Analysts and conspiracy theorists alike have officially dubbed 2017 as “the year of the retail apocalypse.” Although retail has already undergone and will continue to undergo major shifts as we move into 2018, the doom and gloom picture painted by many actually tells the story of retail metamorphosis rather than the end of retail.
Metamorphosis is defined as “a striking alteration in appearance, character or circumstances,” and this is exactly what we’re experiencing in the retail industry. With the proliferation of flashy new technologies such as artificial intelligence and virtual reality, as well as increased consumer demands for omnichannel capabilities from retailers, retail “alteration” is inevitable at this point. In 2017, we’ve seen acquisitions, closures and bankruptcies, but we’ve also seen successful openings of new retail store concepts, along with an upswing in adoption of game-changing technologies. And we expect to see these trends, and more, continue into 2018 and beyond.
What to Expect in 2018
Continued Acquisitions and Convergence
Rather than the retail apocalypse, 2017 could be more accurately coined, “The Year of the Retail Acquisition.” This past year showcased several acquisitions of niche brands by bigger retailers. Wal-Mart increased its fashion and apparel portfolio by acquiring ModCloth, Shoebuy, Bonobos and Moosejaw, among others. Through these acquisitions, Wal-Mart not only increased its apparel offerings, but also acquired a highly curated customer base through these unique offerings. Additionally, Amazon.com made, perhaps, the biggest retail headline of 2017 by acquiring Whole Foods Market.
As we move into 2018, retail acquisitions will continue, however, we expect to see additional players besides retail giants getting into the mix. We envision technology powerhouses joining the game as they try to increase competition against Amazon. For example, Google could move from partnering with retailers such as The Home Depot and Wal-Mart with the Google Home device to making more significant investments in retailers to broaden its commerce portfolio. At this point, we certainly wouldn’t put it past a big tech company like Google or Apple to move in the direction of Amazon and start acquiring retailers, especially as customer experience continues to grow in importance.
Expanded Showroom Trials and Brand Extensions
In order to expand in-store experience, 2017 has seen retailers such as Nordstrom announce plans to roll out smaller format stores that offer services rather than inventory and traditional e-commerce retailers move into brick-and-mortar. In 2018, consumers will begin to expect services, in addition to merchandise, when they visit a physical store. To meet these demands, traditional and online retailers alike will continue to test the concept of showrooming, not only attract more customers, but to fully utilize their digital and physical channels and evolve their omnichannel capabilities. To be successful at this concept, retailers should think of 2018 as a time to experiment with the showrooming concept to find the right mix of services and merchandise at the right locations to reach the right shoppers.
In a similar vein, retailers will look for new ways to expand their brands in 2018. Retailers can no longer simply offer consumers a product; they need to offer experiences that are tangential to their brand. For example, REI has already mastered this concept by offering classes and events to demonstrate the ins and outs of camping and outdoor survival, along with well-planned, professionally led adventure trips.
While RFID isn’t a new concept and it gained some buzz in 2017, it still hasn’t taken off and reached its full potential. However, as omnichannel capabilities continue to evolve, the potential for RFID to aid retailers in their current transformation will continue to widen. As retailers hone in their multichannel offerings, RFID can allow them to successfully help consumers with buy online, pick up in-store activities as well as keeping inventory instantly up-to-date — a clear expectation that's growing among today’s consumers. With RFID, the possibilities are endless. We think 2018 could be the year it reaches its tipping point.
This past year may have been the shape-shift year for many retailers, where they had to face uncomfortable challenges to continue along their transformation journey. However, the lessons and shifts experienced in 2017 will allow for continued advancement in 2018, leading retailers to explore further growth through RFID advancement, expanded showrooms and brand extensions, as well as continued convergence.
Rick Amari is the founder of Columbus Consulting International, a company that specializes in consulting for business processes in the retail industry.
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