Think Tank: Six Trends That Are Redefining Retail
With half the year done, 2018 has already proven to be an exciting time in retail. From experiments with new technology to innovative partnerships and acquisitions, brands are launching smarter and more tactical strategies to move forward with their evolving consumer base. With this in mind, here are six key trends to watch as well as some predictions for what will really stick in the market.
Innovative Partnerships
Merging off-line and online, Amazon struck a deal with Sears so that consumers can purchase tires from the e-tail giant and have them installed at Sears locations. It was a smart move for Amazon to increase its commerce footprint in an industry that typically sees in-person purchases. In another strategic expansion, Macy’s acquired Story, known for its highly curated shopping experiences. This allows the department store the opportunity to offer a coveted boutique vibe that modern shoppers want. And while design collaborations are nothing new, Kith found a way to use it to its advantage. The latest partnership between the sneaker-style maven and Mitchell & Ness has propelled them into the apparel world.
Investment in Data
While return leniency can earn brand loyalty, the harsh reality is that many people abuse the system. In 2017, the U.S. retail industry lost about $17.6 billion from “merchandise return fraud,” according to a report from the
National Retail Federation.
Stories are rampant about return fraud and companies are wising up to this practice and banning customers who make too many returns. Amazon’s extensive customer data system makes it easy to recognize frequent returners and subsequently shut down their accounts, but even brick-and-mortar stores are stepping up their efforts. Many major retailers are investing in comprehensively unified commerce platforms that can analyze internal data to track return activity.
Sponsored Shopping Experiences
Pop-up stores are a great way for brands to gain exposure and test their retail potential, but creating a quality shopping experience can take serious investment. Enter: Sponsorships. Goop, Gwyneth Paltrow’s beauty and lifestyle site, has opened high-end shops in tony towns like Dallas and Miami all thanks to the inclusion of sponsors. The latest Sag Harbor shop, for example, is being backed by Cadillac and Saks. For those companies, they’re gaining access to Goop’s highly desired clientele. It’s a win-win on both sides.
Conversation Commerce
What’s really exciting is the growth of technology to better support customer service. Nordstrom, the company that’s renowned for its customer service, recently acquired two retail companies to further engage with their consumers. These deals, Nordstrom reported, are to “Support the evolution of the customer experience.” Message Yes, one of the companies it acquired, has revolutionized “Conversation Commerce” and will empower Nordstrom’s salesforce to use messaging to interact with online shoppers.
Beauty Breakthroughs
As beauty destinations like Ulta and Sephora continue to challenge department stores’ market share, retailers are looking for ways to create in-store destinations. Saks famously created a wellness floor with yoga workouts and now it is investing in technology to further drive in-store visits.
“Magic mirrors” will record a customer virtually applying makeup, and sends the look via email to the shopper. Experiments like this are inspiring a makeover for the beauty industry.
Ethical Shopping
The buy-one-give-one model popularized by Toms, Bombas and Yoobi put social good and social impact at the forefront of consumers minds. Now, more brands are proving to Gen Z (the new breed of consumers) that they care about issues bigger than their bottom line.
Allbirds and Reformation are committed to building sustainable apparel brands, and Everlane is standing up for price transparency and factory safety. But it’s not just about your product that is catching the attention of young shoppers — what you stand for and speak up about (like Dick’s and gun control) has an even bigger effect of earning new customer loyalty.
To stay relevant and continue to grow in a challenging retail environment, you need to evolve with the changing landscape. As retailers look to the future, consider implementing one or more of these retail trends.
Sam Kliger is founder and chief executive officer of KWI.
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