The New World of Retail: A Curated Future and the Next Generation of Commerce
Recently, Hubba, a global B-to-B commerce network, examined the trends impacting the retail economy and released a new whitepaper, The Curated Future - why less selection, not more, will be the defining retail trend of 2018. The study explores the past, present and future state of the retail industry, as well as the tools needed to prepare for growth in the next generation of commerce.
Retailers and Fortune 100 brands have worked together to create a profitable model that they’ve been able to keep going for the last 20 years. More often than not, this model didn’t include consumers, who were forced to choose from a limited product selection in a retail model that was difficult to crack for new brands.
Traditional gatekeepers in the retail industry were not counting on the impact technology would have and how it would empower brands to sell directly to the customer, bypassing retailers altogether in some cases, and creating a robust direct-to-consumer market. This put customers at the center of the retail industry, shifting the power away from retailers and opening the door to innovative business models and new opportunities for both brands and retailers.
Retailers are beginning to adopt new practices to attract customers while exploring innovative tactics in order to generate sales across both physical and digital channels. Research shows that there are two types of customers that have emerged: "savers" and "selectionists." Savers prioritize the best value and are drawn to the lowest price. Amazon.com and Walmart’s dominate within this group, making it difficult for any other retailer to play a significant role in this space. Selectionists, however, is a group that places higher value on quality and discovery, and are willing to pay more for the right product. Trying to beat Amazon, Walmart or dollar stores, for example, on price and convenience is a losing battle; the real opportunity will, therefore, be in winning over selectionists and their higher-margin purchases.
Hubba’s research goes on to explore the impact on the industry from the influx of new brands entering the market by the thousands each week. What happens when customers and retailers alike become paralyzed by the paradox of choice? Trust becomes the key currency for success.
Customers will increasingly rely on trusted recommendations to discover and select the right products to meet their needs, their lifestyles and their interests. This opens up a real opportunity for retailers to build relationships of trust and take a leading position as tastemaker with consumers.
The future of retail will not be about having a large variety of products, as it has been in the past, but rather the next generation of successful retailers will win over consumers with their thoughtful curation of products. They may curate an assortment of products for one specific type of customer, or center their product selection around an aspect of consumers’ lifestyles, across different product categories. With this, the industry can expect additional, service-led companies like yoga studios and restaurants to begin to take on a new role in the eyes of consumers as they begin to sell selective products to their captive audiences as a way of growing their bottom lines.
While customers will increasingly turn to retailers to help them discover and choose the right product, retail buyers also find themselves in this paradox of choice — but who will curate for the curators? While retailers will be increasingly expected to sort through an oversaturated market and identify the true “best-sellers” among countless pitches, buyers will require and demand the tools and technology to predict and prioritize the right products for their business and their customers.
It's worth noting that, combined, SMBs represent a buying power that outstrips many big names. The influence that independently owned businesses have on the retail industry will continue to grow and shape the market alongside customers. To do this, retail buyers will demand the right tools and technology to help improve their ability to discover and build the right inventory mix, build a network of business partners, and connect with their customers to sell products at better margins.
The consumer wins in this new retail reality. While the transitioning to the next generation of commerce can be a challenge, embracing the shift to a curated future represents the chance for retailers to create true engagement with customers and set themselves up for a sustainable future.
Phil Chang is the industry lead and retail expert at Hubba, a product information network.
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