10 Retail Predictions of 2018 – What Came True?
At the start of the new year, many retail publishers shared their predictions of how they thought the industry would change in 2018. Now at the halfway mark, it’s a significant time to see what has happened so far. Here are 10 retail industry predictions that may – or may not – have come true in the past six months.
1. Online Shopping Will Continue to Soar – True
This prediction is easily true, as it seems the use of online shopping increases year after year, and 2018 is no exception. Online shopping offers several benefits that just aren’t available when shopping on high streets; 24/7 shopping, price comparison, larger selection, and global shopping are just a few reasons why more consumers are shifting to online shopping. Studies show that current online shoppers in the UK make 80% of their retail purchases online, which is 6% higher than in 2017.
2. Artificial Intelligence Powering Customer Experience – False
2017 showed the huge advancement technology went through, as we’ve seen with self-driving cars and Amazon Echo; so it was predicted that the use of AI would make its way to retail stores in 2018 with robots. According to Vend “Companies such as Amazon are investing in robots to help pack and ship items. In 2017, the retail giant had robots in about 20 percent of its fulfilment centres, and we anticipate this number to grow.” While AI might be driving functions behind the scenes, the idea that 2018 would show cashier-less and QR-code driven stores has proved false. However, by 2020 I believe we will be seeing more AI in retail stores.
3. A Cashless Economy – False
The growth of electronic payment systems has led to predictions of a cashless economy. While this isn’t completely true, and probably won’t ever be (at least for a long time), the number of London shops that no longer accept notes or coins has increased this year. In Japan, you can already use Bitcoin to pay at retail stores, so it’s only a matter of time before cryptocurrencies hit retail in more accessible ways. It hasn’t happened yet so far in 2018, but it’s possible that if transactions become simpler to undertake, it could take off in the next few years.
4. The Rise of Private Labels – Both
2017 solidified the rise of discount retailers, so many thought that 2018 would see the private label brands doing exceedingly well, more specifically Amazon. Private labels are brands that are manufactured by a contract or third-party manufacturer and sold under a retailer’s brand name. For example, Amazon has a line of children’s clothing called Kid Nation. Private labels offer quality clothing at an affordable price, threatening retailers like Nike, Calvin Klein and other popular big-name companies. In December 2017, Amazon had roughly 30 private labels in apparel, including denim, activewear, swimwear, and shoes. This number was predicted to increase, but in April 2018 Amazon took a turn and sold over 70 of its private labels, half of which were in apparel. However, while Amazon’s number of private labels has decreased, the number of private labels in the retail industry altogether has significantly gone up, as companies like Target create their own brands to boost profits.
5. Death of the High Street – True
With the rise of online shopping, and the consumer appeal to speed, convenience, and automation, it was predicted that there would be an increase in the number of brick and mortar shops closing. I found this to be true as the number of people visiting UK retail stores fell by 8.6% in March to its lowest recorded level since 2010. That’s a significant loss of customers for the high street, meaning fewer profits. Additionally, high street shops are losing business to discount retailers. Primark has had a rise in demand from cash-conscious shoppers who have been affected by inflation for close to a year, largely because of the decrease in value of the pound since the UK’s vote to leave the EU. Major retailers are continuing to close stores throughout the year including New Look, House of Fraser, Toys R Us and Marks & Spencer.
6. Retailers will adapt to reflect Millennial Values – True
Millennials differ from the last generation of shoppers, in that they care more about a company than merely the quality of its products, often wanting to ensure that the business they support is invested in sustainability, corporate social responsibility and community initiatives. In 2018, this has proved true as more and more companies become significantly more “green”. This is most likely because millennials tend to have more loyalty to retailers, and retailers are willing to change in order to improve retention rates. For example, at the start of 2018 Gucci President and CEO Marco Bizzarri announced that the luxury brand will no longer use mink, fox, rabbit, Karakul lamb, and racoon dog as part of its new 10-year “Culture of Purpose” sustainability plan. Bizzarri stated, “Being socially responsible is one of Gucci’s core values, and we will continue to strive to do better for the environment and animals.”
7. Personalization and Curation of Data – True
As technology becomes more advanced, many predicted that there would be more ways for companies to collect and use data for sales, marketing, customer service, and operations. This can be seen happening throughout the retail industry. One example is how Facebook uses your data on your account to show you specific ads that it thinks you’re likely to enjoy or click on. Walmart has begun to use a more advanced data collection strategy, where they use facial recognition to identify shoppers who are unhappy or frustrated, which tells employees to open new checkout lines. More and more companies are following this mindset in order to acquire a better understanding of their customers.
8. Experience-based Stores – Both
Because of the recent decline in brick and mortar shops, many thought that companies would start to try and enhance the consumer experience at their stores to avoid losing business. The key is creating a memorable in-store experience because it serves as the ultimate compliment to the online one. One store that has created an appealing environment is the fashion-forward brand Missguided. It has opened a new high-energy store intended to immerse its young customers. The enormous shop has covered its walls floor-to-ceiling with digital screens portraying customer-generated content with the hashtag #babesofmissguided.
Mid-way through 2018 only a select few stores have changed their design to appeal to consumers, as many are still sticking to the basics of customer service. Visual design, easy layouts, and convenience are used to create a pleasant experience but don’t allow companies to stand out.
9. New Collaborations Between Retailers – True
2017 saw some unexpected collaborations between companies, such as Louis Vuitton and Supreme. These limited-edition combinations sparked an interest in consumers because of their uniqueness. So far we’ve seen many collaborations between fashion brands such as Kate Spade x Keds, Hunter Boots x Target, Uniqlo x Marimekko, and perhaps the most different Opening Ceremony x Disney. Collaborations between brands are becoming increasingly popular, so it wouldn’t be wrong to expect more as the year goes on.
10. Voice AI Will Change the Way We Shop – False
This is a fairly new way of shopping and it was predicted to take off in 2018. While some consumers use it to shop, the products such as Siri, Google Home and Amazon Echo are mostly being used for more simple reasons: playing music, controlling smart-homes, asking questions and setting alarms.
However, just like Millennials used cell phones as they grew up, there’s a lot of evidence that GenZ is using Voice-AI more. They are being seen as the generation of “voice shoppers”, so as they mature, the use of this new technology should increase. While this way of shopping isn’t so popular in 2018, by the 2020s it could be the norm.
Based on these predictions it’s clear that 2018 is an innovative year for retail. While not all of these predictions have become reality yet, we are only halfway through the year so it’s still possible the industry will continue to see some interesting developments in the lead up to peak.