In their annual predictions for the new year, retail industry analysts and consultants see one consistent trend for 2019 that has defined the business for two years: transformation.
From the uncertainty over the future of Sears and lagging holiday sales at traditional department stores (according to data from Mastercard) to the explosive growth of dollar stores and e-commerce, 2018 was a year of notable change. And the next 12 months shaping up to be the same — with some caveats.
Antony Karabus, chief executive officer of HRC Retail Advisory, told WWD that “the transformation of retail is now permanent” — meaning the traditional methods of selling goods to consumers requires constant reinvention due to a variety of factors, from ongoing shifts in consumer behavior to the impact of e-commerce on profitability.
But Karabus and other retail experts see opportunities for retailers and brands that can navigate these market challenges. And that means knowing which way the wind blows.
Dana Telsey, chief research officer of Telsey Advisory Group, said in a report this week that the “macro landscape is filled with more headwinds — the prospect of more interest rate increases, potential tariff hikes and category extensions, moderating housing fundamentals, more challenging comparisons, expense pressures, accelerated inventory receipts, a slowing global economy and geopolitical uncertainty — than tailwinds, like product innovation, full employment, lower gas prices and higher tax refunds.”
An ongoing government shutdown may also create consumer spending friction in the near term. Which is why retailers, fresh off the holiday selling season, need to keep up a competitive pace in the first quarter. And that means continuing to give shoppers what they want, when they want it.
Sarah Martinez, vice president and industry lead for retail at Oath, said it is critical for retailers to create a seamless in-store shopping experience. “Physical stores will offer better and more digital experiences in 2019, with tech to make it easier for shoppers to find items and gain more product information,” she said, adding that this “should lead to a faster shop for many, where searching aisles and shelves for the right item is replaced by an app that guides shoppers to where they want to be.”
Martinez also said content-driven commerce will grow in prominence. In a recent consumer survey of holiday shoppers, she said 54 percent of respondents’ purchase decisions are influenced by content.
“We’ll see retailers connect the dots between storytelling and shoppable content more in 2019,” Martinez said.
For its part, Oath is rolling out an “exclusive shoppable series” on its Yahoo Lifestyle channel, The NowWith Network. “It’s a celebrity-driven, interactive platform that will connect consumers with top talent, brands and products through premium storytelling and interactive shoppable experiences,” Martinez said, adding that the company has signed on actress and entrepreneur Nicole Richie as well as brand partner “Honey Minx (Richie’s debut beauty line) for ‘Style NowWith’ and actress Janel Parrish and eBay for a series ‘Deals NowWith,'” she said.
Martinez also sees marketers making an even bigger push into mobile as usage “skyrockets.”
Alan Treadgold, partner and global retail lead at PA Consulting, said “tumultuous change will define the retail industry in 2019. In particular, more high profile failures of well-established retail businesses who haven’t been able to change their businesses anything like as quickly as their (former) customers are changing in terms both of what they want to buy and how they want to buy it. Midmarket department stores continue to look especially vulnerable.”
Another soft spot in the industry surrounds data use and security, Treadgold said. “Following very high profile data breaches and at best inappropriate use of customer data, retailers should expect their customers to be far more aware of and concerned about how their data is being collected, stored and ‘harvested,'” he said, adding that more “thoughtful retailers will see this as an opportunity to gain a competitive advantage by positioning themselves as custodians of their customers’ interests and backing that up with properly secure systems and processes.”
In the meantime, the next big retail event for fashion is Valentine’s Day, Feb. 14, which falls on a Thursday this year. For Valentine’s Day 2018, the NRF said sales reached $19.6 billion, and Telsey noted that jewelry and flowers were the two largest categories.