In 2018, the eldest millennials will turn 37. Their generation is greater in number than the baby boomers, and their purchasing powers are just beginning to peak. So it’s no surprise the consumer landscape will continue transforming as retailers adapt to keep up with millennial preferences.
As the first digital-native generation, millennials’ expectations are vastly different than those of their forebears. The digitization of shopping has greatly accelerated the pace of change in the retail world, and 2018 is going to see plenty of changes. Here are some trends to watch:
Old stores out, new ones in
Last year saw a record number of store closures (more than 9,000) and bankruptcies (50 of them). That’s more than in 2008, when the Great Recession stopped the economy in its tracks. And there will be even more stores weeded out in 2018, as outdated or underperforming brick-and-mortar stores continue to close.
But on the bright side, the next generation of stores – often with smaller formats, less inventory and more experiential concepts – will thrive.
Despite the purge in 2017, the year still ended with a net increase of 4,000 store openings, according to IHL Group data published by the National Retail Federation. For every company that closed a store, 2.7 companies opened one.
Because technology has made high-quality point-of-sale and retail management tools readily available to any entrepreneur with a smartphone, it has become much easier for smaller retailers to enter the market.
Have you ever thought about a product, then had it pop up in your Facebook news feed? Get used to more of that in 2018.
Now that a consumer’s every move is tracked online, retailers know which products consumers want, even before consumers themselves know they want them. Advanced analytics and data-gathering tools give retailers intensely personalized insight.
Retailers will continue applying predictive modeling and artificial intelligence to anticipate customers’ needs and predict each consumer’s next move, according to a trends report from Alliance Data. By watching and analyzing a shopper’s behavior, retailers can predict what shoppers are likely to do in the future. From there, it’s not that difficult to figure out how to get shoppers to behave the way they want.
But predictive personalization will do more than just beef up profits. By seeming to know consumers personally, it will help customers feel heard and understood, and make their shopping experience more painless. We’ve already seen early local examples of this with the Ithaca-based company Rosie, which runs Dash’s Markets’ delivery service. It uses the technology to learn customer purchasing habits, allowing undesirable products to fall away and reminding customers when products they buy regularly might be running low at home.
Subscription companies are not a new thing. Birchbox, Dollar Shave Club, Netflix, Blue Apron – they’re household names. But while subscriptions have tended to be offered by startup retailers or retailers who focus on subscription as their main selling point, trends in the subscription industry will shift a bit this year to include traditional, established companies and products, according to the National Retail Federation.
North Park Florist, a Buffalo mainstay since 1988, launched a subscription in time for the new year. It teamed with local businesses such as Buffalo Gal Organics, Whimsy Confections and Lily Pad Boutique to curate a monthly collection of Buffalo-sourced products in a subscription box called Love. Local. Me. For $49 each month, customers receive a variety of sample- and full-sized products, such as body lotion, bath salt, chocolate, socks, tea, cookies and air freshener.
Long-established national companies are getting in on the action, too. Customers who don’t own a car can now buy a subscription to one. Care by Volvo gives subscribers access to a vehicle when they pay a monthly fee that covers registration, maintenance and insurance.
Hasbro, with its new Party Crate, will send subscribers a newly released board game every quarter. Fender guitars will launch a digital lesson subscription. And Gap will start sending out subscription styling boxes with curated baby clothes collections inside.