Retail stock prices forecast the future. The predictions for 2020 are dim. In 2019, global trade tensions, economic uncertainty and the growing dominance of Amazon and a handful of other e-commerce giants shrunk the pie for most of us. Retail executives need to develop strategies to fight for new customers and innovate to keep the ones they have. The retail trends highlighted here suggest a slew of winning initiatives for those wise enough to act now. Waiting is not an option–carpe diem!
In-Store Service Meets Online Shopping
Mobile technology is now available to connect online shoppers with live associates in physical stores, maximizing brick & mortar resources to drive omni-channel sales. Founded in 2015, Hero lets your customer use his device to interact in real-time with a store associate via chat, photos and video. John Hardy, a retailer of handcrafted jewelry worldwide, uses the Hero software platform to provide the type of personalized service its customers could previously only receive in-store. By harnessing the key human component at the heart of traditional retail transactions, virtual face-to-face technology such as Hero’s is a win-win for consumers and merchants. It will be fascinating to see how far and quickly it spreads and what comes next.
The Resale Evolution is Here
Vintage stores, Goodwill outlets and thrift shops have long been havens for shoppers who love a bargain, enjoy rummaging for that perfect find, and embrace the adage “one man’s trash…” Look around today and it’s pretty clear the market for secondhand clothing has gone mainstream, invested in by major retailers as an in-demand, lucrative, and perhaps inevitable part of the fashion mix. Macy’s and J.C.Penney have added entire departments selling pre-worn attire and both are now partnering with ThredUp–a leading online thrift marketplace where quality used clothing may be purchased for up to 90 percent below retail prices. According to ThredUp, which smartly underscores an environmental message, 64 percent of women have bought or are now open to buying secondhand garb. That’s up from 45 percent just three years ago, which should encourage retailers to take notice and–where used merchandise has an afterlife–action.
Brands Bet Big–Shopping and the Mega Experience
Anyone who’s seen the iconic 1967 Mike Nichol’s film The Graduate will likely recall the poolside scene where young Benjamin (played by Dustin Hoffman) is given career advice by a well-meaning neighbor. “Just one word…” the man intones. “Plastics.” Without delving into the irony of the comment, I’ll offer that if the scene were reshot today the word would be “experience.” Consider, for instance, the unprecedented investments in Area 15 in Las Vegas, with Meow Wolf as its top experiential attraction, and the American Dream Mall which just opened 10 miles from New York City with ski slopes and high-speed roller coasters–designed to draw adventurous consumers. These are likely to become go-to attractions given the planning, creativity and money being brought to bear, but some wonder: will visitors be too tired to shop?
Who among us doesn’t envy those clever air travelers who can get by with carry-on luggage, even on extended trips? At least two companies are hoping to get you into those ranks. Unbound Merino has developed a line of travel-friendly fashionwear requiring minimal care. Their merino wool is odor resistant, breathable and insulating, fast drying and wrinkle free. Anatomie is another firm promising travelers stylish, lightweight, easy-care clothing that can be worn day-to-night, season-to-season. These clothiers aim to eliminate carousel waiting and lost luggage hassles. Their niche is one to watch. As experiential consumer spending grows–and it will–wayfarers who want to pack light without sacrificing style may find the ideal travel companions in duds like these.
Autonomous Delivery Takes Hold
E-commerce companies are keen to reduce the cost of delivering the last mile, generally the most expensive part of the shipping process. Amazon is piloting an automated delivery solution they’ve named Amazon Scout. The service, currently being tested in Washington State’s Snohomish County, is designed to safely get packages to customers using autonomous delivery devices. Meantime, Starship Technologies, a leader in this space, is deploying thousands of “clean and green” six-wheeled delivery robots on college campuses around the country. Pizza, groceries and sundries can be delivered 24/7 to the student prepping for an early morning exam or the household that’s run out of a must-have item in the middle of the night.
