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2018 Retail Trends

Updated: May 8

Welcome to the experience economy. Combining customer research, technology, and outside-the-box thinking, brands and retailers have reinvented shopping as a personalized, participatory experience that few consumers can resist. For brick & mortars, creating exciting in-store experiences promises to bring back customers once thought lost to online shopping, while online retailers are finding new ways to win over consumers and grow their market share. Against this backdrop, here are my top retail trends for 2018.

Malls Create Unique Customer Experiences

Great customer experiences happen when a company effectively uses services to set the stage and goods as props to entertain. Pop-up stores allow retailers to wow consumers in small spaces with limited investment, and malls increasingly bring in non-traditional and multicultural retailers to differentiate and enliven their offerings. Platform, a Los Angeles-based shopping center, requires potential tenants to demonstrate the unique experiences they will provide. Nordstrom, meanwhile, has launched Nordstrom Local, a clothing “store” that instead of merchandise, showcases personal stylists, same-day ordering, on-site tailoring, and experiential amenities including manicures and a variety of beverages to relax with. Anticipating the unexpected, shoppers look forward to mall trips and even confirmed couch potatoes may be tempted. Fusing entertainment and shopping has become the mall’s new mission.

Consumers Demand On-Demand Delivery

Fast delivery isn’t always critical, but options for convenience and lifestyle are universally appreciated. Fetchr, a delivery service in Dubai, uses your smartphone to determine your location and deliver your goods to wherever you are. Walmart and leading supermarket chains continue to expand their online ordering/in-store pickup options. When on-demand services are available, the customer designates a pickup time, then pulls into stations with kiosks where associates are standing by to load the groceries (some may even have treats on-hand for your kids and furry friends). For consumers who crave instant gratification, not to mention convenience, same-day delivery is widely available and spreading outward from its metropolitan test-beds.

Shop & Vacation: The Perfect Combination

When Willie Sutton, the notorious bank robber, was asked, “Why do you rob banks?” he was known to respond, “That’s where the money is.” Brands are smart enough to follow the money as well, and rather than wait for customers to come to them, they have been ramping up their presence in hotels and resorts. Satellite stores in hotel lobbies have a celebrated history, of course, but the pressures of time and distractedness afflicting consumers in modern life has no historic equivalent—why wouldn’t brands aim to reach consumers when they are relaxed, with time on their hands, and ready to shop as a vital part of their vacation experience?

Retailers Add Wellness & Lifestyle Programs

Among the new and immersive customer experiences offered by brick & mortars are complimentary wellness and nutrition programs, with retailers taking their cue from the hospitality industry. Westin Hotels helped lead the way with RunWESTIN™, a New Balance-sponsored program of scenic three- and five-mile running routes available to hotel guests. Lululemon, a yoga clothing specialty retailer, offers yoga classes and running clinics, while Williams-Sonoma provides in-store cooking classes. The expansion of such services enhances the shopping experience and increases the number and quality of human-to-human connections between associates and customers. For many of us, the word “shopping” is a sure-fire stress inducer; by incorporating wellness and lifestyle activities, businesses are putting the customer’s well-being and relaxation first, and they stand to reap the benefits.

3D Printing Provides Customization & Fast-Track Access

3D printing lets retailers reduce inventories and offer shoppers unique, fully customized products. Boasting “+50 high quality materials,” Shapeways is leading the charge to create a marketplace where brands and consumers design and produce the original merchandise they want. Nike, for instance, can quickly prototype a new athletic shoe and fast-track a go-to-market strategy, while California-based Accent, a custom accessory company, turns its customers’ descriptions, drawings, and ideas into wearable pieces of art. 3D printing takes the concept of consumer choice to an entirely new level, and the trend will continue to fire our imaginations as the technology blooms.

Retailers Offer a Single Point of Contact

While the lion’s share of transactions continue to occur in brick & mortar, an increasing percentage of sales are being originated on other channels. Companies like Saks are offering consumers a single point of contact though a new company, In-store associates can recommend and sell their clients products online through a storefront application. It’s a winning combination for the customer who depends on recommendations from a savvy associate, who earns commission regardless of whether the order is placed online or in-store. Additionally, through, smartphone-toting shoppers in the vicinity of a Saks location are prompted to stop by the store. The benefits: personalization, a better customer experience, higher revenues, and fewer returns.

