Top 5 retail trends for 2019 (and what they mean for your business)
Brendan Straw, Chief Sales Officer - Ovato
With the rapid growth of retail technologies and a new focus on unique shopping experiences for customers, 2019 is set to become a transformative year for the retail industry. Rising competition from online and overseas stores means that local retailers need to get creative to overcome the challenges heading their way. Here are the biggest retail trends to watch this year:
1. Changing customer expectations
Improvements to delivery services mean that customers want to purchase goods online and receive them that afternoon. Five years ago, this would have been mind-boggling, but now it’s par for the course. Online retailers like The Iconic can deliver within three to five hours to customers based in Sydney. Companies like FedEx are experimenting with drones and robots to improve their delivery time, putting pressure on local Australian retailers to adopt similar initiatives and retain their customer base.
Customers are now willing to pay more for quicker delivery but demand higher quality, convenient service. This means an efficient delivery channel is a priority for maximising customer satisfaction. Offering same-day delivery or easy click and collection options for customers creates a seamless shopping experience that will encourage repeat sales.
2. The new subscription economy
Customer spending power has changed. Rising household costs and stagnating wages mean Australians have less expendable income compared to 5 years ago. This doesn’t mean they’re not spending - they’re just doing it in more manageable chunks.
One-off, expensive purchases are less appealing when customers can instead split payments through subscription or pay-by-month services like Afterpay. The rise of the ‘subscription economy’ includes the retail industry, with many businesses expanding to accommodate this trend. According to Forbes, between 2013 to 2018, the subscription e-commerce market grew by more than 100 per cent a year, generating more than $2.6b globally in 2016.
Small, monthly payments have become the norm for customers, with the expectation of this service growing. Customers are looking for more flexibility, and businesses must be able to pivot to accommodate it.
3. The popularity of experiential retail
‘Experiential’ retail is on the rise as retailers shift from traditional bricks and mortar stores towards multi-channel shopping experiences designed to engage customer senses. For example, IKEA developed a new virtual reality shopping experience that lets people see what a product will look like in their home before purchasing. This is driven largely by the millennial audience and its desire to ‘experience’ rather than to ‘have’.
For this generation, it’s not just about walking in and out of a store, but engaging with an experience that will add something to their day (and if it’s Instagrammable, that’s another plus). This might mean a traditional bookstore now offers a bar for local shoppers to catch-up for a drink, or a retail outlet sets up in a space shared with a yoga studio.
In a crowded market, the need to differentiate and distance your business from your competitors is rising. Experiential retail is an opportunity to grow your local audience and build a community of loyal shoppers.
4. The growth of ‘cult’ brands
Another trend in the retail sector is the growth of ‘cult’ brands, supported by a loyal base of customers that act as fans and advocates for their products. This brand loyalty is inspired by the idea of brands as micro-cultures, complete with a value system, aesthetic and social influence. Vans is one example of a successful ‘cult’ brand, having cultivated a loyal audience by tapping into the skate culture of California.
By tapping into existing cultural or social movements, even smaller or new brands can inspire and connect with an audience that shares their belief system. Alternatively, you might craft an authentic narrative using Instagram or other social media tools, personalising your brand in a way that becomes relatable and engaging.
This inspires loyalty that could activate a customer base who will share and spread this message with their own social networks. Brand storytelling and personalisation are key tools that can build your reputation, audience and influence.
5. Blurred Lines: making the physical digital
Ever since the Pokémon Go phenomenon took the world by storm in 2016, expectations about real-world applications for augmented reality (AR) have been high. But the reality has often lagged - and not just on your mobile screens.
Now, the combination of rapidly evolving technology, like mobile phones with in-built 3D cameras and AR software, an easier development framework spurred by manufacturers promoting development tools like Apple’s ARKit or Facebook’s AR Studio, and a raft of useful and easy-to-use trailblazing AR apps, like IKEA’s ‘Place’, means the technology is entering the retail mainstream. By 2020, it’s predicted there will be 1 billion users.
The biggest brands are already creating attention-grabbing AR experiences. Burger King Brazil’s recent burn-that-ad campaign let users ‘set fire’ to any printed McDonalds materials and receive a free Whopper burger in return, bringing to life the firm’s ‘flame grilled’ brand promise. US department store Macy’s teamed-up with L’Oreal to create an AR cosmetics sampling tool that lets shoppers try make-up shades pre-purchase. And US home-improvement chain Lowe’s used AR to teach customers DIY skills and see what furniture will look like in their homes. The falling costs of AR production will mean we continue to see smaller and mid-sized businesses try the tech in new ways.
Soon, supermarket apps will have AR prompts that suggest recipes and help you navigate around shops to create them. Beyond stores, other physical touchpoints like billboards, brochures or print ads will become interactive, giving brands new ways to educate and engage customers. The best tools will offer a way to enhance an existing experience – such as browsing a catalogue for new furniture – with practical functionality, like the ability to see and test new colours or styles virtually.
These trends reflect an industry undergoing intense and rapid evolution in response to a range of cultural and technological changes. To keep up with your competitors, it’s essential that you understand and prepare for these changes by thinking out of the box and trying something new.