In many towns, the neighborhood stores we love have been replaced by the very same retailers found at the nearest mall. Historic shopping districts such as Georgetown in Washington, DC, which once offered shoppers variety along with loads of local flavor, are today little more than outdoor malls. This unhappy trend is compounded by the growing vacancy rate in neighborhoods where leases are now well beyond the means of small players. A solution is being put to the test in and around Fort Lauderdale, FL, by Zero Empty Spaces, which helps provide area artists with affordable studio space in vacant stores and, thus, hopes to bring community shoppers back to the neighborhood. Landlords are able to add panache to an otherwise homogenized retail mix while giving artists the exposure they need and a lease they can afford. It’s not difficult to imagine the possibilities for expanding Zero Empty Spaces. It’s a smart and timely retail model that in my view can’t move beyond Broward County, FL, soon enough.
The “Temporary Economy” Innovates and Expands
Rent the Runway (RTR), a pioneer in the fashion rental business, is looking beyond attire. RTR’s partnership with West Elm lets customers rent quality home décor such as bedding, pillows and coordinated bundles for any room in the house. For West Elm, it’s a new way to demonstrate to its environmentally conscious customers that sustainable décor can be both accessible and shared. For RTR, it’s a natural extension of its motto “simply rent, arrange, live, re-arrange, return and repeat” and the first but undoubtedly not the last new rental category it will help to establish. Meanwhile, LUX | Miami is offering luxury cars–including Porsches, Ferraris, Lamborghinis and Rolls Royces–for one-day rental, if that’s what the customer wants, delivering an experience that’s not likely to be forgotten.
Peer-to-Peer Selling / Renting
A sister trend to both the Resale Evolution and the Temporary Economy is peer-to-peer trading. While eBay helped put this concept on the map following its founding in 1995, it was rare in those days for buyers to seek out pre-owned clothing not classified as “Vintage.” Today, companies such as Depop are growing at lightning speed by allowing their app-based communities (target demographic under the age of 26) to buy, sell and share their used fashions. While the number of online platforms promoting peer-to-peer clothing rental is growing, challenges include the expense of shipping and even thornier issues around cleaning practices–or the lack thereof. Although these remain pain points for the nascent market, demand for such services will lead to solutions that diehard customers, at least, will accept.
Driving Traffic Through Collaboration
We know e-commerce has led to fewer people coming to our physical stores. So, what can we do to turn this trend around and increase foot traffic? Walgreens and Nordstrom have an idea: Let customers of other retailers and brands pick up and return items in their stores. Walgreens, for instance, is offering pick-up and return service on merchandise purchased online from Levi Strauss & Co., Urban Outfitters and Anthropologie. For both Walgreens and Nordstrom, the tech/software firm Narvar, Inc. makes the process possible by managing order tracking and customer communication. In yet another synergistic experiment to bring in new customers, Nordstrom is offering temporary space to online brands such as Allbirds, a footwear maker that follows sustainable practices. I’m confident this is just the tip of the iceberg and that a growing number of brick & mortar retailers will aggressively pursue these types of collaborative strategies in 2020.
Putting It All Together
Many of our 2020 trends suggest a challenging future for retailers. Absent the stigma of wearing other people’s used clothing, and with a new generation of consumers willing to rent and share items they would once have bought, production can be expected to decline across a range of categories. An even more formidable factor: the sustainability movement. A monolithic trend with the weight of youth behind it, sustainable culture is poised to impact consumption at the expense of designers, manufacturers, merchants, and supply chains that underestimate or (god forbid) ignore it. One result is that brick & mortar retailers are going to find it more difficult than ever to persuade consumers to drive over and come on in.
To ensure customers visit our establishments in the future–and that’s measured in years, not decades–the retail experience must be structured around the human component. The first step is to get back to the basics of delivering on the customer’s wants and needs, building trust, and demonstrating that our appreciation of the individual shopper goes beyond the sum and substance of her transactions. As environmental factors and fast, convenient e-commerce increasingly keep consumers in their seats, it’s essential we view each person who walks into our shop as golden. Why are e-commerce merchants opening so many physical stores and pop-ups? They recognize the need to reach out and touch the customer.
Which brings to mind a little story. A restaurant in New York was catering to a remarkably diverse group of loyal patrons and its business was through the roof; there was nothing like it in the neighborhood. Eager to uncover the secret of its success, a business columnist dropped in to interview some of the regulars. “Why do you come here so often?” the reporter wanted to know. “Is it the food? The ambiance? The prices?” The response was consistent: “They know my name.”
It’s just that simple.