9 Trends that Will Change Retail in 2019

January 4, 2019 Ginna Hall

Smartphones and wireless internet access have changed the way we shop forever. The retail sector is racing to catch up with this radical transformation.

Some brands have leaped over the new digital divide and continue to thrive. Others have succumbed to rapidly shifting consumer habits, changing technologies and challenging competitive dynamics. In just one dramatic comparison, Dollar General led U.S. retailers in store openings with 900 new stores last year, while Toys “R” Us had almost the same number of closings.

Brick-and-mortar bankruptcies and store closures hit retail hard, with some calling it a “retail apocalypse.” According to eMarketer, “Stiff competition from direct-to-consumer brands and private-label offerings and declining mall traffic have chipped away at demand, while debt financing and excess real estate have put a dent in the bottom line.”

Nevertheless, 2019 will mark a strong year for the sector. Closings of traditional retailers will be offset by expanding direct-to-consumer brands and other niche retailers that are set to thrive in this new world. eMarketer forecasts that total retail sales are expected to grow 3.3% to $5.529 trillion and ecommerce sales by 15.1% to $605.3 billion.

No retail article would be complete without an acknowledgement of the elephant in the room. U.S. ecommerce in 2019 will once again be dominated by Amazon, which for the first time will fuel more than half of ecommerce spending. Total ecommerce sales at the retail giant will approach $317 billion — 52.4% of the market.

Omni-Channel Consumers

Consumers Want Better Experiences

The biggest change facing retailers is that consumers are rejecting the old-school model of inventory-led retail in favor of experiences. Shoppers demand interactions that delight, entertain and inspire rather than those that simply meet a functional need.

In the past, skillful control of inventory was a determinant of retailer success. Today, being nimble and responsive to the fast-changing preferences of modern shoppers is critical.

Consumer habits are changing as a result of data and technology-enabled shopping. The strongest growth in retail will continue to come from digital channels. Retail ecommerce sales are expected to climb 15.1% for the year to $605.3 billion. Mcommerce will fuel much of this growth with an anticipated jump of 29.9% to $270.4 billion.

Retailers Must Leverage Digital Data

More purchases than ever before are influenced by digital touchpoints on the path to purchase. These interactions produce data that can inform marketing, inventory management, merchandising and shopper experience.

This means that the effective use of customer data is now a requirement for retailers that want to thrive. It is the surest path to reducing costs, providing what the customer wants, marketing most effectively and accessing new revenue streams.

To achieve marketing success, today’s retailers need to connect online and offline dots to see what exactly is driving sales. This means piecing disparate online, device and offline point-of-sale data together for a more comprehensive, end-to-end view of the consumer journey that bridges digital and in-store experiences.

Many marketers are turning to multi-touch attribution to get a more complete, people-based view of a shopper’s path across digital and offline marketing channels. Multi-touch attribution also allows marketers to measure and optimize tactics in near-real time based on their online and offline impact.

The Future of Retail: 9 Trends from eMarketer

With this dramatic backdrop, here are nine retail trends that will shape the industry in the year ahead from eMarketer’s new report, The Future of Retail 2019.

1. Direct-to-Consumer Brands Will Add Bricks to Clicks

The online success of companies such as Warby Parker, Casper and other direct-to-consumer brands is morphing into the physical realm. Brands that were originally digital-only are now launching brick-and-mortar stores at a rapid pace, with 850 locations expected over the next five years. These brands are leveraging the benefits of online and physical retail to engage modern consumers who are comfortable with both.

2. Retailers Will Pop-Up To Capture Demand

The combination of healthy consumer spending and cheap retail square footage has driven a number of retailers to try pop-up stores. Once primarily for seasonal retailers, pop-ups are now used by some of the trendiest names in retail. These brands see the advantage of being close to customers, especially younger, digitally savvy shoppers who first encountered their products online.

3. Cashierless Checkout Will Speed Up Brick-and-Mortar

According to Usabilla, 22.5% of U.S. digital shoppers cited long checkout lines as the primary reason for leaving a physical store without making a purchase, second only to not being able to find the product they were looking for. More retailers will begin to experiment with “grab and go” stores and mobile self-checkout to ease the pain and retain digital buyers.

4. Data-Driven Merchandising Will Make Retail More Relevant

Physical retail’s technological transformation has given retailers more data than ever before to better understand their consumers. Digital storefronts for shopping and searching, ratings and reviews, and buying and returns all leave behind trails of data, but that doesn’t always translate into insights. Many retailers are only now developing the competencies and practices to put this data into action.

5. Improved Apps Will Speed Smartphone Shopping

Mobile has been the top growth channel for retail for the past few years, and increasingly, mcommerce will be driven by smartphones. In 2019, eMarketer expects smartphone sales will grow 37.9% year over year and will account for 76% of mobile spending. However, many  internet users continue to be disappointed by slow performing websites and apps. In 2019, look for rising smartphone conversion rates and incremental mobile dollars due to improvements in the smartphone app experience.

6. Social Commerce Will Revive

The visual aspect of newer platforms such as Instagram, Pinterest and Snapchat offers a better environment for shopping than “older” social networks and many brands are taking advantage. They also function as discovery platforms, driving encounters with interesting styles, trends and brands that can create incremental demand.

7. Voice Commerce May Emerge For Replenishment Goods

Voice commerce has become one of the most talked about trends in retail. But while an Adobe Digital Insights survey found that 32% of smartphone users own a smart speaker such as Echo, internal data from Amazon showed that just 2% of Alexa-enabled device owners had completed a voice-enabled purchase. According to Digitas, consumers most receptive to smart speaker purchases may be replenishing stocks of health, beauty and personal care items.

8. Augmented Retail Will Create Engaging Experiences

One way retailers seek to differentiate themselves in an increasingly Amazon-dominated landscape is with a focus on experiential retail. Digital technology — including augmented reality (AR) on shoppers’ smartphones — incorporated into physical stores can produce experiences that shoppers find more engaging. eMarketer estimates that the number of AR users in the U.S. will grow 14.9% to 58.8 million in 2019.

9. Retailer Media Networks Will Boost Bottom Lines

The biggest shift in digital advertising this year has been Amazon’s emergence as a disruptive force, surpassing Oath to become the No. 3 player in the U.S. market. eMarketer forecasts that Amazon will grow 144.5% in 2018 to $4.6 billion. Several other leading retailers, including Walmart, Target, eBay, and Best Buy, have their own ad networks. While they may not be able to match Amazon’s customer data, they possess valuable data sets that can be used for ancillary revenue streams.

In today’s landscape, retailers must be open to transforming their business if they are to get – and stay – ahead. To succeed in these changing times, retailers must combine online and offline marketing strategies and consider the effects of all influences on the path to purchase. By obtaining and connecting data across all online and offline touchpoints, marketers can effectively allocate budgets, optimize campaigns, and make informed cross-channel marketing decisions.

Learn More

To learn how to connect your best-performing marketing with the people who matter most, download our ebrief: Reaching the Consumers Who Matter Most: A Q&A with Forrester’s Susan Bidel

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