Retail in 2019: Experience is Everything
It’s 2019 and the retail landscape is dynamic, complex, and exciting.
In late 2016, we saw headlines pronouncing “retail is dead.” 2017 continued the “retail apocalypse” narrative, while 2018 brought positive progression in the “retail revolution.” As we enter 2019, we emerge into a full transformation to “new retail” where experience is everything, blending physical and digital environments.
The radical move to new retail is the product of rapid change in this market influenced by evolving consumer behavior with digital disruption playing the most significant role. Commerce is now omni-channel, and physical and digital retail have merged to create customer-centric experiences where physical complements digital and digital adds value to the in-store experience. Deloitte research indicates 60% of physical store sales are influenced on some level by a digital channel, and that number has continued to grow.
Retailers have embraced technology to further brand recognition and elevate experience by engaging their guests with a personalized connection, often via integrated tech interfaces. Case in point: Nike NYC, House of Innovation at 650 Fifth Avenue delivers on smart and immersive “only here” experiences in its six-story flagship location.
Enhanced physical retail environments, like Nike NYC, that are remarkable and relevant have been the signature of highly successful 2018 launches offering differentiated experiences, opportunities for social connections, and deeper, more personal brand relationships. This transformation has led many direct-to-consumer ecommerce brands to expand to physical brick and mortar locations. Bonobos, Warby Parker, Allbirds, UNTUCKit, Casper, Everlane, Outdoor Voices, MM.Lafleur, and Glossier, to name a few, have launched physical stores or have plans to in 2019. Physical stores for brands like these are designed to deepen the customer relationship and strengthen brand loyalty.
Similarly, the integration of BOPIS (buy online, pick up in store), both in new and existing locations, brings convenience and value to consumers and, studies indicate, enhances the shopping experience. What surfaced in late 2017 as an emerging trend to watch has now been fully integrated by nearly 90% of retailers.
What more does the coming year have in store?
9 trends to watch in 2019
1) Sustainability and conscious consumption
Consumer awareness of the environmental and ethical footprint of their purchases (and the production process) is on the rise. Consumers support brands they believe in and that reflect their personal values. Whether or not a retailer has adopted sustainability standards is on consumer minds when they’re making buying decisions. People purchase products they feel good about. Brands to watch: North Face, Dirty Lemon, Ritual, and J.Crew.
At Whole Foods, you can grab a bite to eat while you shop, and do so knowing the retailer offers local and responsibly sourced products.
2) Beauty industry embracing technology
The integration of technology into the shopping experience by way of apps, augmented reality, and AI has had a direct impact on increased sales and in-store engagement. Consumers are able to “try” before they buy both in store and from remote locations, making the shopping experience more seamless than ever before.
3) Social media becomes transactional
Some 38% of millennials discovered a brand on Facebook that they ended up buying, closely followed by Instagram (37%). Both figures were higher than the overall average of 30% for Facebook and 29% for Instagram. One-click purchasing options, accompanied by ratings and recommendations, result in a highly personalized and efficient shopping experience.
4) Voice commerce
Shopping through voice-activated assistants is an emerging platform that will continue to increase in overall consumer adoption. According to market intelligence firm Tractica, unique consumer users for virtual digital assistants will grow from more than 390 million worldwide users in 2015 to 1.8 billion by the end of 2021. The result: increased customer interaction, improved brand recall, and easy access to recommendations, discounts, and promos.
5) Artificial intelligence
AI-based solutions will increasingly support product content marketing and supply chain enhancements. Retailers are heavily invested in AI development and adoption to provide a deeper understanding and precise insights into consumer preference.
6) Loyalty programs
Following Sephora and Ulta’s overwhelming success, other retailers are revamping or launching more robust programs to meet consumer demands. Loyalty programs not only encourage advocacy, but also assist retailers by surfacing more detailed customer data.
A merging of brands and services creates an elevated experience and encourages longer consumer dwell time. Retail is no longer this OR that, but AND. For example, Coal Drops Yard with their shop, eat, drink, and activity amenities; Industry City, set up equally for innovative work and play; and Story, emphasizing curating and storytelling.
Rapha Cycling Club goes beyond the storefront to create a lifestyle center for its customers.
Flix Brewhouse is the world’s only first-run movie theater, eatery and microbrewery.
8) Data-driven everything
A consumer’s shopping journey is changing. Retailers who embrace the use of data to develop and deliver on experiences and who provide innovations that matter will not only see great success, but also will be at the forefront of retaining shoppers. Today’s consumer expects retailers to understand their wants, needs, and desires and provide the tools and moments for them to create their own experiences that impact the quality of their lifestyles.
9) Gen Z consumer influence
Agents of change, this age group represents the 23-year-old and younger consumer. Experience matters above all else. They are the most diverse generation to date and the first 100% digitally native generation. Their shopping trends and influence should be of high interest (and importance) to retailers.
We enter 2019 fully immersed in an “experience economy” in retail across merged channels. There’s no room for going half-in when creating harmonized experiences to satisfy the wants, needs, and desires of today’s consumer.