Show of hands: Who else is tired of the term, “retail apocalypse”?
While news of store closures filled the headlines in 2017, there is a ray of light in the year ahead. For starters, the negative narrative of “retail doom and gloom” was sensationalized and overhyped.
Here are some stats you may not have heard:
- According to the National Retail Federation, the most recent retail sales figures released by the Census Bureau were up 4.2% year-over-year in July 2017. In fact, every month this year has seen a steady increase in sales over the same period last year.
- The same NRF article reports that “On a percentage basis, 42% brands are opening stores, 43% are holding steady and only 15% are showing a net decrease in stores.”
- According to IHL Group, retailers are opening 4,080 more stores in 2017 than they are closing, and plan to open over 5,500 more in 2018. The report, “Debunking the Retail Apocalypse,” was released in August 2017.
What is important to note, however, is that retail and the consumer are indeed evolving. So, as retailers, you need to be up to speed on the changing shopping habits of consumers, the key trends and shifts of the retail industry, and recognize what’s applicable to your business.
“It's time to stop buying into the hype: retail isn't dying. The real issue is that retailers can no longer assume a ‘build it and they will come’ stance,” explains fashion tech entrepreneur, strategy consultant and founder of Click2Fit Chaya Cooper. “Retailers need to treat consumers like they genuinely value their time and their business.”
This past year was an exciting one for online retail trends too: 2017 saw an increase of over 24% year over year growth in ecommerce, according to Doug Stephens, founder of Retail Prophet and a speaker at this year’s “VOICES,” the trailblazing fashion industry conference held by The Business of Fashion (Bof).
As Stephens continues to explain, the challenge 10 years ago was convincing people to buy online; now the challenge is getting products to consumers in a window of time that they deem acceptable.
So, enjoy this year in preview and get inspired by what’s moving consumers and what’s continuing to shake up the industry, according to the six experts we spoke with.
Our panel of retail experts includes:
- Doug Stephens, speaker, retail futurist, founder of Retail Prophet, and author of the groundbreaking books, The Retail Revival: Re-Imagining Business for the New Age of Consumerism and Reengineering Retail: The Future of Selling in a Post-Digital World
- Jed Wexler, CEO and chief strategist at 818 Agency, an award-winning B2B content agency based in Brooklyn, NY.
- Georganne Bender of consulting duo Kizer & Bender: keynote speakers, retail strategists, and authors
- Nicole Leinbach Reyhle, founder and publisher of Retail Minded and co-founder of the Independent Retailer Conference
- Chaya Cooper, fashion tech entrepreneur, strategy and product development consultant, and founder of Click2Fit, an artificial intelligence-based software that enables retailers to recommend clothing that flatters and fits.
- Susan Reda, Editor of STORES Media, the National Retail Federation’s magazine
7 Retail Trend Predictions for 2018
1. Community
The importance of community was among one of the most important predictions for 2018.
Doug Stephens elaborates: “I think ‘community’ will be the buzzword of 2018 as retailers awaken to the idea that the consumer’s primary problem is no longer the scarcity of products but rather the scarcity of genuine, human, social connection. Great retail — if it’s sensitive to this condition — can fill the void. Your customers are merely people with shared interests and values. Bringing them together with a sense of community can be socially powerful.”
Sephora’s online “Beauty Insider” Community is one example of how to create a strong sense of connection based on common interests: it’s where beauty lovers can ask questions, share tips, and get recommendations in real time. And real talk: this community feeling is key.
Jed Wexler, CEO and chief strategist at 818 Agency, also cited community as a key retail trend, and took it further: “[It’s about] thinking local and creating community. Carrying products that reflect their immediate communities (i.e. “made in Brooklyn!) and local makers. It’s the local community connections that will allow stores to not only survive, but thrive.”
Wexler continues: “According to Google, 78% of all local searches on mobile result in a purchase in-store within 24 hours. Customers want an amazing ‘in real life’ customer experience, and even better, a place in the community where they can gather. Making every customer visit count will be everything. People want community more than anything. WeWork just acquired Meetup this past November to leverage the human connection of communities at scale for just that reason.”
FURTHER READING: Want to know how to build your own customer community? Read our article on creating an engaged customer base.
2. Personalization
2017 saw the rise of retailers focused on personalization and curation, with subscriber-based services like Winc, a wine subscription brand that sends customers a variety of wines customized to their palate, and the online service Stitch Fix, a personal styling concept that uses an algorithm to deliver personalized packages of pre-assorted, curated clothing deliveries for men and women, on a monthly basis.
As Georganne Bender puts it: “It’s all about getting a handle on personalization that is truly personal.”
Susan Reda, Editor of STORES Media, the National Retail Federation’s magazine, explained this in her overview of “What’s in store for 2018”:
“It’s not something that retailers can let slip, especially as companies such as Netflix and Spotify continue to hone their skills when it comes to individualized recommendations and playlists. Once consumers taste what can be, they expect other businesses to deliver the same treatment.”
According to “The State of Fashion 2018,” a report conducted by McKinsey & Company and The Business of Fashion, “3D printing is quietly growing and has the potential to shake retail’s foundation.”
And it’s already happening: Carbon, a technology company changing the way the world makes 3D printed items, has joined forces with Adidas, to create a revolutionary midsole. It’s the first mass production process that paves the way for custom, high-performance shoes known as the Futurecraft 4D sneaker, which meets the unique needs of each customer.
