As 2017 draws to a close, it's time to take a look at what is just around the corner for 2018. Retail has had significant ups and downs, so keeping up with the trends can help insulate businesses from surprise disruption. Retail sales are on the rise, with a total of 4 percent gains expected across the board. E-commerce continues to be the largest growth sector, showing 16 percent increases. As the landscape for retailers changes, here are the top trends to watch for 2018.
Personalized Recommendations, Products and Communications
The growth of personalization is here to stay. Consumers expect to interact and engage directly with brands, and that means communications that respond to buying and browsing history. Yoox Net-A-Porter is a great example of a brand that offers personalized service. This company gives clothing suggestions based on where consumers are traveling. Using data about the destination, weather predictions, past buying history and other details, customers get highly-tailored suggestions. Expect to see more personalization in the types of offers extended to customers, the types of product recommendations they receive and the ability to personalize products. The micro-manufacturing market and print-on-demand services all allow customers to hone in on one-of-a-kind buying experiences.
Consolidation and Integration
While department stores continue to struggle, big box retailers are moving toward more consolidation. Amazon, eBay and Alibaba are expected to capture 40 percent of the e-commerce market. That leaves other retailers either working through these mega platforms or struggling to compete. One solution that is gaining ground is the consolidation of existing brands. Big buyouts have reduced the market competition. Look for more mergers among major retailers in the coming year.
Big Data Just Gets Bigger
Personalization, innovation and anticipation all depend on data. Companies leverage analytics collected about their customer-base to make predictions about customer behavior. The more data on hand, the more accurate the predictions. Big Data has been a major behind-the-scenes player for years, and it is only expected to become more important as more shopping moves to digital channels.
AI and Automation Take Over Behind the Scenes
Chatbots and robots both will be taking on more responsibility in retail. Chatbots already handle routine customer service inquiries, but with the growth in social commerce they may also start handling more direct sales. Robotic applications include picking, packing and shipping product. Amazon already uses robots in several facilities and is expected to expand their mechanical workforce.
Social Media Is King for Commerce
While few buyers finalize a sale directly through social media platforms, these channels are still some of the most important for customer engagement. Social media allows brands to establish a presence without blowing the marketing budget. Established brands leverage their existing following to roll out new products and collect customer feedback. Social is a rapidly expanding part of the retail marketplace.
More Stores, Not Less
Don't discount brick-and-mortar retailers. For every store that closes its doors, 2.7 more open. Larger retailers are exploring smaller concept stores, and independent retailers continue to do well. Target plans to open an additional 130 small format stores on or near college campuses by 2019. These small format stores often act as shipping hubs to streamline logistics and enable customers interested in buying online and picking up at a store.
As businesses gear up for 2018, the major trends continue to circle around technology advancements and omnichannel buying experiences.