Almost no one can argue that the retail ecosystem isn’t changing at an accelerated pace. But a school of thought around the shift misses the mark pretty badly. Specifically, there are a lot of doomsayers out there who look at store closings (Sears, Lowe’s, JCPenney, Macy’s, etc.) as the harbingers of worse to come for retail, but the truth is that retail is just changing and sales are growing. It’s about where, when and how consumers buy goods that is shifting.
That said, there’s a grain of truth to what the doomsayers think: For those retailers, marketers and brand owners that can’t capitalize on the morphing landscape and prepare themselves for and take advantage of disruption, the prognosis is pretty poor as far as their company’s survival goes. Thankfully, as winners and losers emerge on the way to retail’s jagged future, some clear trends for success are emerging. Retail and brand leaders should hop onto them fast if they want to flourish. Here are some of the biggest retail trends, and what brands can do about them:
- Online And Offline Continue To Blur. The blurring of online and offline retail will pick up speed, and retailers need to meet consumers in both arenas. Online retailers will aggressively march into brick-and-mortar (Amazon bookstores, Buzzfeed at Macy’s, Adore Me, Facebook at Macy’s and UNTUCKit, to name a few). And brick-and-mortar retailers will not sit still; they will continue to up their game in online retailing (e.g., Walmart, Target, Macy’s, to name a few).
- It’s About Experiences. Brands and retailers should continue to look for ways to “pull” consumers into a brand rather than “pushing” the brand at them. They should offer more “experiences” to consumers — both virtual and physical — such as creatively driven pop-up stores; online experiences; new, permanent mono-branded stores (for instance, the new Cover Girl store in New York City); malls featuring spa services, tailoring, personal stylists; and branded hotels (like the Shinola Hotel opening in Detroit and the Restoration Hardware Hotel opening in NYC). Brands and consumers will become more “entangled” if brands play the trend adroitly.
- AR Wins; Use It. When it comes to Virtual Reality vs. Augmented Reality, AR will become the technology of choice in the shopping journey, as it brings experiences to our real world instead of placing consumers in a fantasy world. Examples include both IKEA and Wayfair. They each have apps that allow consumers to see actual furniture (to scale!) in their own homes. Retailers would be remiss not to invest in this new and exciting way to shop.
- Watch eSports. eSports — with hundreds of thousands of viewers for any single event, players gaining celebrity status, teams becoming increasingly popular and competition among leagues heating up — will grow as a marketing tool for brands and retailers. The audience will continue to expand because of greater awareness among viewers, bigger and better platforms and more television broadcasts. More brands (including retailers) should seek to get in on the act as sponsors or licensees.
- The Year That Goes To Pot. As cannabis becomes legal in more and more states, it will be marketed like any other consumer product, and the recreational marijuana industry will evolve like any other consumer product industry. We’re already seeing big companies enter the space. Constellation Brands (maker of Corona beer), Altria (maker of Marlboro cigarettes) and InBev (maker of Budweiser) have all announced investments in Canadian cannabis companies as they begin to experiment with new products. Cannabis is moving from the back room to Main Street, and this should have retailers’ rapt attention. In recent weeks we have seen retailers like Barney’s and Sephora announce plans to stock beauty products infused with CBD, the non-psychotropic element in cannabis.
- Take A Position. Brands should be increasingly aware that younger consumers want their brands to take a position and to have a purpose. Sometimes brands are compelled to adopt a controversial position, such as abandoning the NRA following the shooting last February at Marjory Stoneman Douglas High School in Florida. Or they voluntarily take a controversial position such as Nike’s Colin Kaepernick ad. A brand and business can no longer sit on the sidelines; consumers expect to hear brands’ voices and see their integrity.
- Gen Z Comes Of Age. Pay more and more attention to Gen Z (born after 1998) as the older end become consumers. They are 25% of the population and will be a bigger wave than both Millennials and Baby Boomers. They are digital natives and know little of the world before smartphones, Amazon and Google. Digital connectivity, on multiple platforms, comes easy to them. They want their “brands” to act more like advisors than salespeople, and they want brands that feel “real.” So smart retailers should play to this desire. And watch out for Gen Alpha (born after 2009). Marketers are already paying attention to them.
- Digital Brands. Younger, digitally native brands will continue to flourish. Some of them are, bit by bit, eating into the market share of the big consumer products companies. Consider for example how Tempurpedic and Serta Simmons got blindsided by Casper. The big boys aren’t going to simply stand by wondering what to do. They know what to do –– and that’s compete!
- Digital Detox Paradox. Although consumers seek to be digitally connected 24/7 on multiple platforms (sometimes at the same time), they also want the opposite…to get away from their devices for a period of time, both at work and at home. Already we see devices banned at certain occasions, such as office meetings and restaurants. The research is clear that digital breaks increase productivity. And in a really interesting twist, Millennials and Gen Z, who came of age with social media, are, in a surprising number, permanently or temporarily abandoning social media. Retailers and consumer products companies will have to navigate this very complex cultural paradox.
- Looking Back. “What’s old is new again.” While we are seemingly addicted to our “futuristic” world, we also seem to always look back. Younger generations even look back to a time before they were born. Amazon, the retail-disrupter-in-chief, is opening bookstores and mailed an ink-on-paper toy catalog last holiday season. E-readers are slowly giving way to “real” books and iTunes to vinyl records. Brands that we remember (or mis-remember) fondly come back from the dead, such as FAO Schwarz, and soon, Toys ‘R’ Us (rebranded as Tru Kids Brands). The Monday to Friday work week is making a comeback. As we look forward, keep an eye on brands, products and trends that make a comeback.
I could easily list another 10 things that should be top-of-mind for retailers and brands navigating this new, exciting and disrupted age. It’s certainly a fun — and challenging — time to be navigating and observing the shopping battlefield.
Michael Stone is Chairman and Co-Founder of global brand extension licensing agency Beanstalk and author of The Power of Licensing: Harnessing Brand Equity (Ankerwycke, 2018). The recipient of 23 LIMA International Licensing Awards and member of the LIMA Licensing Industry Hall of Fame, he was instrumental in driving the evolution of brand licensing as a marketing tool used by many Fortune 500 companies. Stone served as an adjunct professor of Brand Licensing at Baruch University School of Business and Long Island University Post. He is a member of the board of Year Up New York.