New version available: For the latest logistics trends, check out our 2019 retail and logistics predictions whitepaper!
It’s 2018. We’re just as surprised as you. One thing is for sure: 2017 was a big year for the retail and supply chain industries. Last year, we saw nearly 7,000 physical stores close while eCommerce sales soared.
Commerce is different now. The way we consume has fundamentally changed and it’s up to retailers and brands to make the necessary innovations to keep up (with Amazon).
With more sales moving online and buying behaviors changing, it’s clear how impactful technology and logistics strategies are to maintaining a competitive edge. Download our latest white paper, 2018 Retail & Logistics: 9 Trends to Watch.
Last year, alone, we saw legacy retailers revamp their eCommerce strategy in myriad ways:
- Running promotions to compete with Amazon Prime Day
- Acquiring last-mile delivery solutions to speed delivery times (Walmart and Target both did this)
- Partnering with carriers to improve delivery promises
This year, we’ll continue to see more investment in retail and logistics technology to improve brand awareness, drive online sales, gain market share, and cater to new buying behaviors.
Here are the top retail and logistics trends to watch in 2018:
- Storefronts make a comeback with omnichannel
- Next-day delivery becomes the new standard
- Acquisitions and partnerships fuel market share gains
- Retailers and brands take eCommerce into their own hands
- Legacy retailers adopt a startup mentality
- CPGs turn to subscription services
- Luxury retail goes head-to-head with fast fashion
- Data drives delivery strategies and promotions
- Mobile commerce is full-speed ahead
1. Storefronts make a comeback with omnichannel retail
In 2017, there was a lot more activity focused on creating a better omnichannel experience for shoppers. Several eCommerce retailers expanded their physical footprints, including Outdoor Voices, ModCloth (Walmart-owned), Boll & Branch, Everlane, and Away.
Legacy retailers didn’t sit still either. Target announced a new and improved store format, and the highest-selling retailers—Walmart, Kroger, Costco, The Home Depot, and more—opened more locations while also improving their online presence.
What to watch: How in-store and product differentiation drives traffic
2. Next-day delivery becomes the new standard
At this point, Amazon is only competing with itself to do more. We predict that this year Amazon will move to free, next-day delivery as the standard promise for Prime members.
What to watch: Logistics solutions and delivery promise
3. Acquisitions and partnerships fuel market-share growth
Beyond Amazon’s purchase of Whole Foods, we saw quite a few acquisitions and partnerships this year. Every major event had one major thing in common: they were all initiated by legacy brick-and-mortar retailers to support eCommerce growth.
What to watch: Logistics-as-a-Service
4. Retailers and brands take eCommerce into their own hands
Amazon is a powerful sales channel, however, it isn’t without risk. By using Amazon, retailers forfeit customer and sales data to Amazon. Businesses gain little-to-no insight about their customers, are unable to cultivate brand awareness or a relationship with their customers, and are vulnerable to being outsold by Amazon itself.
What to watch: Retailers take control of eCommerce
5. Legacy retailers adopt a startup mentality
Legacy retailers have spent years trying to catch up to pure-play eCommerce retailers because none of the traditional rules apply. They aren’t digitally native. The Internet came and they had to build websites, then they had to figure out how to sell through them, and now they must optimize for desktop and mobile to stay competitive. It’s a completely different business model.
What to watch: Investments in agile
6. CPGs turn to subscription services
Online CPGs have gained momentum by removing third-parties, streamlining the supply chain, changing the consumer experience, and, ultimately, lowering costs (think Brandless and Public Goods). This is the year the rest of CPG companies will catch up. Legacy brands will digitally transform their business models and incorporate direct-to-consumer (D2C) subscription services.
What to watch: Established brands go head-to-head with new CPGs
7. Luxury retail goes head-to-head with fast fashion
Luxury retail and fast fashion are inherently different. Luxury retail is built on experience; the feeling you get in the store, making the purchase. It is personal and tailored… and the exact opposite of walking into an H&M or shopping for clothes on Amazon.
This year, we’ll see luxury brands fight back on the digital front with less emphasis on convenience and more emphasis on curating the digital experience as they have the in-store one.
What to watch: Luxury eCommerce strategies and investments in AI
8. Data drives delivery strategy and promotion
Competing with Amazon on fast, free delivery for every product is impossible. Amazon doesn’t even offer Prime shipping on all its inventory. Instead, it creates geo-targeted promotions that offers one- or two-hour delivery on a small number of SKUs, regular Prime shipping for qualified sellers and products, and then varying speed and cost for shipping on everything else.
What to watch: Retailers creating their own Prime Day with new distribution models and technology solutions
9. Mobile commerce is full-speed ahead
The 2017 Black Friday Cyber Monday holiday saw a major increase in mobile shopping. On Cyber Monday, alone, there were $2 billion in mobile purchases—the largest we’ve ever seen.13 81 million U.S. shoppers made an online purchase on Cyber Monday, compared to the 66 million on Black Friday.
What to watch: Shopping via SMS
We’ll continue to keep an eye on how these trends unfold throughout the year. One final prediction? We’ll see more innovative transformations than we saw in 2017.