Top 14 Retail Trends of 2018 That Will Redefine the Industry
As an Amazon evangelist and futurist, I’m always thinking about disruption. In 2018, retail will continue to morph into the next stage of consumer fulfillment. As many of my colleagues attend the National Retail Federation in New York, I present these retail trends to you all.
Retail of all industries, might be one of the most illustrative of being on the front lines of tech disruption.
However it’s important to point out, what does “tech disruption” even mean in the version and flavor of 2018? It’s immersion, speed, convenience and automation.
Each year retail is morphing into its future iterations as a continual upgrading of consumer fulfillment is changing the fabric of how we order goods and services.
The future of retail however is not a mystery, it’s simply a continuation of trends already in motion for some time.
In my opinion, here are some of the biggest retail stories to watch in 2018.
Trend #1. Store Closures Will Accelerate
If 2017 saw a deluge of retail store closures and bankruptcies, there’s some evidence 2018 could be even worse. This is in no small part due to the decline and likely demise of the Sears, Macy’s and others. The fact is, there’s more retailers on the death watch now than in the supposed heart of the “retail apocalypse” last year.
Let’s face it, Toys R Us, JCPenney, Payless and a long list of others are in trouble. The Retail Apocalypse is not an isolated event but an acceleration of what we once termed as “online shopping” and the changing preferences of consumers towards discount shopping and away from legacy brands.
Retail as we know it is shifting and no thanks to a debt-laden U.S. Retail sector. With voice activated shopping expected to have a big year in 2018, with the way we order restaurant food in already taking hold, as well as AR view showrooming of products, the bloated physical infrastructure of retail can continue to see epic shrinkage.
Trend #2. Consolidation and Merger & Acquisitions will Increase
Expect to see some more big-deals in terms of retail acquisitions. Amazon acquiring Whole Foods and Walmart scooping up Fashion retail startups was just the beginning in the sector.
Will Amazon seek to push into physical retail not just to compete with Walmart but with Alibaba? Who knows, but the outrageous idea of them acquiring Target may in the months and years to become feel less like fiction and more like an opportunity.
3. Mobile Payments Will Accelerate a Cashless Economy
Where China is already cashless in thanks to WeChat Pay and Alipay, the rest of the world is catching up with the likes of Walmart Pay, Amazon Pay, Apple Pay and soon payments in terms of cryptocurrencies.
A greater variety of mobile payment options means it’s only a matter of time before U.S. consumers to from debit and plastic to more mobile payments that are faster. In a world where in Japan you can pay in Bitcoin at retail stores, it’s only a matter of time before cryptocurrencies hit Retail in more accessible ways.
4. Brick and Mortar Experiences Evolve
Creating more immersion in-store is also on the rise as physical retailers realize they need to up their customer experience game in order to remain relevant. This takes many forms, but adding value-add educational and entertainment to store environments is a big plus. From show-room style storefronts to even online retailers getting a physical brand footprint, omnichannel is taking new forms motivating paths to purchase from click and collect to new levels of showrooming. Retail brands are not just products anymore, they are living experiences. As such, retailtainment and new experiments are on the rise to appeal to the experience-driven shopper and changing consumer preferences.
5. Can Google Express become Relevant vs. Amazon Prime with Voice Activated Shopping?
Even as more Google Home and Google Home Mini devices were sold during the Holidays of 2017 than ever before, and even if Google eats into Amazon amazing share of the smart speaker market — there’s no reason to assume Google Express, even with an amazing list of participating retailers, can do much against the strength of Amazon Prime.
While Google’s smart screen will likely do wonders with YouTube, beating our Facebook’s iteration and being more useful than Amazon’s Echo Show, in terms of shopping convenience and Alexa leading to higher spend per Amazon Prime user, Amazon still lives in a sweet spot that Google cannot touch.
In fact with regards to retail and advertising, Amazon is likely to out-duel Google in the future of Voice-AI and voice mediated spending. This is because while Alexa skills have a direct utility and wake-words, Google Home excels rather in logistics and integration with the likes of Google Maps. There’s no real competing with 30,000 Alexa Skills. Google practically giving away Google Home Minis shows the desperation; and for retail — the great odds against them even competing with Amazon Echo devices in the space.
