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Important retail trends for 2018

There are several trends impacting how retailers conduct business and keep up with consumer expectations. RICHARD SHAPIRO sheds light on the critical developments for 2018.

Welcome to the experience economy. By combining customer research, technology and outside-the-box thinking, independent retailers and brands have reinvented shopping as a personalised, participatory experience that few consumers can resist.

For bricks-and-mortar retailers, exciting in-store experiences promises to bring back customers once thought lost to online shopping; while online retailers are finding new ways to win more consumers and increase market share.

Against this backdrop, here are the top retail trends for 2018.

Shopping centres to offer unique experiences

Great customer experiences happen when a business 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 shopping centres increasingly introduce non-traditional and multicultural retailers to differentiate and enliven their offerings.

"For many, 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 reaping the benefits."

Platform, a Los Angeles-based shopping centre, requires potential tenants to demonstrate the unique experiences they will provide. Meanwhile, US department store Nordstrom has launched Nordstrom Local, a clothing ‘store’ that showcases personal stylists, same-day ordering, on-site tailoring and experiential amenities including manicures and a variety of beverages. Anticipating the unexpected, shoppers look forward to shopping-centre trips.

Fusing entertainment with shopping has become the mission of many shopping centres, and analysts expect this trend to become even more pertinent now that Amazon has entered Australia.

In fact, some shopping-centre operators in Australia are already responding. The redevelopment of the Chadstone Shopping Centre in Melbourne, for example, includes a dine-in restaurant precinct, an up-market movie theatre and a LegoLand Discovery Centre.

Chadstone also hosted a VIP shopping party late last year with special offers, live performances, in-store events, complimentary sparkling wine, baked Christmas treats and cheese tastings.

On-demand delivery to be available everywhere

Fast delivery might not be critical but it sure is appreciated given the convenience it provides. Fetchr, a delivery service in Dubai, uses a consumer’s smartphone to determine their location, then delivers goods to the exact spot. New on-demand pickup services are emerging where customers can nominate a pickup time then collect their goods from fully-staffed kiosks without ever leaving their cars.

For consumers who crave instant gratification as well as convenience, same-day delivery is widely available, and is spreading outward rapidly from its metropolitan test-beds.

Satellite stores to grow

When asked why he always robbed banks, notorious criminal Willie Sutton was known to respond, “That’s where the money is.” Brands are smart enough to follow the money as well. Rather than waiting for customers to come to them, luxury brands have been ramping up their presence in hotels and resorts.

Satellite stores in hotel lobbies have a celebrated history but the modern-day pressures of time and distraction make them more relevant now than ever. Why wouldn’t brands aim to reach consumers where they are most relaxed, have time on their hands and are ready to shop?

Wellness programs to come to retail
Customer expectations continue to grow
Customer expectations continue to grow

Among the new and immersive customer experiences offered by bricks-and-mortar retailers are complimentary wellness and nutrition programs, a sure sign that retailers are taking their cues from the hospitality industry. Westin Hotels & Resorts leads the way with RunWestin, a program of scenic running routes available to hotel guests and sponsored by New Balance; activewear specialist Lululemon offers yoga classes and running clinics; kitchenware and home-furnishings retailer Williams-Sonoma provides in-store cooking classes.

The expansion of such services enhances the shopping experience and increases the number and quality of exchanges between salespeople and customers. For many, 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 reaping the benefits.

3D Printing to enhance customisation

With 3D printing, retailers can reduce inventories and offer consumers unique, fully-customised products. Online, 3D-printing business Shapeways is spearheading the charge to create a marketplace where consumers design and produce the merchandise they want. In this way, a brand like Nike could prototype a new athletic shoe and go to market on the same day.

The technology is also emerging in jewellery. California-based Accent, which describes itself as a custom-accessory business, turns customer descriptions, drawings and ideas into wearable pieces of art – necklaces, bracelets and anklets are currently on offer. This 3D printing takes the concept of consumer choice to an entirely new level and the trend will continue to fire imaginations as the technology blooms.

