22.12.17

7 Retail trends for 2018

2017 has certainly been a challenging year in retail.

According to the Centre for Retail Research, 37 major retail businesses went bust or were bought out of administration, including Jaeger, Staples, Agent Provocateur and Brantano, with many more having undertaken mass store closures. Profits at Dixons Carphone took a hit and even the nation’s favourite department store John Lewis reported lower than expected results back in September.

This illustrates how retailers have a tougher job than ever to draw in shoppers in the face of intense competition from big retailers and dominant online marketplaces.

Speaking at this year’s Festival of Marketing, John Lewis’s marketing director Becky Brock pointed out three companies – Amazon, eBay and Alibaba – will soon account for 40% of the world’s e-commerce, as she backed even more consolidation to occur over the coming years. She warned: “This means there’s a real urgency to rise to the challenge because if we don’t, we could become irrelevant.”

So, what can we expect to see happening in the world of retail in 2018? Having looked into our crystal ball, here are 7 things we believe we’ll be seeing more of in the year ahead.

1. More digital retailers opening physical stores

As traditional retailers have transitioned to online models, the reverse can now be said with digital-first businesses. In some categories, such as furniture, traditional offline retailers have been disrupted by the likes of Sofa.com, Made.com and the Cotswold Company. These businesses have now transitioned themselves and opened showrooms to bring the touch-and-feel retail experience direct to their customers. 

You only have to look at the increasing number of pure play brands that are opening physical stores (including Amazon, Google and Warby Parker) to see there is still a lot of life left in bricks and mortar.

2. Voice commerce

With four of the world’s biggest companies – Google, Apple, Amazon and Microsoft – having rolled out their voice-enabled technologies into home products, we can expect voice integration to be the new feature of even more products, making its way into a far greater number of homes.

Expectations are high for an avalanche of device sales through the holidays, as the Amazon Echo Dot outsold the Kindle last year through the holiday season, plus, it ranked as the “best-selling product from any manufacturer in any category across Amazon globally” during this year’s Prime Day.

With several big box retailers announcing partnerships with either Amazon or Google, there will be an ongoing battle for market control between Amazon’s Alexa and Google Home.

Voice-enabled shopping is in its early stages. Soon however, consumers will expect to utilise voice as well as additional conversational channels such as Facebook Messenger and WhatsApp as their preferred channels of communication during their shopping journey. According to Comscore, recent predictions show voice searches will account for 50 percent of all searches in just two years.

3.  Say Goodbye to owning Big-Ticket Items

The must-haves for previous generations aren’t as important for Millennials. They’re putting off major purchases - or avoiding them entirely. To that end, were seeing a proliferation of companies springing up to service the demand for renting.

We have seen this trend explode over the past few years within the music and film industry with the likes of Spotify and Netflix, then came transport with brands like Bikeshare and Zip Car, through to clothing with Rent the Runway and Armarium to name just two. With Grover, you can now rent gadgets and tech – everything from a smart watch to a laptop to a drone with a simple monthly subscription, then just give it back when you’re done with it.

This shift in ownership attitude is likely to have an impact on shopping behaviour as Millennials are less likely to invest in big-ticket items such as cars and luxury goods. This can already be seen in the slowdown in luxury demand and backed up by data from Goldman Sachs.

This approach is enticing to Millennials, as it leaves them with more spending power and choice, without having to commit to full on buying the product.

4. Experience 

When it comes to the physical store, the buzzword of recent years has been ‘experience’. And as retailers continue to rationalise their store estates and focus their efforts on creating more ‘destination’ stores, the customer experience is going to become more important.

According to new research from Vista Retail Support, 77% of UK consumers believe retailers are not doing enough to make shopping in stores enjoyable.

In the past year alone, John Lewis took things to a new level this year, with their ultimate ‘try before you buy’ experience, “The Residence”. This was an in-store, fully-furnished (with everything buyable in store) apartment which allowed a few lucky people to stay the night. John Lewis also allowed these contest winners to bring up to ten of their friends along for a dinner party to share the experience; a story that will stay in consumers’ minds and on their lips whenever they think of the brand.

Expect more retailers to follow suit in 2018, as the battle to differentiate and stand out from the crowd will no doubt continue to intensify.

5. The battle for the last mile

As our appetite for instant gratification continues, we will see the number of mini-distribution hubs increase, particularly in metropolitan areas, as retailers seek to differentiate their offering by providing improved distribution services. 

Companies like CommonSense Robotics are building an on-demand supply chain that allows retailers to offer sustainable, 1-hour delivery services to their online customers. Its Micro-Fulfilment-Centres (often located in unused city centre underground car parks) are an urban, automated fulfilment solution that combine the benefits of local distribution with the economics of automated fulfilment.

6. Subscription services 

For retailers, the subscription model operates much like an expanded rewards program, allowing companies to lavish discounts on long-term customers while mining them for valuable user data such as brand, style and fit preferences. “For retailers, subscription services ensure there is a steady monthly revenue coming from the customer” says Julia Fowler, Co-founder of retail and fashion technology company EDITED.

We are likely to see more ‘service’ businesses offering subscriptions, such as hairdressers and beauticians, as well as food, wine, beer, coffee and beauty brands.

7. The power of people 

At the heart of the bricks and mortar retail fightback outlined in this blog is the human touch, and this is where a fully engaged field marketing program can reap significant rewards. Consumers enjoy the attention they receive from enthusiastic, well-trained brand ambassadors.

Retailers and brands who invest in the right talent, who can deliver memorable customer experiences and reward them accordingly will be the winners in this new era of retailing.  

Regardless of what happens, we would like to wish all our readers a very happy holiday and a healthy and prosperous 2018. See you on the other side!

For more information about how Retail7 can help you win in 2018, please contact Andy Boothroyd on 01628 450738, or email aboothroyd@retail7.co.uk

 Additional sources: Centre for Retail Research, Campaign, Goldman Sachs, Retail Dive, WWD, Linc

Article by Andy Boothroyd


Head of Business Development, Retail7

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