(Source: Forbes | December 19, 2018)
Forbes Senior Contributor Andrea Cheng shares some of the trends to expect this year:
Digital natives and the brick-and-mortar sector will have an increasingly symbiotic relationship.
At a recent event hosted by Fifth Wall, a venture capital firm that backs several digital-native labels, one-year-old Candid, an online-born orthodontist care startup, sought store-opening advice from older counterparts including UNTUCKit apparel, Warby Parker eyeglasses and Allbirds shoes. While there was no consensus on the best physical strategy, one thing was clear: A brick-and-mortar presence is all but a must to raise the awareness for digital-native brands and give their online sales a lift. Amazon had good reason to embrace brick-and-mortar store openings, buy Whole Foods and partner with rival Kohl’s to process returns.
On the other end of the spectrum, while brick-and-mortar retailers like Walmart and Target are pitching online ordering for in-store or curbside pickup, others are opening their doors and welcoming 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 and the b8ta tech retail startup are just some examples. Macerich, a major U.S. mall owner, recently opened a BrandBox concept, with plans to open more locations 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, said in an interview at the time of the BrandBox opening.
Small and urban will be a major avenue to growth.
In the Kips Bay neighborhood of Manhattan, the departure of a local supermarket has left a space vacant for well over 18 months. But it has 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, just months after it opened a store in New York’s East Village, about a mile away, in July.
With the size of traditional big-box stores becoming more of an impediment for retailers who want to get closer to dense urban populations in areas like New York, smaller-format stores are the new hip trend. One telling example: Swedish furniture giant IKEA said this month that it’s opening its first-ever U.S. smaller-format city center store, called the IKEA Planning Studio, right in Manhattan come spring—part of IKEA’s move to bring 30 “new touch points” to 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.
Getting closer to customers also means being right where they live. AT&T said in September that it plans to open over 1,000 stores in the next 18 months, including more pop-up stores inside apartment and condo buildings in urban areas including New York and San Francisco.
“We want to be as close to the end customers as we can be,” Rasesh Patel, senior executive vice president of AT&T Digital, Retail & Care, told me at the time. “A lot of those customers don’t own cars. This is very convenient for them. They don’t have to go out of their way.”
Robots will be the new model employees.
Amazon has beat its rivals in the e-commerce race in part because of its logistics powerhouse. But it relies on more than technologies like artificial intelligence and computer vision; also critical are the roughly 100,000 robots it has deployed in 26 fulfillment centers globally. Those robotic drive units not only save employees time—they don’t have to walk to pick up or store items—but also allow Amazon to fit more inventory in its storage space, process package orders at a much faster pace and open smaller centers in cities to deliver orders even faster to customers. For instance, in September, Amazon opened its first fulfillment center in New York.
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 on customer-facing and other assignments. Walmart, for instance, said in October that it had robotic units scrubbing the floors at 78 stores and that the initiative was expanding to 360 locations.
It will be all about skipping the checkout line.
While Amazon Go may be the gold standard in terms of giving customers the ability to walk out of a store without interacting with a cashier, expect more retailers to come up with their own features to allow you to bypass those checkout lines. In one of the most commonly used formats so far, retailers including Kroger, Dollar General and Walmart’s Sam’s Club allow customers to scan and pay for goods on their mobile phones. The world’s largest convenience store chain, 7-Eleven, has hopped on that bandwagon. It said in November that it plans to expand its Scan & Pay service to more cities next year outside its home market of Irving, Texas, and nearby Dallas.
While 7-Eleven may lack the computer vision and other wow factors of Amazon Go, which reportedly is eyeing opening stores inside airports and overseas in London, that 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.
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