Don’t sweat: when we speak of personalization and customization, keep in mind that it doesn’t have to get as high-tech and fancy as 3D technology: it can be as simple as offering in-store embroidery and monogramming to add a personal touch to each item, on demand.
FURTHER READING: Learn how to personalize your customer’s shopping experience.
3. Data
In order to make personalization and curation possible, having data available is important. According to the McKinsey and BoF report, “As consumer values coalesce around authenticity and individuality, brands will value data even more to tailor recommendations, engage influencers and personalize experiences. The fashion companies that flourish will refocus on their strengths.”
Through data, merchants and brands of all sizes can make more accurate, more timely business decisions.” — Nicole Leinbach Reyhle, founder of RetailMinded.com
4. Analog Technology
As technology evolves, it’s important to always keep the “real life” component alive.
Wexler refers to this concept as “analog technology:” “This is kind of an update on the ‘omni-commerce’ buzzword that’s been percolating for many years now. It’s basically the return to the analog, or IRL (“in real life”) as a crucial complement to our digital lives. This holds true for the products they carry, marketing strategy, and even the platforms retailers use. For example, retailers can now use platforms like Dor to measure actual foot traffic, which gets translated into actionable analytics that shop owners can use to inform decisions about inventory, staffing, and even marketing. ‘Analog technology’ in a nutshell is how every business needs to approach the analog-meets-digital experience. Digital enhances the analog experience (and vice versa), while serving as a bridge to bringing people together in-person. Which, really is, everything.”
Of course, with the rise of mobile and online, digital has transformed how people research or, “kick the tires of your business first,” Bender explains. “But the real-life shopping experience is still where deals are closed and sales are made.”
So, knowing how to straddle the worlds of “analog technology” means knowing how to master these opposing concepts. “Retailers, and businesses of all kinds for that matter, need to learn how to build and nurture audiences all year-round via the right combo of digital campaigns and offline experiences. It’s no longer optional for even the smallest stores to not have at least a couple of their digital channels dialed,” Bender continues.
5. Direct-To-Consumer Sales
According to Stephens, there is a critical wave of direct-to-consumer that’s currently occurring:
“Going forward, we’ll continue to see name brands going direct-to-consumer and steadily pulling out of mass merchants. Brands are coming to realize that the ubiquity and reach of mass merchants is having a toxic effect on their brand equity and that in order to survive, brands need to deliver a shopping experience consistent with their market positioning. At the same time, they’re recognizing that it’s once again possible to reach and serve individual consumers directly through a combination of owned online and physical stores.”
6. In-Store Experience
While online retailers like Warby Parker, Everlane, Bonobos, and skincare brands like Credo and Glossier have opened brick-and-mortar locations, it’s becoming clear that the in-store experience serves as the ultimate complement to the online one. But the key is creating memorable in-store experiences. For example, Glossier’s showroom/store in New York City (and only physical location) is pure Instagram candy; visitors will want to shop and capture every moment on Instagram as every detail serves as social content.
Stores can’t be just about distributing products. They need to be about distributing experiences: less stores, more stories.” That means putting less emphasis on shopping and more emphasis on entertainment, hospitality, and community. — Doug Stephens at Business of Fashion’s VOICES
Yes, things like augmented reality, artificial intelligence, and experiential are all moving forward as well, but when it comes to in-store experience, it’s critical to focus on the basics and create a memorable and strong in-store experience.
“Experiential retailing has become a buzzy trend, and though it can often just be an expensive distraction, when well-executed, it can significantly enhance loyalty and increase sales. Effective experiential retail generally ties directly into the product, and is focused on either branding or on customers experiencing or interacting with the products in ways that directly increase sales,” Cooper explains.
Here’s what Bender believes will be important in 2018: “Stores stocked with great merchandise that are warm and welcoming, and store associates who know their stuff – and how to work with every kind of customer. And in-store events that encourage you to shop, but that are also fun and entertaining, like pop-up shops in unexpected places. Pottery Barn featured local artisans selling their wares, in and among the store’s displays, all December long. The challenge for every brick-and-mortar retailer is to create and cultivate experiences that are unique to their business. And thrill shoppers at the same time.”
7. Collaboration
2017 saw with it many unexpected partnerships that went beyond the retail realm: Saks opened a limited-time wellness-focused department called the Wellery at its flagship 5th Avenue location, where it collaborated with wellness online magazine, Well + Good. Other brand collaborations injected some excitement into brands, like North Face + designer Junya Watanabe, Vetements + Champion, Supreme + Louis Vuitton, Pressed Juicery + Sugarfina, and as mentioned by Susan Reda of the NRF, Martha Stewart + Marley Spoon (the meal kit delivery service), as well as IKEA's acquisition of TaskRabbit (where home services get the Uber, on-demand treatment.)
The limited-edition, capsule collection concept is nothing new (hi, H&M), but when two brands partner up in unexpected ways — especially when they are in different realms or industries — retail magic can happen.
The Forecast For 2018 Retail Trends: Evolution and Experiences
It’s time to roll up your sleeves and get excited: this is an amazing time for retail.
“The biggest shift I’m seeing is that the marketplace is constantly shifting between in-store, in-person and online. But that represents a huge opportunity for retailers (large and small) to provide experiences their customers want, especially in real life,” Wexler explains.
As Bender puts it: “Today’s consumers want what they want, when they want it, the way they want it, and given all the shopping venues available to them, those wants are critically important.”
So give ‘em what they want and keep ‘em wanting more, regardless of what retail trends are coming your way.
