The retail industry has undergone a significant transformation over the past decade, and it continues to evolve quickly.
Led by advancements in digital channels, 2018 has been kind to retail in the US, with the market reporting growth every month so far after a record-setting 2017. Even so, the face of the market is quickly evolving, and retailers must adapt to new shifts in demographics, attitudes and consumer preferences.
In 2019, the market will be defined by emerging technologies that change the way consumers interact with their favorite brands, a shift in preferences and the emergence of new battle lines for e-commerce.
Let's look at five trends that will shape retail in the year to come.
1. The glass box and brands-as-a-culture
More and more, consumers are shopping with their emotions instead of their wallets. Indeed, millennials’ changing preferences and attitudes regarding corporate responsibility, social consciousness and more have already impacted how retail brands present and position themselves. The trend has resulted in brands having to equate their internal culture with their exterior identity, turning companies into what some have dubbed “culture coders”.
Companies are increasingly engaging consumers outside of traditional shopping parameters and becoming cultural figures. This trend cuts both ways, however, as this new measuring stick can also result in unintended consequences.
“Today, brands need to look more actively and purposefully at the culture buzzing around them — in entertainment, in fashion, in news, on social media — and use that awareness to inform how they should best position and integrate themselves into the world,” Peter Grossman stated on Quora.
Companies will have to consider the image their brand conveys to the world, and work to create cultures that match consumers’ changing values and world views.
2. Making e-commerce shipping faster
E-commerce continues its march toward becoming the most popular shopping medium across the board. In September 2018 the sector expanded by 11.4%. Today, most major brands have an online presence, and they all offer comparable prices. Even stores like Amazon and Walmart have become largely homogenous in this regard, so retailers seeking to differentiate themselves have found other avenues to deliver value to consumers.
A recent study found that the amount of time people are willing to wait for free shipping has dropped from 5.5 days in 2012 to 4.5 days on average. Programs like Amazon Prime have made two-day shipping the standard, so cutting down on shipping time is vital for any e-commerce business looking to stay afloat.
Importantly, this trend is set to continue well into 2019 as brands evaluate new ways to differentiate themselves from an increasingly saturated crowd. And no, this doesn’t necessarily call for drone delivery systems.
“What happens if customers don’t have to compromise on their buying experience because they get the exact same delivery experience (if not better) on their favorite brand’s website?” asks Dhruv Saxena, CEO of logistics innovator ShipBob. “This is the version of the world which excites us; the power of any individual anywhere to create a brand they are passionate about, to be able to serve and treat their customers the way they would want to be treated.”
3. The rise of experiential retail
The old model of in-store (and even online) retail strictly focused on products being sold. However, consumers have slowly but surely been moving away from strictly shopping for products, instead seeking a more engaging experience. The trend has been driven largely by millennials and their preference for experiences over things.
Even so, simply remodeling a store isn’t enough. Nearly 3,800 stores are expected to close their doors by year’s end, and the brands that do survive will have done so by creating engrossing experiences.
Stores like Sephora, for example, have rethought their stores by combining traditional elements with mobile apps and activities that are completely unrelated to making a purchase. Samsung unveiled a $43 million “pop-up”that features its products, but doesn’t have any for sale. The emergence of virtual reality, augmented reality, and improved mobile technology will continue to push retail brands to add layers and new experiences to their traditional retail models.
Of course, many of these retail “experiences” that have become popular in recent months depend on a plethora of connected hardware. “Smart IoT devices such as beacons and smart shelves offer retail companies the efficiency to ensure their staff are effectively utilized, but physical IoT technology that is not secured properly can leave networks accessible to threats,” notes Rob Brown, director of services at Cloud Management Suite.
“Although smart in name, smart IoT uses open wireless networks and Bluetooth in order to communicate, creating more vulnerable endpoints in brick-and-mortar establishments,” he continues. “Tracking these IoT devices in retail companies is essential, because without knowing which ones you have, you cannot identify which ones are less secure or have known vulnerabilities which can be exploited.”
4. The rise of subscription e-commerce
Today’s buyers are also increasingly seeking shopping that is tailored to their preferences and delivered directly to their doors. The confluence of these trends has resulted in the emergence of subscription e-commerce, businesses that curate products and ship them to customers on a regular basis.
The sector has been witness to explosive expansion since 2010, growing from $57 million in sales to more than $2.6 billion by 2016. According to a report by McKinsey & Company, 15% of online consumers signed up for subscription services in 2017.
The trend goes hand in hand with users’ search for experiences, as they are more willing to shell out cash for a service that delivers a tangible benefit along with a personalized offering.
The trend should continue to build momentum in the year ahead.
5. Multi-channel is the new normal
One of the interesting dichotomies of the current retail model is that despite their alarming closure rates, brick-and-mortar stores still play a key role in the sales process. Nevertheless, it has transitioned from the primary point of sales to being part of a broader retail strategy. Instead of a single touchpoint for consumers, the trend in retail over the past few years has been to widen the net that brands use to catch leads and convert them.
This is largely a result of the changing methods consumers employ to make shopping decisions. BigCommerce’s 2018 Omni-Channel Retail Report found that only 11.8% of Gen-Z shops on Facebook, while nearly 25% of Baby Boomers shop on the social platform. Millennials, meanwhile, prefer to buy products they discover on Instagram and Snapchat.
How can independent retailers maintain active presences in all of these places and keep fulfillment streamlined? This calls for deep integration across all channels, including websites, marketplaces, social media and brick-and-mortar.
Multi-channel is vital for captivating consumers and keeping them engaged from first impressions to the eventual point of sale. Focusing on providing excellent service across sales channels will pay big dividends in the coming year.
The latest trends in retail are driven by a combination of an evolving technological landscape and the shifting preferences of consumers as demographics start to skew younger. By embracing these trends and preparing for them, retailers can look to 2019 as another positive opportunity to grow.