What’s in Store for 2018

Retail Predictions for 2018

The business of predicting trends and outcomes is not for the faint-heart and often enough we find that when service providers and consultants try them as a part of their marketing blitz, they end up jumping on the latest bandwagon or buzz in the market. Do you remember, how everyone was predicting a retail apocalypse?

On a Saturday morning, as I wait for my kids to wake up and for the sun to come out to go hiking, I figured, I need to write one as well. I don’t know why. Maybe I am just not into hype and buzz. That’s why I am an operator.

One thing will remain – the customer is the king. Our customer will remain – smart, intelligent, indulgent yet calculated and educated. As the new tax bill takes effect, pay checks incrementally change for the better and the economy continues to flourish, our customers will continue to spend money judiciously. With choice, voice, reach and expectations growing, they will remain the king.

The ‘death of the store’ will be dead. Yes, we had store closings. Yes, malls were affected. Yes, e-commerce sales went up by 4X YOY. Yes, mobile engagement went up. But in 2018, we will still find that 90% of retail is conducted in stores. The trend described by pundits is just a course correction from the days when every retailer grew their footprint and created retail waste for themselves. If you look at all the big brands, they overwhelmingly rely on brick & mortar and will continue to do so in 2018.

Customer experience will increasingly become paramount. Retailers who can distinguish themselves by providing a delightful customer experience will thrive. Those who change their strategy from selling products to selling experiences or making their customers visions come true will benefit; as long as they can deliver on their promises. And when they do it, customers will talk about them.

Stores will continue to be reformatted and digitized into experience centers with sales teams becoming advisers. In-store technology with a focus on customer interaction will continue to evolve. The POS may never be the same as more and more retailers began to implement smarter, smaller and mobile POS systems and even go to the extent of blurring the lines between paying in store or online at the customer’s own convenience. Teams who can clear the information deluge for customers will thrive.

Private Label will rule. One of the notable ways to amplify differentiation has been to rely on private labels and brands. That trend will continue to grow not just on products, but on services and experiences as well. Brands will thrive. Multi-brand stores will face challenges.

Omnichannel will be forgotten. Once the darling buzzword of retail, it will no longer be relevant. Many retailers tried and tried and failed to do omnichannel profitably. The focus on things considered ‘omnichannel’ will move to ensuring the customer can engage, research, build and buy their products seamlessly across the digital and physical spaces. Fulfillment for products from traditional channels will thrive as long as the overall experience is remarkable and noteworthy.

Consolidation, acquisition and extinction will accelerate. Whether pure play online retailers buying physical assets (like Amazon’s acquisition of Whole Foods), or brick and mortar stores buying technology companies (like Walmart’s acquisition of Jet.com), consolidation of multiple brands, venture capitalists buying failing brands, fire sales, or retailers closing shop – the trends will continue.

Online one SKU wonders will loose. In the pure ‘online only’ space, the shakeouts will continue to validate the point (as I have mentioned before) that to survive and scale profitably beyond one SKU wonders, they will need brick and mortar, not e-commerce.

Amazon will continue to scare retailers and dominate the buying space. Buying is different from shopping in that it is task oriented, compulsory, focused on low price and convenience. No one will be able to beat Amazon in that game. And in that game against Amazon, retailers will end up making bad decisions just to neutralize the threat. For some of them, it will end badly.

Cool technology will not become mainstream. Retail is not the early adopter of technology and the alphabet soup of cool technology from AI, ML, IoT, AR, VR, Wearables, Voice based commerce (or Alexa ordering as I call it), cryptocurrencies and Blockchain will not fascinate and dominate retail executive conversations. While service providers will talk about the importance of these technologies, retailers will have no idea what it means to them and therefore will not embrace them. They will not go mainstream. Someday, maybe. Not 2018. On the other hand, Cybersecurity will drive retailers nuts and get them to invest as much as they can to protect their reputation.

Supply Chains will dominate the conversation. As retailers continue to compete in the customer driven economy, they will compete not just based on their products and experiences, but on their supply chains. Supply chains which become agile and provide customers with their desired products profitably will drive the competitive advantage and differentiation required to survive. Technology will become fully embedded in supply chain management. 2018 will see supply chains become more agile, data driven, digital and customer-centric in their approach.