The days where you have a queue of excited customers lined up outside a store to be first in for the January sales are now a distant memory. Consumers are in charge now and it’s up to retailers to fight hard for their attention and pounds.
Advancements in technology have changed the way consumers interact and buy products. Technology has also enabled a whole host of new types of retailers to emerge, trading across new channels and resulting in traditional retailers having to compete even harder for a share of the purse.
Today’s shoppers are online, on mobile and on social media apps; and they expect their chosen brands to be so as well. Retailers that can create a seamless service and a truly omni-channel offering will create retail’s success stories this year.
Here are three trends we can expect to see more of as retailers fight to stay relevant in 2019.
Experience over things
Overcapacity remains a major burden for many traditional retailers. We’ve already seen the impact of this on established high street names such as House of Fraser, New Look and Homebase, and the focus of ‘rightsizing’ will continue. Unfortunately, that means we’re likely to see more store closures this year.
However, this isn’t the death of the high street as some would suggest; retail certainly hasn’t fallen out of fashion. The reduction of physical stores will help many retailers return fundamentally good businesses to profitability, meaning they can reinvest and turn to technology to not only provide operational efficiencies but also deliver their customers a seamless, omni-channel offering and bring excitement to their stores.
There are already some great examples of in-store tech. The likes of Zara and Ralph Lauren are trialling interactive mirrors and Sports Direct has brought in gaming arenas into its stores, while Nike’s investment in innovations such as the Bootroom, Table and Media Wall has helped the brand connect their physical, online and social retail seamlessly.
Those that see the store as much more than the ‘transaction point’ and embrace the concept of ‘experience over things’ will come out the winners.
Owning less, consuming more
In an economy where there is a shrinking disposable purse, the concept of owning less but consuming more is naturally quite appealing.
Consumers are becoming increasingly satisfied by the idea of hiring goods - not necessarily owning them. According to GlobalData research, for over 40% of millennials, there are some products that they would prefer to rent than own.
People are used to streaming music, films, and books via subscription packages. It gives them huge choice and people are willing to pay the price for convenience rather than ownership. Shoppers are also placing greater importance on sustainability considerations and are increasingly conscious of the impact of fast fashion, single-use plastic and ethical trading standards.
In turn, this is creating huge opportunities for forward-thinking retailers and there are signs that similar rental models are gaining traction across other retail categories. IKEA is already trialling furniture rental in London and a buy-back scheme in Japan that sees sofa’s recycled rather than disposed in landfill. This trend is expected to gain greater pace in the future.
Alexa, let’s go shopping…
Artificial Intelligence (AI) and the data retailers collect will play a huge role in the future of retail not least in better understanding consumer preferences and behaviours. As technology advances, consumers do too.
In less than a year, the number of UK consumers that owned a smart speaker increased from one in 20 to one in ten. However, only 7% of smart speaker-owners in the UK are utilising the assistants to make physical purchases.
There is a belief that consumers are reluctant to allow AI to predict their shopping. However, consumers are time poor and once they start to shop through their speakers and allow the benefits of AI to perform mundane orders of regular purchases, it will become second nature and there will be no turning back.
Could we see voice-commerce become the next big thing? Amazon saw Alexa usage for shopping more than triple over Christmas compared to the year previous. Voice-commerce is in its early stages here in the UK but, combined with the subscription-based trend that we’ve already seen consumers lap up, I can see this as a big opportunity for retailers looking to gain an early mover advantage.
Sophie Michael is head of retail at BDO