6. 2018 is the Year of Private Labels
The unsung heroes of 2018 will be the in-house brands of the likes of Amazon. Inspite of a series of fashion acquisitions by Walmart, Amazon and Target’s private label brands still offer more value, by quite a wide margin. The exclusivity and margins of private label offerings can’t be beat if you understand your consumers well. Here is where Amazon’s appeal and web traffic really means they can take a greater share of the apparel retail market away from retailers whose stocks will subsequently suffer.
If 2017 solidified the rise of discount orientated retailers, I think 2018 will see the private label brands doing exceedingly well. Amazon has over 41 private label brands and this is only increasing. Amazon can launch private labels exceedingly rapidly to adjust to consumer demand, with the majority of them in apparel thus far.
7. GenZ become Voice Search Natives
In retail and technology, the trends of today and early adoption by young people, become the consumer preferences of tomorrow. There’s a lot of evidence that GenZ are using Voice-AI more natively much as Millennials used mobile-first as they grow up. This means that GenZ is an entire cohort who will be voice-activated shopping natives. This is important to recognize in how the future of online shopping scales. Alibaba has its own mandarin speaking smart speaker too where the Chinese consumer is monetized with some of the best consumer data.
The intersection between Voice-activated shopping and the Chinese and Indian consumer will be pretty important to the future of global e-commerce. Owners of Alexa devices bought about 10% more as Amazon Prime members, however this is expected to increase steadily as Voice-AI becomes more sophisticated and GenZ grow up a little to and in terms of discretionary income. Here again, baby boomers who adopt technology and who possess sizeable purchasing power, may actually prefer voice activated shopping over mobile shopping itself for its added convenience. The impact of voice search on the future of retail cannot be underestimated.
7. Retailers Sync with Millennial Values
In 2018 retailers must sync increasingly with Millennials, who have different cultural mindsets and customer experience preferences. These include sustainability, corporate social responsibility and community initiatives, among others. Millennials seek educational insights and add-value experiences on-site in stores and collaborative partnerships among brands that are creative and offer great deals.
Millennials need omnichannel integration and brands that know them and cater to their changing consumer preferences of the new age shopper. Millennials are loyal to retailers who demonstrate a values sync from brand image, to product, to the influencers and advocates they associate with.
8. The Second Coming of QR Codes is Real
Whether it’s e-commerce solution Shopify or the leading printer solution for SMBs, Star Micronics, Western retailers and payment providers will learn to follow China’s innovation of QR codes. WeChat and Alipay have made QR codes synonymous with access to services, and this trend will spread to the west as even Amazon’s AmazonGo stores will use QR codes as the method to sign-in to the POS when you enter one of the futuristic stores.
In 2018–2020 QR codes won’t just make a comeback, they will dominate how we access deals, learn about products in-store and access innovative loyalty programs. According to Juniper Research, we’ll see QR code offer redemptions increase by 5x from 2018 to 2022. Think about that, 5 billion QR code coupons are expected to be redeemed by more than 1 billion mobile devices.
9. Mastering Offline Experiences
Retailers can’t just offer amazing products, digital optimization and some semblance of personalization — they need to keep shopping as human and visual as possible. The marketplace might be transforming, but humans are still the same we were trading at the marketplace hundreds and thousands of years ago. We are still impressed by the same things; great customer service, visual design, easy layouts, convenient experiences that are memorable. Customer experiences that are unique and offer a quality you can’t find online!
Offline experiences are those “analog tech” nuances that build retention and grow brand trust. Many of these “offline experiences” will also be about how data and AI is used to collect and re-target customers in new ways. What is an experience in the digital age? It’s a cluster of how a brand reaches you; and data-driven approaches that are immersive is the key. But these can also occur in-person, and retailers are learning how in 2018.
Trend #10. Robotic Retail Will Scale
The robot to human ratio is changing fast in E-commerce warehouses. Many of the new retail jobs are in these environments. Walmart is testing retail robots for shelf-scanning and cleaning quite aggressively. JD.com has invested in retail automation of the E-commerce warehouses that may be ahead of the likes of Amazon and Alibaba. Drone delivery is increasingly becoming an option.
