The 2018 retail trends demonstrate how the fundamental way that we shop is up for reinterpretation, given the power of technology at our disposal, and retail is being reinvented. Today, shoppers have the power to buy from any channel, with endless amounts of information available to them in order to make an informed decision. This isn’t a trend, but just a new reality that brands and retailers now must deal with. As a result, the primary focus for top retailers is not how they regain the “upper hand” in the shopper-retailer relationship, but how can they become the retailer of choice by creating unique, personal, and convenient experiences for their customers. But what is the most unique in this evolution, and different from the past is that the pace of change in the retail industry may seem fast today, but it is only going to get faster. Companies need to find new ways of working that enables reinvention in order to remain competitive in the short- and long-term.
Digital as the Backbone of Retail
It would be disingenuous to write a trends piece and NOT start with digital. The reality is that digital technology no longer refers simply to a retailer’s website, but to the entire foundation that serves as the communication vehicle to the customer. This could (and should) refer to traditional eCommerce, mobile commerce, and in-store technologies, as customers expect consistent shopping experiences, with information at their fingertips no matter the purchase point. Recent metrics say as many as 80% of shoppers are using mobile devices while in stores to look up product reviews, compare prices, or find alternative store locations. These cross-platform shoppers will continue to grow in number and retailers who are not proactively embracing these customers are risking out on missed sales. In years past, “omnichannel” has been a buzzword focused on making sure that retailers could get the right product to the right customer at the right location, but digital technology has empowered market leaders to go beyond that – creating unique brand experiences both in-store and online. Amazon Go and Nordstrom Local are two completely different concepts, both made possible by a strong fundamental digital backbone, that are creating new experiences for shoppers and ultimately creating repeat customers. This approach to consistent experiences, regardless of channel, is critical for a brand that wants to put forth a specific image – and will prevent confusion for a customer who experiences a great digital website, but a store that looks like it is stuck in the 90s.
Personalization – Not Just a Trend
I remember attending NRF Big Show in 2017 and hearing Jodie Fox, co-founder of Shoes of Prey, saying that personalization and customization is not a fad, but the future. Fast forward a year and she couldn’t have been more right. In fact, it has grown in importance in the time since she said those words on stage as personalization is not a product problem, nor a marketing problem – it is a retail opportunity. Personalization impacts all touchpoints with a customer, as they now want to only receive relevant messages, see relevant products, and have catered store experiences. Curated subscription services have never been more popular, with 5.7 million shoppers in the US today receiving monthly mystery boxes of goods that have been picked out based on their preferences and tastes. While online personalization is more mature – we’ve all experienced seeing ads online for products we just happened to search earlier in the day – in-store personalization is still a major opportunity for retailers as we wade into 2018. When a shopper walks in the door, associates should be able to cater their message to that individual, however recent research shows that only 19% of brands provide this information to their associates, and only 7% have access to view a customer’s online cart. Clienteling is by no means a new technology but one that retailers who want to create a personal touch, as well as a consistent, cross-channel experience in their physical stores should explore.
Artificial Intelligence as an Enabler
As we move forward into 2018 and beyond, Artificial Intelligence (AI) is going to serve as the key enabler that allows retailers to become more highly efficient in all aspects of their business. Without AI, the personalization mentioned above becomes a much more difficult problem to tackle. Retailers have spent years, if not decades, accumulating as much data as possible – and AI is now allowing the application of this data back into the business in a rapid way. New forecasts say that retailers will spend as much as $3.4 billion on AI in 2018 – with a focus on automated customer service agents, expert shopping advisors and product recommendations, and merchandising for omnichannel operations. Artificial intelligence thus has the ability to improve every touchpoint with the customer – it can further optimize what products the customer sees when browsing online, what product is actually in the stores when they visit in-person, and even what is communicated to them when interacting with online chatbots. Voice and text based virtual assistants are a growing channel in retail, with 21% of shoppers using these agents to shop in the United States. For these to be effective, the customer must have a seamless interaction – and AI is the way to make it happen.
Managing Growth in a Competitive Environment
Retail is in a state of change. While many recent headlines preached that retail is dying, or that we are in the retail apocalypse, the reality is that there is a massive shift in how people buy, and retailers are now being forced to react. The above trends reflect opportunities that every retailer can immediately consider investing in, but the solutions will likely look different for each, based on their brand image and consumer base. A few characteristics that retailers should look to adopt are flexibility and adaptability. It is not enough to simply wait and see what a market leader like Amazon or Walmart does, and then try to repeat it. Retailers desperately need to seek out innovation, and then try it out. Whether online in A/B testing or in-person in their stores, retailers shouldn’t be afraid to sample innovative ways to build their brand and then take to market the ideas that are successful. As the Chinese proverb says, “a journey of a thousand miles begins with a single step” – retailers should take this to heart and take those first steps as many times as they can. Each step won’t lead to a journey, but the ones that do could potentially be game-changers.
Forward-Looking Retailers Will Win
As we push towards 2020, we can recognize that retail could very well look completely different in even two years. New channels can emerge, enabled by troves of data and massive investments in technology. Content will likely be even more personalized, looking at all aspects of a customer journey, so that products you didn’t even know you wanted are sent to you across platforms as they are released. We don’t know exactly what it will look like, but we do know that retailers that start investing in and planning for the future now are placing the right bets as we move towards the even more consumer-centric environment of the future.