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Retail: the big trends for 2019

  • Raman Sharma
    February 7, 2019

Our work with companies across the retail spectrum – from UK grocery to US apparel – means we understand the ongoing sector transformations. Here are our perspectives on what 2019 might have in store, and some key questions to ask when evaluating existing and new retail strategies.

Social Commerce Boom

Increased usage of Facebook, Snapchat, Pinterest and Instagram to buy has been of keen interest to many retailers. What is interesting is that consumers don’t mind being advertised to, as they know they are there for buying. With YouTube and Twitter being actively used to influence, engagement has become more important than advertising.

Some retailers have been experimenting with chatbots, and have also seen positive results. 2019 could see increased use of chatbots on apps, websites and messengers to provide a differentiated experience to the consumers. With an understanding that consumers are likely to spend more on the brand they interact with on social media, retailers are likely to see an increase in share of sales coming from social commerce.

Key questions for retailers: What channels will provide the highest ROI? Are there any avenues to expand the social commerce footprint beyond the usual suspects?

IoT Driving Two-Way Benefits

IoT is helping retailers follow customers through their journey – from search and exploration to making a purchase. With rapid advancements in software and increased adoption of wearables, IoT is helping deliver the right message (communication/promotion) at the right time (on location/closer to purchase) to the right audience (those having considered the brand).

Consumers are not complaining either, with retailers using technologies to make it easier for customers to find the right product and access product information ‘on the go’ or while in store – making the shopping experience more streamlined and less overbearing. The challenge for the retailers will be to make sense of all the data to have a higher ROI. This can be accelerated by marrying data science with specialist retail experience to provide actionable insights.

Growth of Experience Stores

While there has been much talk of a retail apocalypse, there are brands that have found a way to grow by focusing on their core proposition. At a time when mundane, impersonal department stores are falling out of favour, retailers such as Nordstrom and Sephora are coming up with smaller stores – focusing on limited products and providing superior customer service through well-trained sales associates and additional ‘beyond retail’ services.

It is not surprising that people prefer e-commerce for transactional buying, and offline stores for emotional or personal purchases. No matter how fast online may be growing, almost 90% of retail purchases are still through brick-and-mortar stores. Retailers need to tap into the segment which still needs that physical experience. Brands that can go beyond transaction/sales focus, and offer experiences, are likely to stay in consumers’ minds for much longer, and are expected to witness higher loyalty and average purchase size.

Some retailers are moving to small format stores as identifying locations that can generate high ROI through traditional formats is becoming increasingly difficult. Others are being driven by the focus on service as a value proposition, minimising inventory and optimising the usage of online and offline channels.

Key questions for retailers: How do you go about selecting store locations for new initiatives? Which products do you choose to stock in a space-starved layout? How do you assess the ROI across various store locations?

Decoding Multi-Channel Consumers

The realisation is growing that consumers are channel agnostic. While there may be a situation-specific preference for a particular channel, the customer does not mind switching, and has no specific mental barriers across the purchase journey.

Customers can be browsing online and purchasing offline, or purchasing offline and getting it delivered at home. Twitter, Facebook, Instagram, Amazon, brick-and-mortar stores – these appear in the customer journey in no particular order.

And where the purchase takes place should be the least of a retailer’s headaches; rather, they should focus on maintaining the right balance, after understanding its customer. By having a multi-channel strategy, it is easier to have an in-depth view of the customer, and engage with them at the right time to increase not just awareness and consideration, but purchase intent.

In an age where apps are giving customers fashion advice, and then directing them to stores, retailers need to make sure they are decoding all the signals that come in from all the touch points, and use them to gain a competitive edge.

Evaluating Second-Hand Apparel

With more and more women opting to purchase second-hand, many big brands are jumping on the opportunity. What started as a niche concept by some start-ups is quickly scaling up into a multi-billion-dollar opportunity. Resale disruptors are growing at over 20 times the overall apparel retail growth, and retailers have suddenly woken up to a latent demand which they have not previously addressed.

Millennials, while discarding items in up to five wears, are also less wasteful – becoming a good prospect for retailers. They are the driving force behind this change, also bringing along the sustainability challenge that retailers must act upon. Although it may be easier for department stores of multi- brand retailers, high-end brands face a conundrum on how to plan for the future.

Key questions for retailers: How do you price a product, which does not become mass at launch, but is likely to become mass (through resale/second-hand) in the future? How do you keep your core customers engaged, and make them see value in your offerings?


Find our more about The Smart Cube’s Retail Solutions, and how analytics can help ease increasing margin pressures.