With increased spending shift online, the future of US Postal Service will be among key developments to watch.Andria Cheng
As retailers are making last-ditch efforts and repeating their Black Friday-type promotions to get consumers to open their holiday-shopping wallets, they have also been thinking ahead for what’s coming for the new year.
What’s on their mind include those wild cards that could pose potential risks. For one, the sector is waiting to see what may happen to President Trump’s threat of higher tariffs on imports from China past a 90-day truce. Retailers also are paying close attention to the future of U.S. Postal Service and whether higher rates recommended recently by Trump-mandated task force may eventually come to pass. In such an event, that would signal even higher shipping costs for Amazon and other retailers because they count on USPS to play the critical last-mile delivery role for many goods.
With experience the big industry buzzword, you can also expect to be wowed with more gimmicks like virtual reality, augmented reality and Instagrammable moments.
But when it comes those trends that may actually have a more lasting impact? Bet on these developments to greet you come 2019.
Digital natives and brick-and-mortar sector have a growing symbiotic relationship: At a recent event hosted by Fifth Wall, a venture capital firm that backs several digital native labels, one-year-old online born startup Candid orthodontist care service sought store-opening advice from its older counterparts including UNTUCKit apparel, Warby Parker eyeglasses and Allbirds shoes. While there was no consensus on the best physical foray strategy, one thing was clear: brick-and-mortar presence is all but a must have for these digital native brands’ awareness and online sales lift. There is good reason why Amazon has embraced brick-and-mortar store openings, bought Whole Foods and partnered with rival Kohl’s to process its returns.
On the other end of the spectrum, while brick-and-mortar retailers like Walmart and Target are increasingly pitching online order for in-store or curbside pickup, others are opening their doors to welcome digital natives to set up shops on their properties, hoping their cachet can stoke excitement and foot traffic. The Market at Macy’s, The Edit at Simon Property Group’s Roosevelt Field mall or b8ta tech retail startup are just some examples. Macerich, a major U.S. mall owner, recently even opened a BrandBox concept, with plans to open more at its other properties to make it easier for online brands to open stores without typical leasing strings and red tape.
“Consumers get excited about seeing anything new,” Kevin McKenzie, Macerich’s executive vice president and chief digital officer, has said in an interview.
Related on Forbes: Macerich is embracing digital natives in a big way
Embracing Small And Urban As A New Growth Avenue: At the Kips Bay neighborhood in New York’s Manhattan, a space that had been vacant for well over 18 months after a local supermarket chain left appeared to have finally found a new tenant: Target, which has been dotting New York City with smaller-format stores since its Tribeca store opened in 2016, has signs on the property announcing its upcoming arrival, after the company in July opened a store in New York’s East Village just about a mile away.
This new smaller format store in New York’s East Village is part of Target’s new growth strategy. Not surprisingly, brands getting big displays are its in-house labels like Heyday, JoyLab. https://t.co/MXPUNgmYyC $tgt pic.twitter.com/v5Iz0poxiK
— Andria Cheng (@AndriaCheng) August 23, 2018
With the size of traditional big-box stores becoming more of an impediment for retailers to get closer to the dense urban populations in areas like New York, smaller-format stores are becoming more popular than ever. One telling example: Swedish furniture giant IKEA said this month it will open its first-ever U.S. smaller-format city center store, called “IKEA Planning Studio” right inside Manhattan come spring– part of IKEA’s move to bring 30 “new touch points” in city centers over the next three years.
“We recognize that we are in a rapidly changing retail environment, and to be fit for long-term growth, IKEA is transforming in a way that lets us meet our customers where they are,” said Lars Petersson, IKEA Retail U.S.‘s country manager.
In another type of getting closer to customers, AT&T said in September it plans to open over 1,000 stores in the next 18 months, including setting up more pop-up stores right inside apartment and condo buildings in urban areas including New York and San Francisco.
Robots, the new model employee retailers love to have: Amazon has beat rivals in the ecommerce race partly thanks to its logistics powerhouse. But key to its secret sauce is not only such technologies as artificial intelligence and computer vision, but also some 100,000 robots it has deployed in 26 robot-filled fulfillment centers globally. Those robotic drive units have not only saved employees time from having to walk to pick up or store items, they have also allowed Amazon to fit more inventory in the storage space, process package orders at a much faster pace and give it the ability to open smaller centers in cities to deliver orders even faster to customers. For instance, in September it opened its first fulfillment center in New York.
Read my exclusive coverage: Amazon’s first robot-filled fulfillment center in NYC that gives rivals another reason to worry
Across the board, retailers are seeking to use robots of different kinds to help spare employees from menial tasks so they can spend more time for customer-facing things and other assignments. Walmart, for instance, said in October it had robotic units scrubbing the floors at 78 stores that the retail giant said it was expanding to 360 locations.
It’s all about giving you the opportunity to skip that checkout line: While Amazon Go may mark the gold standard in the industry in terms of giving customers the ability to be truly hands free while shopping and walk out without a cashier in the store, expect more retailers to tout their own version of cashier-less stores— which for what’s been showcased by retailers including Kroger, Dollar General and Walmart’s Sam’s Club basically allow customers to scan and pay for goods on their mobile phones. 7-Eleven, the world’s largest convenience store chain, has also hopped on that bandwagon and said in November it plans to expand its Scan & Pay service to more cities next year outside of its Irving, Texas and nearby Dallas home market.
Not having the computer vision and other wow factors of Amazon Go, which reportedly is eyeing opening even inside airports and overseas in London, is not a concern for Gurmeet Singh, 7-Eleven’s chief digital officer and chief information officer.
“I don’t need to involve another set of technology if I can solve the speed issue,” he said in a November interview. “It’s really about ‘how do I skip the line?’”
With convenience-seeking consumers getting less patient and having more choices than ever, expect these trends to become even bigger come 2019.
Related on Forbes: 7-Eleven wants to be even more convenient
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