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Significant retail trends in 2019

Large retailers are often at the cutting edge of consumer change. RICHARD SHAPIRO looks at some of the significant shifts gaining foothold in the US.

If we don’t look ahead, we risk being left behind. Perhaps nowhere is that risk greater than with the emergence of Artificial Intelligence (AI) as a practical retail technology. AI has left the lab and brands and retailers have seized upon it to predict individual consumer behaviour and better target their messaging.

Those who begin coupling AI with the human touch in the years to come will have a huge advantage long-term. The technology gold rush will go on unabated but savvy retailers will never lose focus on people.

Specialty to thrive

Perpetual discounting and their inability to motivate staff and excite consumers have damaged department stores. Once-dominant chains are shrinking and shuttering at a frightening pace, including Sears and Toys R Us. At the same time, specialty stores that offer unique merchandise, irresistible service and highly-trained and well-compensated sales staff are booming. No retailer better exemplifies the trend or its staying power than Mitchells, a luxury-brands specialty store that’s set the bar with exceptional customer service, exquisite product and multi-generational relationships with designers and consumers.

Jack Mitchell, CEO of the company, went on to write Hug Your Customers and, later, Hug Your People, titles that communicate his retail recipe for success in a world of unlimited choice.

Spend as channels blend

Today’s customer is channel agnostic, switching effortlessly between online and traditional shopping, and employing a blend of browsing techniques: visiting physical stores for tactile and social experiences; conducting product/pricing research via smartphone; taking advantage of-convenient online ordering and delivery options.

“We don’t hear customers talk about channels very much,” James Nordstrom, president of Nordstrom Stores, told Diginomica.com. “Customers value experiences, and so the more successful we are in creating a great shopping experience, no matter how they’re choosing to shop, I think the better our business will be.”

Retailers to go sustainable

Serving the goal of sustainability, a circular economy is a regenerative human-managed system in which waste is minimised by slowing or closing energy and material loops. The economic model embraces durability, reuse, repurposing, refurbishing, recycling, and upcycling. It is embraced by a growing cohort of environmentally-friendly merchants and manufacturers.

Companies such as Unilever, Patagonia, IKEA, Lush Cosmetics, and New Belgium Brewing now boast legions of loyal, educated and affluent customers who reward environmental leadership at the cash register and like to tell their friends about it.

Take Patagonia, the cultish outdoor clothing chain that has championed Earth-friendly practices and policies for over 30 years. The retailer’s Worn Wear program provides merchandise credits for Patagonia clothing that is returned in good condition. The items are resold, turned into other products or recycled. According to CEO Rose Marcario, Patagonia “wants everyone to become radical environmentalists by keeping our stuff in use longer”.

Retailers with their eyes open don’t need a degree in climate science to know which way the wind is blowing.

The rise of members-only
"If we don’t look ahead, we risk being left behind. Perhaps nowhere is that risk greater than with the emergence of artificial intelligence (AI) as a practical retail technology."

Amazon is far from the only retailer that’s innovating in e-commerce. Walmart describes its Jetblack service launched earlier this year as, “a new shopping service that combines the convenience of e-commerce with the customised attention of a personal assistant”.

Pricier than Amazon Prime – Jetblack is $US50/month while Prime is just $12.99/ month – the service is targeting upscale, busy clientele, including “time-strapped urban parents”. A member can text her shopping request and Jetblack goes to work, delivering the appropriate merchandise within two business days at no additional charge.

The launch stresses an entrepreneurial, teamoriented answer to the question, “What if we doubled down on the customer experience and leveraged emerging technologies to build the most effortless and curated shopping experience possible?”

The underlying system reportedly combines the skill and knowledge of expert human buyers with the speed and precision of AI. If it flies, and it should, consumers will be hearing a lot more about this and other hyperpersonalised services soon.

Self-serve checkouts to grow

As Amazon expands its Amazon Go chain of self-serve convenience stores, dozens of startups are competing with established firms to master and lead this potentially gamechanging retail model. Innovative Chinese entrant BingoBox has taken the cashier-less concept to another level, automating virtually every aspect of store operation in more than 300 unmanned outlets.

BingoBox stocks snacks, beer and just about any essential food or household item you might need in a pinch when other stores are closed. Shoppers scan a QR code to gain entry and pay for their purchases via mobile app.

Other checkout-free startups include Zippin, with a recently-opened concept store in San Francisco, Inokyo in Mountain View and Santa Clara’s AiFi, which promises an affordable, flexible system for ma-and-pa stores and larger retail operations alike. This is an important trend but the milliondollar question is whether automation that eliminates human staff will remain consigned to convenience stores only.

Metrics to shift

While the same-store sales metric has long served as a baseline indicator of retail success, industry analysts are questioning whether the metric is appropriate for modern retailing.

Stores don’t always serve the same function that they did in the past, which was to complete the sale. Today, stores must also play a role in boosting brand awareness, which means they might become a showroom that doesn’t even sells products.

When sales are frequently completed through more than one channel, basing performance on sales numbers is misguided. This is a reality that investors are learning to accept as retailers convert their stores into something new.

AI and personalised service

Retailers are using AI to personalise customer service and the trend is picking up steam. Fifty-five percent of retailers plan to leverage the technology within three years, according to the 2018 Customer Experience/Unified Commerce Survey from Boston Retail Partners (BRP). Among the many applications: recommending merchandise and the ability to contact a given client at their preferred time of day.

Starbucks rolled out voice-recognition ordering in South Korea, extending its mobile order-and-pay technology by integrating with Samsung’s AI chatbot Bixby.

Customers can use their phone in a conversational way to learn more about available beverages. Meantime, The North Face has adopted IBM Watson’s cognitive computing technology to help consumers find just the right jacket but here’s the thing: while AI will permit businesses of all kinds to increase client satisfaction, Starbucks and The North Face know full well that personal connections will always trump technology.

Subscription-services for rent

Ann Taylor and Express are notable among the fashion retailers that offer rental subscription services. With Ann Taylor’s Infinite Style program, subscribers receive up to nine garments every four weeks for $US95/month.

“Wear it. Send it back. Get more. Exchange as many times as you like with free shipping, both ways,” the program promises.

Meantime, Express Style Trial works on a set of three at a flat monthly cost of $US69.95: “This service allows our closet to become your closet. Start closeting items by browsing our site and viewing everything Express Style Trial has to offer. Check out New Arrivals for new styles each week.”

In recent years, retailers have overlooked employees as their most important competitive differentiator, instead focusing on technology solutions that promise to reduce overhead and automate every conceivable aspect of the business. AI is a remarkable tool with capabilities that the industry has only just begun to discover but it also runs the risk of devaluing the people in retail. As enthusiasm for AI, unmanned stores and ingenious, self-service options swells in the next year, remember that customers will be most grateful to have a human being in the room when – and not if – the machines drop the ball.

Consider the philosophy of clothing brand MM LaFleur, as articulated by director of offline retail Rachel Mann when she said, “For us, it’s all about the human experience – a refuge from Alexa and all of the choice. And robots? It should be like you’re meeting your friend and she’s giving you good advice.”

Now that’s a trend on which retailers can bank.











ABOUT THE AUTHOR
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: tcfcr.com

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Thursday, 18 July, 2019 02:30pm
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