco’s chief executive Dave Lewis said earlier this week  "consistency and great value" are vital for rebuilding trust. The former P&G marketer, like his peers, is not getting carried and is all too aware that there is "much more to do".

Moving forward, the supermarkets are going to continue to focus on service, making it as easy as possible for people to buy the food and drink they need. This is where technology will be used to drive ahead on convenience, that will see retailers push multi-channel strategies harder to get their goods to shoppers anywhere, anytime and on their terms. Sainsbury's has already talked up its big data aspirations for the year, while Asda aims to grow its online operation from a £1bn business to a £3bn one by 2018.

The reason for such hefty investments in IT is clear – IMRG Capgemini e-Retail Sales Index revealed this week that online retail sales recorded a solid 11 per cent year-on-year increase in 2015, equating to approximately £114bn spent online. For 2016, their respective prediction is the Index will record a further 11 per cent growth, with total e-retail sales estimated to be worth £126bn by year end.

Mobile is driving the bulk of this spend, with 45 per cent of all online sales made via a mobile device during the third quarter (August to October). While some of the more advanced retailers such as Argos and Shop Direct have already passed the so-called mobile tipping point, IMRG anticipates that in the coming months the retail industry as a whole will see at least 50 per cent of sales coming through the devices in our pockets.

“2015 has been another massive year in terms of consumer spending, but what the Index reveals is just how dominant the online channels have become," said Alex Smith-Bingham, head of digital at Capgemini.

"Mobile confirm[ed] its role as a primary shopping channel, providing consumers with an unprecedented level of convenience. In 2016, I’m confident we’ll see this influence increase even further with mobile representing over half of all sales made online.”

It’s little wonder then that Sainsbury’s is trying to get ahead of the game by buying into Argos’ infrastructure through a well-documented takeover attempt. Boss Mike Coupe justified the move by saying the retailers that will win in 2016 will be those that provide a strong on and offline experience. Rather than spend the next five years scaling up its mobile and delivery systems, it could tap directly into Argos. 

Meanwhile, Waitrose yesterday (15 January) inked a 10-year tech deal that will see it better run more mobile payment options as part of wider efforts to introduce more sub-brands within its shops, such as juice bars.

Nailing the mobile strategy then, will be among the more immediate priorities for grocery bosses in the coming year. But, following the Consumer Electronics Show in Las Vegas last week - where Samsung launched its Smart Fridge - it’s clear they can’t afford to ignore concepts that once seemed far off, such as the Internet of Things (IoT) and how they will shape buying habits in the coming years.

2016 also could be the year Tesco et al's fight with the German discounters moves online. Despite Aldi's continued growth last year, it is beginning to slow and with Amazon's entry into the sector imminent it will be looking to show consumers it can offer online convenience as well as competitive prices.

Aldi - which does not report like-for-like sales - made a tentative step into e-commerce last year while Lidl is yet to committ, likely due to seeing continued a double digit like-for-like sales growth last year, although it remains to be seen how long it can hold out.

Grocery’s biggest players may have confounded critics by enjoying a surprisingly merry Christmas but one swallow doesn’t make summer. These companies still need to win over shoppers in the long-term and how they harness digital to provide more convenient services will be key to doing that in 2016.

Featured by The Drum