Retailers to use single points of contact

The lion’s share of sales transactions continue to occur in bricks-and-mortar stores; however, the percentage of sales via other channels is rising. Retailers like Saks Fifth Avenue, Bloomingdale’s and Ann Taylor are offering consumers a single point of contact through companies like Salesfloor. net, a mobile platform that allows online shoppers to connect with in-store sales staff to ask about product, seek recommendations or make purchases.

Such a service is a win-win for customers and staff alike – customers build relationships with staff who can offer them exclusive discounts and customised recommendations, while staff earn commission regardless of whether an order is placed online or in-store.

Additionally, retailers who use these mobile services can prompt shoppers to stop by the store whenever they are in the area. The benefits are many, including personalisation, a better customer experience, higher revenues and fewer returns.

Personal stylists to enhance online shoppers

Thanks to innovative online stores like Stitch Fix, personal stylists are no longer available only at high-end fashion retailers. Stitch Fix is an online styling service that analyses data to understand each customer’s personal style. The service then curates a selection of compatible products that are shipped to customers each month. Customers can keep what they like, returning unwanted items in the included postage-paid envelopes.

This data-driven approach, which is backed by seven-day, customer service that the company asserts is “100 per cent human”, offers consumers a customised 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 personalisation on a broad scale.

Bricks-and-mortar retailers to go long tail

Online shopping has allowed retailers to become successful specialty stores. Consumers can now easily purchase unusual products that would have been virtually impossible to find in the pre-internet era.

The term ‘long tail’ was traditionally used to describe a type of retail strategy where businesses would sell a large number of unique items in relatively small quantities.

Fast forward to 2018 and the meaning of this term has been turned on its head. A retailer’s long tail strategy today calls for selling fewer 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.

This trend is interesting for bricks-and-mortar jewellers as it suggests that people are turning to physical stores for their specialised products.

Facial recognition to improve security
Jewellery technology is on the move
Jewellery technology is on the move

Facial recognition technology isn’t new but rapid improvement in 2017 has set the technology up to go mainstream in 2018. With a glance, Apple iPhone X users can unlock their phones and easily authorise 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 business is conducted. 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 to become communities

Even before Apple announced its “town square” alternative to stores, incorporating “avenues” rather than aisles, many of the tech giant’s bricks-and-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 the innate human need of its customers to belong; it’s also raising consumer expectations across the board.

Businesses to focus on returns

The product return rate for online shopping reportedly hovers around 30 per cent, while bricks-and-mortar stores boast fewer than 10 per cent returns. Online returns are costly for retailers and inconvenient for customers. 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 80 Kohl’s stores in the Chicago and Los Angeles areas.

Meanwhile, online business SmartGift helps retailers reduce gift returns by transforming the gift-giving marketplace through a conversational, peer-to-peer (P2P) technology. After gift givers place an order, gift recipients receive a text, email, messenger or whatsapp notification that gives them the opportunity to customise their gift before it ships. SmartGift claims this service dramatically reduces returns in a win-win-win combination for giftee, gifter and retailer.

The press loves to report that bricks-and-mortar retailers are under siege, yet established retailers such as Best Buy have survived despite analyst predictions that Amazon would eat them for lunch. What’s Best Buy’s secret? According to CEO Hubert Joly, the company has beat Wall Street’s expectations by matching Amazon’s prices, turning bricks-and-mortar stores into showcases, providing new shipping and delivery options, quietly cutting costs and training staff to consistently deliver a better customer experience.

Best Buy’s tactics will not work for all retailers but every business still needs to think about the basics of retail as they consider the implications of the strategies presented here – great technology and great service delivered with passion is a must-have combination for thriving in the experience economy.

A New Year is at hand, full of promise. Retailers that dig more deeply into these 2018 trends and find creative ways to leverage the most relevant ones will unlock customer experiences that will make it a year to remember.

Richard Shapiro

Contributor • The Center for Client Retention

Richard Shapiro is founder of The Center For Client Retention, offering research, training and consulting services, and author of The Endangered Customer: Eight Steps to Guarantee Repeat Business. Learn More:

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Saturday, 14 December, 2019 08:51pm
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