It’s a new year and retail is moving faster—finally we’re seeing retailers looking in the right direction—up. A unified commerce environment, an on-demand marketplace, social media, growing competition and new technologies mean an evolution in the way we shop.
Everything is changing – from pricing and planning the just right product assortments to forecasting demand and creating an unforgettable in-store experience. Brick and mortar is transforming in surprising new ways and competition is coming from unexpected places. Consumers are changing and advancements in technology are taking us further.
And while we aren’t exactly where Ridley Scott thought we would be, there’s still plenty of automation, artificial intelligence (AI) and machine learning (ML) to go around. So, take five, grab a cup of coffee and read on for my predictions of what the end of a decade in retail has in store.
Here are five ways you’ll see the retail industry changing this year:
1. The new customer experience demands precision.
When it comes to product assortments, promotions, pricing and experience, your shoppers want everything their way. Retailers are using artificial intelligence (AI) and machine learning (ML) to create a personalized customer experience – mining customer data for meticulous and exacting precision. This is the year when customer centricity is driving deeper roots to a personal experience for shoppers across every channel.
Automation and visibility across the supply chain are becoming key differentiators for retailers and their supply chains. That means more businesses will be honing their inventory types and levels to drive the right products closer to consumers for faster response times.
The Internet of Things (IOT) will reveal a new level of visibility across the supply chain. Products will be tagged and tracked from the factory, across the ocean, on the shelf and all the way to the consumer in more agile ways – promoting more customer loyalty and satisfaction.
2. Competition is continuing to change on every channel.
Social commerce is becoming a reality and brands will continue investing across networks to reach customers on every medium. According to a recent eMarketer report, almost 70% of retailers used Instagram for marketing last year while 28% used Snapchat.
More consumers are using social media to research their purchases. In fact, more men used Pinterest to look for products and details on holiday sales than women last year. Over Black Friday weekend social media screen time almost doubled for some age groups.
Meanwhile manufacturers are using social media in new ways to connect with consumers directly. This year, direct-to-consumer (DTC) will continue to gain in traction as customers have been trained to demand quicker response times and replenishment of commodity items.
From their social feeds to eCommerce, more customers are buying products right from the source. According to Retail Dive, last year, direct-to-consumer brands captured more market share based on those essential differentiators – product quality, convenience and fast and free shipping. Expect to see that market share increase in 2019.
3. Price optimization is a must with growing competition.This year pricing is coming into focus as retailers navigate through more transparency within the industry, reshaping customer expectations around agile, localized pricing. New trends including on-demand technologies are creating seismic shifts in consumer expectations and behavior.
Throughout this entire decade, there have been endless fluctuations in retail, including the rise of Uber and Amazon. Think about how both have changed consumer behavior and the impact of surge pricing and connecting demand. We’ve already been seeing disruption across every major retail front, but nothing is becoming bigger for competing in retail than having the right price at the right time.
4. Customer loyalty is all about social good and convenience. Shoppers want brands that align with their value systems. According to the National Retail Federation (NRF), about 60% of consumers would stop purchasing from one of their favorite brands or retailers if they found the business values didn’t match their own. Customers will be drawn to brands that demonstrate sustainable practices, like Everlane and Starbucks who is eliminating plastic straws completely by next year.
Consumers are looking for transparency and brands driven by values, they’re also looking for convenience. Shoppers want their purchases on their terms – expectations and service levels are rising.
5. Shopping channels are blurring like never before.
With unified commerce dominating the marketplace, channels will continue to blur and cease to exist in the eyes of your consumers. Always-on networks will emerge. Ecommerce will need to drive economies of scale and retailers will seek out technologies like automation, AI and ML to minimize inventory movement and localize inventory to customer demand.
Distinct channels of distribution are fading out of existence and in the in-store experience is becoming exactly that, an experience.
Retailers will bring customers in-store by building deep connections and unforgettable experiences like Nike’s new concept stores. Technologies like augmented reality (AR) and virtual reality (VR) will help customers shop from their favorite brands live, like Rebecca Minkoff.
Checkout-free concepts like Amazon Go will become more prevalent – their cashierless store concepts could top $4 billion in sales by 2021. Meanwhile, brands will become more experiential like Nordstrom Local – a new inventory-free approach to retail.
This sea change is marked by the exit of Manhattan’s iconic brick and mortar retailer, Lord & Taylor. The historic retail building is getting a second life as home to WeWork’s shared workspace for technology startups and up-and-coming entrepreneurs.
What are your retail predictions for 2019?
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