10+ Predictions for 2019

(excerpted from the Robin Report and written by David J. Katz)

In 2019, regardless of size, tenure or segment of business retailers, brands and suppliers must recognize that they can no longer navigate the new landscape with their old maps. Tomorrow’s winners will be nimble, data-driven, fast to market, and highly efficient.

Tomorrow’s champions will have the foresight, fortitude and fearlessness to disrupt their own identity and historical path to success to succeed in the rapidly evolving retail environment.

Do or do not. There is no try. The rate of change will continue to escalate. There is no time for deep contemplation. Winners will leap, measure and then optimize. Failing fast will be a requirement. Succeeding fast will be a requirement, too.

10 Retail Predictions for 2019

1. After a strong 2018, the retail industry will slow down in 2019.

  • Labor markets and basic economic indicators will remain strong. However, geopolitical factors, consumer confidence, inflation, and demographic shifts will influence spending patterns and slow retail spending.

2. “The Retail Apocalypse” will be exposed as “fake news” for math-challenged, headline-grabbing media.

  • Online sales get the buzz. Mortar-and-brick gets the dollars.
  • Ecommerce will remain a minority share of total retail sales, somewhere between 10 and 15 percent of total. The vast majority of retail sales, over 85 percent, will continue to take place in brick-and-mortar stores.
  • In 2019, physical stores will contribute 50 percent of all retail growth.

3. “Network Effects” will yield a winner-takes-all retail playing field.

  • 2019 will see a bifurcation of “winners” and “losers.” Growth will accrue to a small number of big winners…others will struggle.
  • Loyalty Programs will matter more than ever as the battle for consumer loyalty intensifies in both cost and value.

4. Off-Mall will outperform In-Mall.

  • This shift represents a fundamental change in preference, demographics and convenience.
  • This will be good for Kohl’s and not so good for JC Penney.

5. In 2019, we will still have too many stores, too much retail space and too much inventory.

  • Surplus selling space turns retailers into landlords. Will these new tenants add value beyond lowering real estate costs?
  • Kohl’s has Amazon and Aldi as tenants; a play for foot traffic.
  • Macy’s has added Samsung and B8ta and Marketplace as tenants, some of whom sub-let their space; a play for new consumers and data.
  • JCP has Sephora as a tenant; a play for relevance.

6. The battle for tomorrow’s consumer will make enemies of friends… and friends of enemies.

  • Competitors will emerge from sectors previously perceived as irrelevant.

7. Online commerce will be costlier than ever to execute.

  • The cost of customer acquisition will grow significantly.
  • The cost of customer acquisition will shrink significantly, for a handful of industry leaders. For companies that can leverage network effects the cost of customer acquisition will actually decrease with growing scale. Examples include Amazon, Google and Facebook.
  • Online fulfillment costs, both outbound and inbound, along with the associated labor, materials, freight, warehouse space, inspection, refurbishing, I.T. and “reverse logistics” will be an essential retail performance indicator, separating winners from losers.

8. In 2019, “Brand Relevance” will beat “Brand Authenticity.”

  • Consumers crave quality, utility, uniqueness, and value. They have new ways of validating these features via social media, reviews, peers, and transparency. Therefore, fewer brands will be meaningful at scale.
  • New brands will proliferate in niches.
  • Private Label will grow, and some will scale.

9. Retail will Pop-Up everywhere.

  • Pop-Ups inside of malls and Macy’s will also pop up inside WeWork buildings, hotel lobbies, and apartment complexes.
  • Vending machines become Pop-Ups in previously unexplored locations with unexpected merchandise. Take note of the Uniqlo “Puffer Jacket” vending machines in airports.

10. Experiential retail gets real.

  • The Canada Goose see-through freezers, where customers can try on outerwear and step into a 12-degrees-below-zero dressing room. This is a selfie-magnet that elevates consumer experience, brand awareness and sell-thru.
  • The Casper “Dreamery” costs $25 for a 45-minute nap in a cool, quiet compartment with fresh sheets, pajamas, eye masks and a break from the daily grind. No hard sell, just relaxation reinforcing the value of quality sleep. Note: You can’t purchase a mattress at the Dreamery.
  • The Nike “House of Innovation” is fueled by digital commerce tools. Customers can text to have clothing delivered to dressing rooms in the size and color of their choice, schedule appointments with an in-house stylist or fitness expert, scan mannequins for product information, use the “scan and go” mobile checkout or pick up reserved items at digital lockers, unlocked with their phone.
  • Poorly conceived experiences, however, will continue to proliferate at retailers who just can’t see the goal line. Compare the winning models above with feeble attempts at relevance via barber shops, espresso bars, pool tables and photo-ops.

Bonus! 13 More Prophecies

11. Sustainability moves from “buzz” to “ding,” the sound of cash registers ringing.

12. Checkout-free technology will expand, quickly.

13. Artificial Intelligence will be widely used to influence and aid in purchasing, and shopping experiences.

14. Virtual Influencers, artificial digital beings, will grow in popularity and impact.

15. Social and text messaging will become more important as data and trust become a currency of great value.

16. Privacy issues will reach an inflection point.

17. Augmented and virtual reality (AR & VR) will begin to show positive retail ROI.

18. Shopping via voice…will still not be ready for primetime.

19. Image Recognition will become a meaningful, widely-used, tool for consumers and retailers.

20. Robots will be critical for supply chain efficiency. Yet they will remain behind the curtain… R2D2 is not ready for consumer interface.

21. Mobile Payments will become the de facto standard.

22. Products will replenish themselves and subscription models will proliferate; some will even succeed.

23. 2019 may see the “Death of Free Trade.”

  • Trade wars and geopolitical uncertainty will unsettle retailers, brands and consumers.
  • Shifting a supply chain takes time, money and commitment.
  • Expect cost increases to consumers to feed into 2019 inflation.

 

By | 2019-01-04T22:14:43+01:00 January 4th, 2019|In the Press|0 Comments