If 2017 was about being relevant, then 2018 is the year of being remarkable. Retail expert, Brian Walker, gives us the lowdown on what to expect this year.
Bricks over clicks
Physical retail rules the world and please don’t let anyone tell you otherwise―technology is the accelerant to changing the experience of retail and boring physical retail is lying dormant on the battlefield. The vast majority of consumers want the social, immersive experience that the best retail brings.
Boring is boring and consumers are voting
Consumers don’t want and don’t have tolerance for boring retail any more. There are too many other options and consequentially, boring retail is inexorably and somewhat painfully dying.
Yet vibrant, strong experiential brands continue to grow and write strong business. Many retailers who are old, boring, undifferentiated, unfit and under-invested will close in 2018, while many fit, innovative, clever, replicable relevant retailers will open.
There’s lots of opportunity to grow retail
Globally, more retail shops are opening than closing―they happen to be the more innovative, clever, differentiated offers.
So we see increasing store openings and great retail brands (Apple, Costco, Sephora, etc.) continuing to thrive, with their overwhelming investment in bricks-and-mortar stores.
Darwin was right
It is Darwinism, adaptation, and innovation that will see business growth from Amazon to Walmart and from Apple to Zara. It’s not the strongest in traditional metrics rather the most adaptive.
There is quicksand in the jungle for boring and less adaptive retail.
However, one change worthy of mention is that the composition of the market structure is changing and the market is continuing to polarise, from strong value offers at one end of the spectrum to highly differentiated speciality retailers and luxury brands doing very well within this growth. And as we know, the middle ground between is more like quicksand and that will become more obvious in the year ahead.
RIP omnichannel; welcome to the birth of retail ecosystem.
Resting by the great graveyard of boring undifferentiated retail will be a headstone that simply reads, ‘Omnichannel―it was a brief and exciting time’. Its offspring, ‘retail ecosystem’, will thrive for those who get it and 2018 will see more refinement in this approach.
Rather than a mass of ‘channels’ awkwardly thrusting into the broad lands of customers, ecosystems will be relevant, precisely focused and remarkable―helping to understand customers with remarkable insights, segmented to address the consumers’ questions.
Understand the brain, rather than interpret the actions
The hunter will reign supreme, the herd that treats all customers equally won’t. Advances in big data and the neuroscientific understanding of the way our brain works and ‘why’ we buy are replacing the largely assumptive models we grew up with.
Building a segmented, aligned shopping experience for the right current and future customer is the big opportunity for many retailers in 2018 and it will require more focus and support than ever before.
Crossing the divide
There is world of difference between shopping and buying and herein lies the divide (with thanks to Steve Denis for this nice and correct delineation). The growth in online is in the ‘buying space’. This is much more activity than aspiration, the activity of buying is typically about best price, range, assortments and maximum convenience. This is the fertile ground for e-commerce and where Amazon and Alibaba play, representing largely where online growth is coming from.
Shoppers vs buyers
Shopping is experiential, human, tactile, interesting, exciting, fun, social, interactive and rewarding and the shops are pivotal. Retailers who can’t see the difference and try to out-muscle in buying simply are racing to the bottom. Confuse the two and your customer is confused.
There is an increasingly huge difference between shopping and buying―understanding this seismic change is fundamental in 2018 and in years to come.
The growing role of digital as a direct catalyst to the physical store experience will continue dramatically. We can be confident that shopping visits typically involve some form of digital experience somewhere between 40 and 70 per cent of the time and this figure is increasing. Clearly in-store digital technology is an investment opportunity for retailers in 2018, supported by remarkable staff and in-store experience.
Differentiation the name of the game―from replicable to remarkable
From replication to remarkable is the catch cry for 2018. It will be less about the size of stores per se, less about replication and more about remarkable. Right-sizing to align with future demand, integrating with digital technology and building retail ecosystems with physical stores at the hub matters most.
What about AI and all that great stuff?
Yes, data, AI, and other relevant technologies will all make their presence felt, as will delivery and fulfilment services, although they don’t make this year’s RDG top five (certainly within the top 10) as the core structural changes matter more.
Brian Walker is The Retail Doctor and founder and CEO of Retail Doctor Group.