RH: The good news for retailers is that consumer spending, for the large part, is up. The bad news, and the biggest challenge of them all, is breaking through all the ‘noise’ and capturing shoppers’ attention. Shoppers are bombarded with branded messaging, and it’s not going to get any lighter anytime soon.
2018 will also see the further consolidation of retailing centers, particularly struggling C- and D-tier malls, those malls in locations that just don’t have community support to be economically viable. It will be a challenge in those areas for the stronger stores to ‘re-stack’ themselves in new locations and in right-sized store footprints.
Another big challenge, particularly for online channels, is the growing problem of the reverse supply chain and the impact it has on cash flow. Online shoppers are notorious for ordering more then they intend to keep, but the ramifications for the retailer is the inventory that moves all around the country only to eventually return to the warehouse. The retailer not only often pays for the shipping, both ways, but it also suffers from not having that inventory available to sell to other customers. For fashion and seasonal merchandise, that’s a huge opportunity.
Lastly, perhaps the most important challenge will be to deliver seamless, friction-free shopping experiences. Over the past decade, online retail has ‘trained’ shoppers to expect convenience and ease. For a great many shoppers, particularly younger shopper generations, there’s no reason to line up or queue for anything. Ever. Retailers need to ask themselves, ‘How does my store fit into this new shopper expectation?’ The answer for many is, ‘It doesn’t,” and that should be an immediate area of concern for retailers, both large and small.”
What trends should retailers pay attention to?
RH: “Mobile shopping is going to continue its exponential growth, and it’s more than just mobile browsing or shopping, but it’s really mobile transactions. Shoppers are getting more and more comfortable in transacting over their mobile devices, so retailers have to play in that game. If your online properties are not mobile responsive, you’ll face an increasingly tough uphill climb to compete.
Voice is another area that will grow. With the proliferation of Amazon Echo and Google Home devices, voice shopping, particularly for staples and commodities, will continue its march into the mainstream of shopping behaviors.
Lastly, and perhaps most interestingly, is the idea of the physical store as a branding and customer acquisition tool. Acquiring customers online is becoming an incredibly expensive and resource-intensive endeavor, not to mention it’s practically impossible to creative a sustainable competitive advantage in pure-play e-commerce. Spoiler alert: It’s really difficult to out-Amazon Amazon.
More and more brands are opening smaller footprint stores in highly trafficked locations in new markets for the purposes of brand education and awareness — customer acquisition — and using their online stores as a method of fulfilling orders and nurturing the long-term customer relationship.”
RH: “For the independent retailer, I’m not certain it’s the need to do things differently as opposed to doing the things they’ve been able to do the past year or two, but do it quicker and more efficiently.
With the exception of discount stores and a critical few others, shoppers, for the most part, are fleeing from department stores and other mass merchants, and one just has to look at store closings for proof. But, in that vacuum of store closings is arising an influx of the new retailer, brands going direct-to-consumer and building their own relationships with customers.
That’s exactly what independent retailers have been doing for years, and it’s something many brands have a distinct core competency in. They need to continue to deliver exceptional shopper service, but they probably need to step up nurturing activities to avoid getting lost in the noise of so many brand communications.
In addition to customer acquisition marketing campaigns, independent retailers should look to further strengthen their customer engagement and retention activities, building a genuine, two-way dialogue between customers and the brand, and fostering those important relationships. Brands should solicit feedback on products and services, and act accordingly so that customers feel heard. Additionally, they should proactively solicit reviews, as shoppers are increasingly finding peer reviews valuable aids in their shopping journeys. Lastly, independent retailers should produce and distribute engaging content for their shoppers – not content designed to directly market and sell, but rather content geared toward the needs of their customers, like how to decorate for a party, how to dress for that important job interview, etc.”
Which technological developments will be most influential in retail in the coming year?
RH: “2018 will be the year of artificial intelligence in retail, and not just through online, digital channels, but in-store at physical retail as well. In 2017, AI left its mark online with chatbots and the like, and shoppers can continue to expect those features to grow both more widespread and more effective.
An interesting area of technological development in the coming year will be an area that won’t be immediately visible to shoppers, and that’s in-store. New machine learning technologies will help retailers better manage of operate their businesses, from the beginning of the supply chain through the store and outside the door into post-sale service and marketing. AI tools will help retailers become more efficient and effective, allowing them to better serve the needs of their customers and shoppers. The key is to make these benefits real for shoppers, something that can be felt through better shopping experiences, for what’s good for shoppers is good for the long-term interest of the retail enterprise.”
What buzzword of this year do you hope will disappear in 2018?
RH: “The industry needs to stop talking to itself. Retail is not run by retailers. Retail is now, and forever will be, run by consumers. They have unparalleled access to product and service information and nearly unlimited global alternatives in which to shop. Shoppers are in charge, and retailers need to recognize that. So, be gone with nonsensical verbiage like ‘omnichannel’ and ‘unified commerce’ and all that other jargon that means absolutely nothing to consumers. To consumers, it’s all ‘shopping,’ and the sooner retail professionals can get their brains wrapped around that simple truth, the better.”