Trends & Predictions 2018: Retail

Stephen DeAngelis

December 29, 2017

An apocalypse is generally not a good thing. Originally, the word referred to a disclosure of knowledge or a revelation. Christian apocalypses, however, most often revealed predictions about the end of the world. As a result, the term apocalypse now refers to a cataclysmic event. Because of the spate of store closings over the past couple of years, many observers have declared we are in the midst of a retail apocalypse. However, Christopher Walton (@OmniTalk), former vice president of Target Store of the Future, writes, “Apocalypse is a silly word. It means complete destruction. People will always need to buy stuff. Therefore, retail and physical stores will never go away. They will just look different.”[1] Scott Galloway (@profgalloway), a clinical professor of marketing at New York University’s Stern Business School, agrees with Walton.[2] “The rumors of the death of the store are greatly exaggerated,” Galloway says. Despite the retail apocalypse and declarations that brick-and-mortar stores are obsolete, Galloway declares, “It’s just not true.”

Omni-channel to Omni-experience

The rise of e-commerce and the emergence of the so-called Amazon Effect have forced retailers to adopt omnichannel strategies to survive. Since Walton worked for the Target Store of the Future, he has a few thoughts about where retail is headed. He writes, “[The store of the future] will be the forward presentation of omnichannel ideas that answer the question, ‘Why come to physical stores to shop?’ Technology will be important, but it will be so commonplace that it will be practically invisible.”[3] Millennials are well-known for preferring experiences over things. That’s one reason the store of the future must be an experience destination. Below are few of the technologies that will impact consumer experience in the years ahead.

Virtual and Augmented Reality. Writing about virtual reality (VR), analysts from The Market Creative assert, “Understanding this immersive technology will be vital for brands hoping to engage shoppers in 2018.”[4] Augmented reality (AR) is not quite as immersive as virtual reality, but it has more ways to be used in-store than VR.

Mobile Technology. Mobile technology is not new, but its impact in the retail sector continues to grow. Mark Mathews explains, “Nobody questioned the viability of mobile technology when people ditched flip phones in favor of iOS and Android devices. It’s clear that retailers are responding to a changing and challenging environment, and as in any evolving industry, some will succeed while others fail.”[5] Mobile technology is what brought the digital path to purchase into the store and smartphones will continue to be a driving force in retail.

Tech-empowered Sales Staff. Kyle Fugere (@kfugere), and executive at dunnhumby, predicts, “The tech enabled store associate will change the in-store experience.”[6] For years, in-store sales staff at many retailers have lamented the fact that customers come equipped with better technology than they are provided. Fugere believes that situation is about to change. “The competitive advantage brick and mortar holds over eCommerce,” he writes, “is the personal interaction of the store employee and customer. Giving them the tools to amplify the experience will be vital to the stores success and a pathway to the omnichannel experience everyone has been waiting for.”

Pop-up Stores. Part of the retail apocalypse has been the dramatic fall of the mall. Walton believes pop-up retailers provide a potential short-term answer. He explains, “‘Pop-up’ is one of the sexiest words in retail right now, right alongside voice and VR. Large malls, small malls and the retailers within these malls are struggling. Concurrently, e-commerce players are desperate to expand the reach of their brands. Ergo, pop-up retail seems like an answer — mall operators can bring in new tenants on quick leases, existing retailers can keep their salesfloors fresh through space rental and e-commerce players can get into the physical game without getting locked into high rents. It will all make sense until the underlying business economics of retail change (i.e., until technology fuels more productivity gains and utilizes working capita differently). The same problem that plagues retail — namely traffic — will plague pop-up shops too.”

Fostering a Sense of Community. Newer shopping areas are opting to create community spaces in which consumers can gather, socialize, and enjoy shared experiences. Richard R. Shapiro (@RichardRShapiro), Founder and President of The Center For Client Retention, explains, “Even before Apple announced its ‘town square’ alternative to stores, with ‘avenues’ rather than aisles, many of the tech giant’s brick & mortar outlets had become well-established places to hang out, interact with other brand loyalists, and participate in free classes on coding, music, and photography. The expanded idea is to create outdoor plazas where people can relax, meet up with friends, or just listen to local artists on the weekends. Apple (being Apple) is not merely indulging its customers’ innate human need to belong, but raising consumer expectations across the board. Within a few short years, retailers that have proven unable or unwilling to create a sense of community will watch helplessly as their customers leave for greener pastures.”[7]

E-commerce and Omnichannel Sales. Although much of the discussion has been about how to get consumers back into brick-and-mortar stores, we must remember the trend towards e-commerce continues to grow. Mathews declares, “E-commerce is not killing retail — it is ALL retail.” Retailers that fail to implement a strong omnichannel strategy are likely to be found in history’s dustbin. Analysts from LS Retail note, “Over 5 billion people globally are using smartphones every day. Customers are increasingly more mobile, and use their phones as shopping devices while on the go. Retail winners will invest both in m-commerce and in digital channels to aid shopping while in-store.”[8] Although omnichannel strategies are essential, they are not easy to master. Conventional wisdom says that while “going omnichannel” helps keep customers happy, it’s a notoriously tough way to make a profit. Ben Ames (@BenBames) writes, “Conventional wisdom says that while ‘going omnichannel’ helps keep customers happy, it’s a notoriously tough way to make a profit.”[9]

Summary

One thing should be clear — providing customers with good experiences is the future of retailing. Blake Morgan writes, “Investing in customer experience is an act of bravery, because often the returns don’t happen right away — and many boards and CEOs are not willing to wait around for that payday. And there’s truth to the fact that it’s costly and time consuming to improve customer experience.”[10] Walton concludes, “The store of future is not some ‘way out there’ concept. Sure, it will be different from what we know today, but ultimately whatever transpires will be something we can all easily understand over time.”

Footnotes
[1] Christopher Walton, “10 surprising retail predictions for 2018,” Retail Dive, 6 December 2017.
[2] Katie McBreen, “Scott Galloway Predicts the Future of Retail,” National Retail Federation, 9 October 2017.
[3] Christopher Walton, “The store of the future won’t be Amazon,” Retail Dive, 29 November 2017.
[4] Staff, “Trends influencing shoppers in 2018 and beyond…” The Market Creative, 2017.
[5] Mark Mathews, “Retail’s Reinvention Story is just Getting Started,” National Retail Federation, 14 June 2017.
[6] Kyle Fugere, “Top 5 Retail Trends For 2018,” Seeking Alpha, 6 December 2017.
[7] Richard R. Shapiro, “2018 Retail Trends,” The Center for Client Retention, 14 November 2017.
[8] Staff, “The Future of Retail: 8 key predictions,” LS Retail, 14 January 2017.
[9] Ben Ames, “Study: Reverse logistics still a puzzle for omnichannel retailers,” DC Velocity, 17 November 2017.
[10] Blake Morgan, “Five Trends Shaping The Future Of Customer Experience In 2018,” Forbes, 5 December 2017.