To assume that the spike in robots of the 2020s won’t impact retail is absurd. Self-driving cars themselves could in theory “delivery” packages with a robotic resident in the self-driving car. Before 2020, we’ll see increasingly consumer facing robots in the retail store itself. Then we have cashierless and QR code driven retail mini-stores popping up; sometimes appearing like mobile stores that move, and at other times more like a Japanese like vending machine that’s run with Artificial Intelligence. All of these things combined and heading towards the traveling “airships” where drones come down to deliver our goods — means robotic retail is just beginning; but by the 2030s will be the norm.
Improvements in logistics, robotics and consumer-fulfillment like Amazon Dash buttons means a lot of retail growth isn’t just around data-centric retailers, but robotic-centric retailers who usher in an age of automation in the retail sector. If you can make pepper (see above) like robots that are truly likeable and helpful; you will not need as many sales associates in the store.
11. Retail Keeps Failing at Personalization
The retail listicles often include a section on “Personalization”. However, if we’ve learned anything about this the last five years, it’s an empty promise and a red herring. The retail industry has been failing at personalization, for quite some time. This is why Amazon getting into the smart home, healthcare and banking makes so much sense. For true personalization to occur you need more than just online cookies and the usual segments.
Personalization works both ways and with changing consumer preferences and legacy advertising (including Facebook & Instagram Ads) not working as well on younger consumers, the next level of personalization will require more sophisticated data sets and artificial intelligence than currently exists. Offering experiences to your audience in the physical store, is not personalization. Personalization is offering a customer-centric approach to finding, building and getting alerts for the products they love. 3D-printing a customized product, that’s personalization and it by no means is here yet.
12. Retailers Need to Migrate from Email to SMS
With social media reaching saturation points of engagement, retailers will need to up their presence on SMS apps and via chatbots. This will mean WhatsApp for Business could be very important for retail brands — to get that instant communication to consumers.
Voice-AI will also mean an even greater decline in Email engagement. As cheap and good as the ROI of Email is; for the consumer is just not ideal anymore. Chats were quite disappointing in 2017, so a greater presence on SMS like apps such as Snapchat, WeChat, Facebook Messenger and WhatsApp means a more direct communications approach that syncs with the new consumer. This will allow among other things, big retailers the ability to to provide customers with useful notifications like discount info on fav products, delivery confirmations, new recommended products, cross-selling, and other updates.
Consumers don’t actually want to see Retailers necessarily in their Instagram story feed. Social media and Email isn’t what it used to be for retailers, and Voice-AI, SMS and chatbots will help upgrade the channel to consumers.
13. Checkout Will Become Obsolete
We basically know that “checkout” in retail is a legacy concept. Self-checkout is not the answer, but computer vision combined with machine learning might be. Cashierless stores will be the norm. In China, they already have implemented employee less cafes. The point of sale can be remote. You can sign-in with a QR code; sign-in becomes the new checkout. RFID was too costly and failed.
But how we view the checkout has changed. We now expect AmazonGo type instant fulfillment and speed of customer experience. Anything less is just sort of old-school. Speaking with retail associates might soon be as old-fashioned, it wouldn’t surprise me. Of course, how will this impact retail jobs? Yet more implications of how the automation economy impacts retail. The rules of the store are changing. One of the fundamental economic institutions of our shared human history, is becoming something else.
It’s not so much that we need grab and go, it’s that computer vision is quickly reaching the point where it’s getting a bit absurd to have a checkout-line in the first place.
14. Mobile AR becomes a legit Channel for Retailers in 2018
As Retail Dive correctly point out, Voice isn’t the only war on the path to consumer for retailers. For mobile augmented reality immersion, there’s also a platform war going on between Apple, Facebook, Google and others that is escalating in the race to become a dominant entryway for consumers’ AR experiences.
The point here is not hype, but that Voice and AR will provide additional channels for online shopping to occur. The additional immersion means a boost to the retailers who implement it the best. More time on the Amazon app with Amazon AR view leading to more purchases, yeah pretty much.
Apple’s ARKit and Google’s ARCore will enable devs to create more immersive mobile gateways for consumer products and for retailers to gain traction. It’s not quite Alexa, but it’s still a notable trend.
The future of mobile is incredibly important for retailers, as they learn to do retailtainment better. Gaming and social AR apps could be prime real-estate for retailers. Harry Potters knows magic, but everyone needs to shop.