AI. Store closures. Experiences. These words have been circulating among industry members as the new year looms, and what’s ahead for retail remains a mixed bag. Despite this uncertainty, Edited, a leading data authority, has highlighted five groundbreaking retail trends that will influence supply chains, apparel companies and consumer activity in 2018.
1. Pricing will become more transparent
Discounting may be a retailer’s current gateway to more consumers, but the pricing strategy could also decrease the retailer’s value and economic prosperity. Edited predicts that retailers will combat this dilemma by experimenting with different pricing strategies. To attract consumers without major markdowns, retailers could start to offer more selective promotions online or become more transparent about their supply chain costs to give consumers a better understanding of why things are priced as they are. E-tailers, like Everlane, are enticing consumers with less discounts and more pricing visibility—including workers’ wages and production costs.
2. AI isn’t going away anytime soon
Retail’s competitive environment has prompted retailers to use more technology, including artificial intelligence. Edited said retailers will have to become savvier with AI to advance customer service, personalization and inventory management. AI-powered devices, including chatbots, real-time analytics and voice activated devices, are expected to help retailers provide more seamless shopping experiences for consumers in the coming months.
3. Experience-driven retail comes first
Bankruptcies and store closures took a toll on retailers this year—and Edited said selling products will no longer be “good enough” to stay agile. In 2018, experiences will be a core focus for retailers to engage with consumers on a whole new level. Experiences may vary from pop-up shops to interactive fitting rooms, as physical and digital retailers aim to keep the conversation going with consumers. What’s more, retailers will also ramp up personalization, including exclusive perks and loyalty programs, to show consumers come first with their branding initiatives.
[Read more on 2018 industry predictions: State of Fashion 2018: McKinsey Says Emerging Markets Key to Growth, Industry Improvement Ahead]
4. Luxury will become more popular
Considering cultural factors, including China’s growing middle class and Millennials’ affinity for experiences, Edited said the average cost of luxury items is up 15.4% compared to 2014—and this growth is expected to continue next year. Luxury retailers, including Gucci, will also ramp up their social media activity on influencer-heavy platforms, like Instagram, to gain more Millennial and Gen Z consumers.
5. Shop floors shift to fulfillment
While store closures remain rampant, retailers are hiring fewer sales associates and more fulfillment employees. Edited expects retailers will continue to ramp up their delivery and distribution fleets, as consumers exchange mall trips for digital shopping. Retailers will have to allocate their operation costs without sacrificing margins, so they can meet consumers’ demands for quicker delivery and easy return policies.