By Brian Pearson // Forbes, December 12, 2018
So much of retail is a gimmick. Just ask 2018.
Massive sums are invested in immersive experiences that quickly lose their spark and in digital features that fail to make the experience easier. So more than 5,000 stores closed in 2018. In their valid bids to wow shoppers, many retailers just added complexity.
Shoppers, however, want simplicity, and the unexpected efforts that will likely make a difference are those rooted in simply understanding the shopper’s path.
Ah, but what a crooked path, and how frequently the shopper expects the retailer to lay some of the groundwork. To get a better sense of what retailers have up their sleeves for 2019, I invited retailers, advisors and suppliers to share their off-the-radar predictions for 2019.
1. Shelves will become storybooks
More retailers will shift focus from limited, storewide experiential concepts and instead engage shoppers directly at the shelf, with stories generated by category and brand, predicts Wendy Liebmann, CEO of WSL Strategic Retail in New York.
“Retailers are investing in stores of the future and expensive digital technologies, yet the shelf, where 91% of purchase decisions for consumer-packaged goods are made, remains an emotional hinterland,” Liebmann said. “Those mazes of boxes and bottles will change into communication sources. They won’t just stand out, they’ll stand for something, capturing the shopper with messaging that correlates with the moment and knocks her out of purchasing autopilot.”
2. Warehousing the store
At least one top grocery company will convert its stores into click-and-collect/delivery warehouse spaces, predicts Sean Cheyney, vice president of global business development for Triad Retail Media, a retail media agency and consultancy in St. Petersburg, Florida.
“Grocery stores are huge,” he wrote in an email. “As adoption grows for click-and-collect and delivery formats, and grocery chains make significant financial and operational investments, foot traffic will eventually decrease.”
Cheyney expects roughly 25% of U.S. square footage will be converted into warehouse space for click-and-collect and delivery purposes. “The initial test will be in high-traffic suburban stores and a few affluent urban locations.”
3. More will earn points by partnering for payment
Retailers will allow their customers to pay for purchases using reward points from third-party credit cards and reward programs. Amazon.com does this through a partnership with American Express. When members save their American Express Membership Rewards card information on Amazon.com, the online retailer has access to their points balances and accepts them to pay for purchases.
A number of merchants, from Kohl’s to Nordstrom, have adopted currency-neutral reward program models that do not require a store’s credit card. Accepting another card’s points for payment is a natural progression; it provides a platform for co-marketing opportunities that motivate the customer, potentially adding value to both the card company and the retailer.
4. Recycled fashion
More major brands, from REI to Burberry, are following the lead of consignment shops and offering secondhand (or recycled) apparel as they pursue sustainability as well as more affordable fashion. Aldo Bensadoun, executive chairman and founder of the international shoe brand The Aldo Group Inc., expects retailers to next entrench the practices of a circular economy across operations.
“The transformation of our industry presents opportunities for future leaders to reinvent how they do business to ensure the viability and, more importantly, the sustainability of retail. Tomorrow’s retailers should endeavor to operate with positive intent, while remembering that the consumer is queen and king, at the heart of everything they do.”
5. Brands will move beyond email
Consumers are increasingly ignoring email as a marketing channel, and that includes a retailer’s emailed coupons and other communications. Retailers will respond by reaching out to consumers through their preferred messaging channels, said Michael Cohen, general manager of Zero Gravity Labs, a Toronto-based innovation and experimentation group.
“Facebook Messenger, WhatsApp, WeChat, iMessage Business Chat and Google Business Chat will all become the channels that help retailers engage in a meaningful dialogue — or assist consumers while email starts to take a back seat,” he claimed. “That being said, it is more intimate and usually reserved for friends, so businesses will need to adjust their approach and tone accordingly.”
6. Checking out handily
A new technology must bridge the mainstream checkout experience that exists between present self-checkout stations and the full-blown automated checkout technology being tested at Amazon Go. My team’s money is on store-branded self-checkout apps that enable shoppers to scan and buy items as they shop. The Canadian supermarket chain Loblaw is testing the technology at a handful of stores, and even outfitting the stores with digital scales for produce that is charged by weight. We expect more retailers to explore solutions similar to the Amazon Go experience but require a less tech-heavy approach.
7. Taxing propositions
In June, the Supreme Court gave states the authority to make online retailers collect sales tax. In 2019, e-tailers will incorporate those taxes into the cost of items to avoid sticker shock, predicts Natalie Kotlyar, who leads the retail and consumer products practice at BDO, a global accounting and advisory firm.
“According to the (BDO) 2018 Holiday Consumer Beat Survey, nearly one in five consumers shops online specifically to avoid paying sales taxes,” she wrote in an email. “Roughly half of millennial shoppers would change their habits if all e-tailers began collecting sales taxes.”
Mark Aselstine, founder of UncorkedVentures.com wine clubs and gift baskets, agrees: “As the economy erodes, (states will see) taxes of online sales as an easy way to make up lost revenue.”
8. Sheltering sales
“There will be more demand for indestructible homes and backyard storm shelters,” suggests David Pressler, president of DRD Enterprises Inc. of Davie, a maker of concrete and steel structures, as well as tornado shelters, in Florida. “The next evolution in home construction is today.”
Pressler is on to something. The rash of natural disasters in 2018 will likely fuel the rise of a prevention industry, the offshoot of which will be an influx of new DIY products designed to stave off storm damage, from storage items like fire boxes to catastrophe-proof home materials.
9. Experience does an about-face
Retailers will rely on artificial intelligence to mesh in-store and online experience in what one expert calls proximity marketing. “Customers will opt-in to premium in-store services through face recognition while artificial intelligence analyzes their online and offline preferences to make accurate recommendations,” said Peter Trepp, CEO of FaceFirst, a face recognition firm. He said the movement will be fueled by efforts to make reward programs stickier.
Another area AI will change the retail experience: Product replenishment. “Brands and retailers will automate key merchandising decisions to react quickly to, and predict, demand changes,” said Joaquin Villalba, cofounder and CEO of Nextail, which specializes in merchandising and inventory.
Some of these predictions do go out on a limb, but retailers have to. As time marches on, shoppers have less patience for gimmicks.