By Andrew Rosenband
You may have noticed your holiday shopping was easier this year. If that’s the case, you’re not alone. According to recent surveys, the growth in shopping with Amazon and other ecommerce marketplaces has cut the holiday mall congestion down to something a little more manageable. But is this a good sign for shoppers, or a death knell for brick and mortar retailers?
While some are quick to insist upon the latter, a look at the trends in early 2018 shows that while brick and mortar retailers aren’t dying, “bad brick and mortar is,” according to RETAILMavens’ Cathy Wagner. Simply put, brick and mortar stores that are innovating with changes in the market are going stronger than ever, and there’s even a rising demographic with data to prove it.
The trends also show a homogenizing of the ecommerce market, and that data and technology are gaining traction in retail decisions on both the supply and demand sides. Here’s what 2018 will tell us about the future of retail:
Data and “Smart” Tech Aren’t Just Fads in Retail
You might think “smart” shopping tech like Amazon’s Alexa and Dash buttons are gimmicks, but the future of retail may truly be a turn toward the convenience of automated replenishment. For groceries and consumer packaged goods (CPGs) that shoppers buy regularly enough to need automatic replenishment, this technology will be introduced in the future and be a massive help to busy professionals and parents looking to keep the cupboards stocked.
Additionally, data can be used to monitor shopper’s browsing and shopping experiences and make the process easier (and more individually customized than ever). For example, analytics can look at certain products and goods that are more popular and automatically calculate the optimum price point to maximize profits.
The Ecommerce Sphere is Becoming Less Competitive (For the Big Names)
A disturbing trend for smaller online retailers has been the growth of the reach of the biggest names in ecommerce. With companies like Amazon and eBay putting more of their focus on additional online selling markets, they are edging into the space that was once occupied by smaller stores. When the largest 3 online retailers are expected to account for around 40% of the ecommerce market this year, that leaves little room for your average small competitor.
However, there is an upside to this development…
Brick and Mortar Retail is Here to Stay
The fact that the largest retailers are selling their assets and ceding digital space to Amazon and eBay may have an upshot for the future of physical retailers. Here are 3 reasons why brick and mortar retailers will continue to succeed as we move into 2018, according to ASD Insider:
Generation Z is committed to brick and mortar: The generation of consumers just entering buying maturity widely prefers the brick and mortar retail experience over any other. Contrary to expectations about the most “digitally literate” generation, 98% of shoppers born after 1995 prefer to shop in-store.
This may be because of innovations in brick and mortar retail: Retailers are being forced to think outside the box more often to keep consumers’ attention on them, and away from ecommerce, and it appears to be working. Some stores have always operated in an exclusive way— TJ Maxx, for example, where stock changes so frequently that it would be impossible to shop the store online. Now other retailers are finding ways to offer exclusive experiences to consumers that are only available in a brick and mortar setting.
New store openings are outpacing old store closings: Next time you hear that brick and mortar retail is dead, respond with this: Market trends show that for every store that closed in the last year, 2.7 new ones opened.
There’s a lot of uncertainty in the coming year for retailers, but this much is known: Amazon and its peers (of which there are few) won’t be slowing down anytime soon, data and tech is a growing development in retail, and brick and mortar stores are still alive (and thriving).
Andrew Rosenband is CEO of Morgan Li.