COMMENTARY

Changing Face Of Retail Innovation In 2019

• by Brian Nguyen , December 27, 2018

As a channel strategy specialist at a global ad agency,I’ve noticed a profound shift in the types of briefs received from clients this year. Increasingly, clients are seeking consultation on fundamental business challenges that can’t simply be solved through a 15-second commercial or even a highly efficient and targeted Facebook ad.

Retail innovation is what’s top of mind. Brands are finally taking a hard look at the role their brick-and-mortar locations should play in their broader ecosystems. Next year we will see retail transformation on a mass scale, which will invariably have an impact on the advertising industry. These are my top three predictions:

1.       Hyper-focus on convenience. What retailers will truly sell to customers in 2019 is convenience. This year we saw the proliferation of self-service kiosks and order-ahead apps like the one Sonic rolled out in March.

Next year, retailers will continue to reduce friction points for consumers, aided by intensified omnichannel integration. Consumers now use an average of six touchpoints when buying an item, according to a Knexus Group study. As such, we’ll see more emphasis from brands on streamlining customer experiences, leaning on AI-powered tools like chatbots and voice command. Improving logistics, such as no-hassle returns and same-day delivery, particularly for larger retailers, will be a key area of attention.

How will this impact marketers? Brands will continue to look to agencies to help artfully bring their brand positioning to life, but I believe we’ll begin to see more mandates from clients to prioritize communications on convenience. Articulating a point of differentiation about convenience will be the defining communications challenge in 2019.

2.   Retail locations function as awareness, not purchase channel. With over 500 Apple Stores globally and its retail concept nearing its 18th year in existence, this one may seem obvious.

After all, in recent years we’ve seen a number of brands launch their own versions of hands-on, experiential-focused showrooms that don’t push immediate sales but rather invite engagement. But for the most part, retailers have been slow to adopt this format. The majority of retail experiences today fail to offer distinct value to consumers that they can’t get anywhere else.

We’ll see this change in 2019 with the transformation of retail spaces into hubs that offer bespoke services, enhance fan cultures and communities, and hire “experts” rather than salespeople. This will continue to accelerate as brands cater to the desires of Gen Z, a group that is 23%** more likely to enter a physical retail location than the average consumer -- this according to a Foursquare study -- and who will outnumber millennials in 2019.

How will this impact marketers Expect to see a noticeable shift in investment from traditional marketing initiatives to optimized retail experiences. Brands will look to agencies to provide expertise on what consumers, especially Gen Z, expect from in-store interactions.

3.  Localized retail will drive localized media. Earlier this year Target reported its best quarterly results in more than a decade, thanks in part to its strategic imperative of bringing in popular direct-to-consumer brands, such as Casper and Quip. As DTC brands look to offer tactile experiences for consumers, existing brick-and-mortar retailers with abundant real estate will serve as willing outlets for them.

In 2019, we can expect a version 2.0 of this model, with a more localized approach. Retailers will look to rectify the redundancy of their store experiences by customizing stores based on location and consumer data.

Walmart recently announced its Town Center initiative, turning many of its parking lots into curated hubs of national and local retailers, green space and service providers. Better understanding the needs of consumers in a local market will lead to a diversifying of services offered and the ability to adapt to rapidly shifting trends

For some companies and agencies, the sheer volume and velocity of disruption in 2019 will result in near-certain doom. But those able to reimagine the retail experience for the omnichannel age should see great gains in 2019, as the economy is projected to remain in an expansionary state, albeit a slower one, according to a National Association for Business Economics poll.

The seemingly zero-sum nature of retail as we close out this decade will surely challenge our definitions of what a store is and what role it plays in our lives going forward.