The strength of your small retail business lies in the word “small.” A manageable size brings an ability to be focused and nimble, developing a truly unique selling proposition and taking advantage of trending products. While it’s tempting to want to emulate big box stores, you’d be making a big mistake, says Doug Stephens, founder of the retail advisory firm Retail Prophet and author of Reengineering Retail: The Future of Selling in a Post-Digital World.
“Amazon, Walmart, and other market competitors are attempting to become as broad as possible in their offerings,” he says. “My recommendation to retailers is to narrow the scope of their offerings, but be absolutely incredible at selling whatever it is they specialize in. Understand your customer better than anyone else in the market and deliver a customer experience that blows their mind. If you can do this, your customers will be the most powerful media you can buy.”
Narrow means niche, but which one? To help you hone in, we’ve compiled a list of profitable retail niches we expect to see exponential growth in 2018 based on trending products.
Organic Beauty Products
The beauty market has always been strong, and it continues to be an industry that offers plenty of niche opportunities. In fact, the global cosmetics market is anticipated to grow annually by 4.3% to reach $429.8 billion by 2022, says Bart Mroz, co-founder and CEO of digital commerce consultancy SUMO Heavy, a digital commerce consulting firm.
The industry’s success is a result of beauty brands winning at ecommerce and social media marketing, says Mroz. “Beauty retailers like Sephora and ULTA, and beauty brands like Glossier and H2O+ have excelled in ecommerce operations and sales.”
Within the beauty product industry, a strong niche is organic and sustainable beauty, which is “exploding as the number of people who are becoming more health conscious is growing,” says Mroz.
In fact, the number of trending products in the global organic beauty product market has experts forecasting sales to increase from $14.8 billion in 2017 to $28.7 billion in 2024, according to Energias Market Research. This can be attributed to an increasing consumer awareness of side effects of synthetic personal care products and growing demand for products that don’t have harmful chemicals that have been linked to cancer and allergies.
Men’s Grooming Products
It’s not just women who are looking for products to help them look and feel better. The male grooming market is estimated to be worth $21.65 billion in 2018, reaching $29.14 billion by 2024, according to Statistica.
“We're becoming more insecure and vain,” says Bob Phipps, CEO of the Retail Doctor, a retail consulting firm. “The recent GQ [magazine] said young guys are counting how fit they are by the number of ripples in their abs. Whether that is mainstream or not, at a time of great change and fear, it can be daunting to look in a mirror, no matter the age.”
Look for trending products like moisturizers and anti-aging creams marketed to men, as well as specialty beard oils, razors, and shaving supplies.
Wellness Products
In addition to outer beauty, consumers are looking to lead healthier lives. Stephens anticipates that the health, fitness, and wellness categories will continue to explode in 2018. In fact, wellness is a $3.7 billion industry, with growth predicted to exceed 17% through 2020, according to the Global Wellness Institute.
“Wellness is an approach to living life that is becoming as second nature as brushing teeth,” says Kelsey Groome, managing director at TRAUB, a global business development firm, told Forbes. “Brands that will have the biggest impact are ones that will make it accessible to more people to live a balanced life in mind, body, and soul.”
Major segments and trending products in the wellness market include fitness, meal programs, supplements and vitamins, eateries, juicing, spa, beauty, and meditation.
Food
Consumables are also a hot niche, especially food, says Stephens. “I see food and beverage, especially in the upper price range, doing extremely well as consumers increasingly trade-off products for experiences,” he says.
Farm-to-table is a growing trend that isn’t a passing fad, according to the National Restaurant Association. In addition, using local ingredients is also important in carving your niche. Even chains are seeking out the local angle, with Shake Shack using pie from a local bakery, and Longhorn Steakhouse buying watermelon from a local farm.
“2015 was the first year that consumers spent more in restaurants than in grocery stores and I don’t see this trend slowing down,” says Stephens.
Subscription Boxes
While niches are important, sometimes how these trending products are delivered can be its own niche. From Birchbox to Blue Apron, the subscription box method is growing in popularity.
“Business-to-consumer subscription businesses have attracted more than 11 million U.S. subscribers in 2017, and the industry as a whole has been growing at 200% annually since 2011,” reports Harvard Business Review.
“Subscription boxes are exploding with growth, with an 800% increase in customers since 2014,” says Mroz. “While subscription boxes aren’t necessarily long-term strategies, it can introduce new customers to the brand and act as another customer acquisition channel for emerging retailers and brands."
Currently, there are about 5.7 million subscription box shoppers in the U.S., reports Forbes. The key to leveraging the subscription box niche is giving consumers what they want before they know they want it.
“Personalization is key,” John Fetto senior analyst for the consumer insights tracking firm Hitwise told Forbes. “Don't be afraid to ask for information from your consumer to help you deliver a more curated experience."
Finding Success With Trending Products
“Retailers should consider how they can introduce these hot selling trends into their store assortment, even if they are not the core categories of their business,” says Nicole Leinbach Reyhle, founder of the online retail news site Retail Minded. “It's important to consider how they complement existing inventory, of course, yet overall the main goal is to provide items that consumers want. Take the time to identify what may make the most sense for your unique business.”
Experiences ultimately matter, says Stephens. “Consumer preferences have and will continue to bifurcate into two very distinctly different sorts of experiences,” he says. “At the one end is the ultra high utility experience, fast, easy and price competitive. That’s where Amazon has dominated. At the other extreme is the ultra high-fidelity experience, luxurious, high service, emotionally connected and experiential. This is where higher-end retail, dining experiences. and even socially centered fitness businesses like Soul Cycle have thrived.”
Retailers have to choose which end of the spectrum they’re going to try to dominate in, he continues.
“If you sell shoes, for example, either be the absolutely most convenient, price competitive and easy-to-do-business-with option or be the richest, highest service and most exclusive choice. If you can be one or the other you’ll do well. If you’re neither you’re going to have a tough time.”
