2018 was undoubtedly a tough year for retail and one that will be remembered for many years to come.
Thanks to the relentless media coverage, we were exposed to a blustery storm of CVA’s, declining footfall and store closures which flooded the papers with little relief. Throw in the sharpest sales drop in 22 years with a side order of Brexit and the picture looks pretty bleak.
But it wasn’t all doom and gloom. There were moments of positivity and (dare I say it) excitement — innovative in-store technology from big high street players, bricks and mortar retailers such as Zara stepping up their focus on customer experiences, and the likes of Amazon, Matches and Bodenexperimenting further with a physical presence.
At Dressipi we’ve always believed that retailers need to start thinking differently if they’re going to come out on top, and this starts with the customer. Yes, retail is going through a period of change. Yes the road ahead is unknown, but one thing is for certain — the high street isn’t dying, its evolving and brands have a huge opportunity to jump on board and ride the wave of change if they’re prepared and smart enough to think outside the box.
The purpose of this piece is not to dwell on the past but rather look to the future. Now we’ve had some time to get back into the swing of things, here are our top 4 predictions for 2019:
1) There’s More In-Store
An average of 20% of retail sales are done online, so you do the maths — 80% of transactions still happen in bricks and mortar stores. Although this channel shift will continue, the rate of online growth is slowing so the mix of online purchases is unlikely to be significantly higher.
We believe 2019 will see an increase in availability and popularity of self-checkouts, alongside a greater roll-out of technology to solve in-store issues such as queuing.
Furthermore, we’ll see more brands scaling back their stores to provide highly curated edits depending on location and clientele (all driven by data insights) — take H&M’s concept store in Hammersmith as an example, or COS’s in Coal Drops Yard. We’ll also see a surge in functionalities such as Scan-and-Go shopping where customers have the ability to view a product in-store, scan a VR code, and have it delivered to them at home. Convenience is key.
2) The Inevitable Consolidation
There is well documented over-capacity in the mid-market, both in terms of real estate and in terms of product produced. Put simply, there aren’t enough women to buy the number of products produced and what people are willing to spend on clothing varies drastically.
We predict that the gap separating the winners and losers in retail will start to widen even further, with 2019 seeing some large high profile casualties or much-needed consolidation. The winners will be those that clearly understand their customer, have excellent product and a value proposition that resonates. Although everyone understands the value of well-structured data, we feel the winners will start to capitalise on that to surge ahead. In short, data-driven retailers will succeed over gut retailers.
3) Customer Experiences Take A Leap
2018 saw some great progress where brands focussed on improving customer experiences, but it fell short of where we believe retail is truly heading.
Rather than playing at the edges, we predict 2019 will see the launch of the first proper execution of personalisation in store and online. By this we mean customers having access to an entire shopping experience that is unique and completely relevant to them as individuals.
In stores we’ll see an increase in real-time context assistance for customers, helping to guide and educate them better as they shop. Online, we’ll see properly tailored experiences and truly relevant content in marketing material such as emails.
4) No Hiding From Sustainability
With mounting pressure from the government and consumers alike, retailers will be forced to look more seriously at their impact on people and the environment, building genuine purpose-driven initiatives into their businesses. We’ll see more retailers offering customer initiatives (e.g. & Other Stories’ 10% discount for customers who recycle beauty packaging and textiles in their stores), and using more recycled materials in their products (e.g. Adidas).
In addition, let’s not forget the wastage in the sourcing and production of too many garments (with an average sell-through rate of 60%) that continues to be an issue. Again, retailers who start to capitalise on their data will produce more of the right product in the right sizes at the right price for their particular customer base. Supply chain efficiency will not only create less wastage but also drive margin improvement.
The pace of change within retail is rapid and its safe to say that the likes of Amazon are the wolves biting at the heels of more traditional retailers. The need to stay ahead of the curve and be truly forward thinking is more important than ever. Those that use data intelligently in all areas of their business to deliver great product, customer service and value proposition will be the ones that stand the test of time.
Dressipi is the global leader in fashion-specific personalisation, working with some of the world’s biggest retailers. Using a comprehensive set of Machine Learning and AI technologies alongside the largest set of product fit and style data available in the world, Dressipi enables retailers to match customers with products and experiences to influence buying behaviour at scale.
This article originally appeared on our Blog.