To say that retail has had quite the year would be nothing short of an understatement. To sum it up best, 2017 was a year that challenged the paradigm of retail. Plagued with high profile store closures, ecommerce gaining more shares of the market, and new technology emerging on the scene, retailers were left questioning just what the future of this industry would behold.
2018 will be nothing short of groundbreaking for retailers. With Amazon, Walmart, and Target eager to gain hold of the market, retailers are more energized than ever to optimize their business, keep their customers, and better serve the modern day shopper.
What will be top of mind for retailers looking to meet these goals in 2018? Here are a few trends and themes that we think you can expect to see in retail throughout the year.
Retail Apocalypse Shifts to Retail Confidence
The so-called retail apocalypse hit many retailers hard as 2017 saw store closures and blamed the growing prominence of ecommerce as the root of this problem. However, we can’t help but think that “the end of retail” was greatly exaggerated this past year with the majority of retail closures being highly publicized high profile businesses.
To clear the air, the amount of stores that opened in 2017, over 14,000 opens, was greater than the number of store closures, 10,000. With the exception of the apparel sector, most branches of retail are thriving with consumer confidence at an all time high and a strong market to follow it.
2018 will see a resurgence of confident retailers looking to make progress and excel forward vs playing it safe. According to the Forrester report Apocalypse, Schmapocalypse: What’s Really Happening in Retail, the number of store openings and retail startups will overshadow the high profile closings from the previous year. Coming out of a strong holiday shopping season retailers will have a more positive outlook on retail. Big ticket purchase spending is up, with coming of age Millennials looking to furnish homes and take on home improvement projects and make other milestone purchases. The fog that loomed over the industry last year will clear up and make way for forward thinking proactive retailers to shine.
Loyalty Obsessed Retailers
While in 2017 retailers focused on creating superior customer experiences, 2018 will largely involve keeping up the momentum with each customer demographic and gaining their loyalty.
With the increase in both Millennial and Gen Z spending, retailers have welcomed these new customers with open arms. Now that they’ve attracted this younger generation of customers, the key lies in keeping them. Simultaneously they are challenged with not switching up their business so much that it is unattractive to their existing loyal customer base of Gen X and Baby Boomers.
Retailers looking to boost customer loyalty should seek to create more innovate and diverse options for their diverse customer base. The majority of loyalty programs today are simple rebate programs. According to Forrester’s Q2 2017 Global Customer Loyalty Solutions study, the top three business objectives when it comes to loyalty initiatives include engaging customers (58%), retaining existing customers(56%), and acquiring new customers(37%). Tools and resources like retail credit and loyalty programs are a quick way to reward customers for shopping at your stores. Another track to take to drive loyalty this year includes partnerships with adjacent businesses. For example, Casper mattress, a pure play ecommerce mattress store, partnered with West Elm, a brick and mortar furniture store. Developing a partnership like this not only establishes credibility with a beloved brand but also allows you to tap into another similar loyal customer base.
Engagement will be key in harvesting loyalty among new and existing customers. Once you’ve won a customer it’s important to keep up communication cadence to keep them engaged with the brand. Sending personalized emails, promotion and discount codes, and other house keeping emails are an easy way to keep customers engaged and your brand top of mind.
Less novel technology, more smart technology investments
Virtual reality and artificial intelligence peaked the interest of retailers looking to create one-of-a-kind in-store experiences for their customers. With steep implementation and management costs, the question remains: is this technology worth the investment in the long run?
While a virtual reality dressing room and robot shopping carts might bring customers into stores, at the end of the day these novel investments aren’t necessarily getting them across to the finish line and making a sale. In the New Year retailers will look to implement technology that drives results and pushes the needle when it comes to meeting their goals.
What will they be investing in? According to Forester, 66% of retailers are looking to invest more in loyalty technology in 2018. Think loyalty programs, credit programs, and systems that help make the shopping process stress free and convenient for customers.
The Emergence of Mobile as a Major Sales Channel
For the past few years mobile has quietly gone under the radar of retailers, as they have been consumed with ecommerce. That will change in 2018. With consumers spending over $7 billion in retail on the mobile channel in 2017, retailers should now look to fully embrace the channel in the New Year.
This goes beyond having just a mobile responsive website or a store app. The shopping experience that is consistent in brick-and-mortar stores and online, should now carry over to your mobile experience. Any promotions, credit offers, and check out processes should be optimized for this channel. Customers will grow to expect a fluid shopping experience no matter what channel they are shopping on. Smart retailers will work to make mobile seamlessly fit into their 2018 strategy.
Traditional industries going modern
Online pure play businesses generated 30% more in revenue in 2016 than they did in 2015 and 2017 numbers are expected to be even higher.
Retailers in industries like furniture, home improvement, and bedding, have traditionally operated out of brick and mortar stores and have been able to fare well as a regional business. For today’s customer that is looking for convenience, they seek the ability to conduct price comparisons on the spot, and ship to their home no matter where they live. Meaning, how these retailers typically operate won’t suffice for much longer.
As a result expect to see an increase in traditional retailers modernizing their business, and going digital. Furniture stores have already begun to embrace AR that allows customers to arrange and visualize what couches and tables would look like in their homes through the use of an app. Home improvement retailers, like Build.com, have made it possible to give customers access to thousands of home improvement projects and options without having to go completely through a contractor.
Maybe even the most prominent example of traditional industries going modern includes bedding with dozens of pure play ecommerce mattress retailers like Leesa, Saatva, and Tuft & Needle, emerging on to the scene and offering quick and easy shipping, with a hassle free return policy. Customers flock to the convenience of having these products available to them in a matter of clicks.
With Amazon looking to tap into a new industry every day, retailers in these spaces will step up to the plate in 2018 to better serve their customers, differentiate themselves, and ultimately Amazon proof their business.
A Rise in Retail Credit
Retail credit has always been a tool that retailers knew was important to have in place, but rarely worked beyond its implementation and set up to optimize it. As retailers shift their focus to ramping up experience and customer loyalty, retail credit will take center stage.
Early adopters like Build.com sought to find a new way to maintain their largely loyal customer base in the midst of growing competition in their industry. The online home improvement brand has experienced a substantial increase in repeat purchasing and up to a 3X increase in ticket sizes.
But it’s not just the concept of extending more buying power to customers that will win retailers over on credit in 2018. They are looking for an all-in-one solution that won’t add complexities to this experience and can not only offer customers the payment options they are looking for, but also the seamless and convenient checkout process that today’s customers have grown to expect. Platform players, like Vyze, will be key in delivering all the requirements that retailers want to provide shoppers during checkout.
What do you think we can expect from retail in 2018? Let us know at firstname.lastname@example.org.