Online Brands Provide Personal Stylists as a Competitive Differentiator

Personal stylists are no longer available only at high-end fashion retailers, thanks to innovative online shops like Stitch Fix. Although the company is at heart a subscription service (subscriptions are, in fact, optional), it differentiates itself by using data analysis to understand each customer and deliver apparel tailored to his or her personal style. This data-driven approach, effectively supported by a human touch (the company bills its customer service as “100% human” and answers inquiries 7 days a week), offers clients a customized and highly anticipatory buying experience along with free shipping on purchases and returns. In employing more than 3,300 stylists, nearly 80 data scientists, and with merchandise from some 450 brands, Stitch Fix has become retail’s poster-child for personalization on a broad scale.

Brick & Mortar Retailers Jump on the Long-Tail Bandwagon

Starting in the ’90s, online shopping allowed retailers to become successful specialty stores. Suddenly, consumers could easily purchase unusual products that, in the pre-internet era, would have been virtually impossible to find in stores. Fast forward to 2018, where retailers’ long-tail strategy calls for selling fewer (but popular) items in large quantities. An example of this strategy is Walmart’s acquisition of outdoor gear and apparel e-tailer Moosejaw. Through this acquisition, the big-box giant gains entrance to a conspicuous online long-tail market, while Moosejaw continues to operate standalone physical stores and engage customers through its quirky “Moosejaw Madness” promos.

Facial Recognition Improves Security

Facial recognition technology isn’t new, but its leaps and bounds in 2017 have set it up to go mainstream in 2018. With a glance, Apple iPhone X users can unlock their phones and easily authorize purchases through Apple Pay. The pay-by-face feature offers a secure, fast, and convenient way to make purchases and will completely change the way we do business. And lest you think Apple has a stranglehold on the technology, consider that facial recognition is already used by more than 120 million people in China, first and foremost in banking applications, as Chinese firms like Face++ and Ant Financial (Alipay) develop innovative applications with global markets in mind.

Stores Become Communities

Even before Apple announced its “town square” alternative to stores, with “avenues” rather than aisles, many of the tech giant’s brick & mortar outlets had become well-established places to hang out, interact with other brand loyalists, and participate in free classes on coding, music, and photography. The expanded idea is to create outdoor plazas where people can relax, meet up with friends, or just listen to local artists on the weekends. Apple (being Apple) is not merely indulging its customers’ innate human need to belong, but raising consumer expectations across the board. Within a few short years, retailers that have proven unable or unwilling to create a sense of community will watch helplessly as their customers leave for greener pastures.

Companies Focus on Returns

The return rate for online shopping hovers around 30%, while brick & mortar boasts under 10%. Online returns are costly for the retailer and inconvenient for the customer, and as might be expected, Amazon is addressing the problem on multiple fronts. While gearing up to sell custom-fit, “on-demand” clothing, tailored to customers’ precise measurements, the internet giant is already letting shoppers return (eligible) merchandise at more than eighty Kohl’s stores in the Chicago and Los Angeles areas. Meanwhile, SmartGift helps retailers reduce returns of gift merchandise shipped to consumers by transforming the gift-giving marketplace through a conversational, P2P technology. An order is placed and the recipient receives a text, email, messenger, or whatsapp notification. They then have the option to customize their gift before it ships, dramatically reducing returns. It’s a win-win-win combination for giftee, gifter and retailer.

Brick & mortar remains under siege, yet established retailers such as Best Buy have survived in spite of analysts’ predictions that Amazon would eat them for lunch. What’s Best Buy’s secret? According to CEO Hubert Joly, the firm has beat Wall Street’s expectations by matching Amazon’s prices, turning brick & mortar stores into showcases, providing new shipping and delivery options, quietly cutting costs, and training staff to consistently deliver a better customer experience. Every brand and retailer needs to think about the basics as they implement the trend-based strategies presented here. Great tech and people delivering service with passion is a must-have combination for thriving in the experience economy.

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