Retail Spending in 2018 to Continue to Splinter as Consumers “Do It Their Way,” says FGRT Report
New report outlines the top 18 trends that will affect retail this year
January 11, 2018
NEW YORK (January 11, 2018) – More than ever before, spoiled shoppers will want more, want it their way and want it now in 2018. That desire should further splinter consumer spending and favor retailers with strong identities, as well as nontraditional channels and nonretail categories, says “18 Retail Trends for ’18,” a new report from global think tank FGRT (formerly Fung Global Retail & Technology).
“We see no letup in the splintering of consumer spending in 2018, as specialist retailers offering ever-more choice will continue to peel dollars away from midmarket behemoths,” writes Deborah Weinswig, FGRT Managing Director.
Internet-only retailers will capture an additional $45 billion in sales in the U.S. this year, Weinswig predicts. Those e-commerce sales, combined with increased consumer spending on apparel rental, beauty subscriptions, meal-kit services and apparel resale, will mean an additional $47 billion will be stripped away from traditional U.S. retailers this year compared with 2017.
Technology will continue to remake the shopping experience, and adopting tech early is one way that traditional, large-store retailers can fight back against more specialized upstarts, Weinswig notes. In particular, artificial intelligence (AI) will help retailers offer individual consumers tailored interactions, including shopping recommendations, and personalized mobile-commerce portals and promotions.
“Such personalization can drive growth at specialized retailers by enabling them to create deeper connections with their customers. But it will be imperative for hard-hit generalist retailers, including US department stores, which can deploy AI to surface highly relevant products and services from what may be an unwieldy inventory,” she writes.
Mall formats in the U.S. will continue to evolve, as well, adding traffic drivers such as food halls, flexible spaces and more diverse, mixed-use anchors, including discount stores, fast-fashion outlets, apartments, hotels, classrooms and fitness centers.
Five key consumer and retailer demands will drive change this year, says the report, which is sponsored by Boston-based Celect, a cloud-based predictive analytics platform that helps optimize inventory for retailers. Consumers will demand to shop on their own terms by using new and alternative formats, and to be provided with life-improving services as well as new experiences and rewards from retailers, brands and tech firms. Meanwhile, retailers will seek to collaborate with companies spanning services providers to tech giants and to speed up their supply chains.
Another notable trend for 2018 consumers shifting their grocery shopping to unstaffed, high-tech convenience stores. Already a presence in cities in China, the cashierless grocery store format should expand further in the U.S. through AI vending concept Bodega and the debut of Amazon Go. The report also notes that grocery brands such as Nestlé, increasingly enabled by blockchain technology, are likely to experiment further with direct-to-consumer sales.
E-commerce growth won’t be limited to sales of basic necessities. FGRT expects the online luxury market to grow, too, given the recent launches of luxury sites from LVMH and Alibaba. New and expanding luxury platforms will continue to steal sales from high-end department stores.
Wellness-oriented trends in 2018 will include a focus on mental well-being and the blending of retail and services, as exemplified by CVS Health’s acquisition of Aetna.
To compete, brick-and-mortar retailers will increasingly collaborate with brands, services, and other retailers in order to leverage their physical networks. Even so, voice commerce will grow quickly as consumers increasingly shop via devices such as the Amazon Echo and Google Home. Look for more partnerships between physical stores and these tools, the report says, noting that Target has already partnered with Google Home.
Retailers also will collaborate with social media influencers and with companies that enable cross-border e-commerce in 2018.
The full report can be found here. Other recent FGRT reports include: “Deep Dive: The Challenges of an Aging Population in South Korea,” “Retail Reworked, Part 2: Shifting Consumer Demands and Behaviors” and “Deep Dive: Reviewing 2017’s Retail IPOs.” FGRT’s
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FGRT (formerly Fung Global Retail & Technology) is a think tank whose research team, based in New York, London and Hong Kong, follows emerging retail and tech trends, specializing in the ways retail and technology intersect, and in building collaborative communities.
The team, led by Deborah Weinswig, former top Wall Street and retail tech analyst and active startup advisor, publishes ongoing thematic and global market research on topics such as the Internet of Things, digital payments, omnichannel retail, luxury and fashion trends, and disruptive technologies. More information can be found at www.FGRT.com.
Celect is a cloud-based, predictive analytics SaaS platform that helps retailers optimize their overall inventory portfolios in stores and across the supply chain, resulting in double-digit percentage revenue increases. This groundbreaking advance in machine learning and optimization allows retailers to understand how an individual customer shopping in store or online chooses from an assortment of products, revealing true demand. The technology builds on a fundamental advance in customer choice modeling called by MIT’s Computer Science and Artificial Intelligence Laboratory one of the 50 greatest innovations it has ever produced.