Everybody, I’d like to announce that the retail apocalypse has been officially cancelled. It turns out, humans do occasionally like putting down their smartphones, leaving their sofas, and going to a real brick and mortar store to make a purchase.
Over the last three years, thousands of stores shuttered–and dozens of companies went bankrupt. In 2017 alone, 7000 stores closed their doors, and many brands with large retail footprints filed for Chapter 11, including Toys R Us, Gymboree, Payless, Wet Seal, and The Limited. Many experts expected 2018 to be even more disastrous to the retail industry.
But that didn’t happen. In 2018, about half as many stores closed as the year before, and in an interest twist, we saw the rebirth of physical retail, with startups developing their own take on stores and large real estate companies rethinking how malls should be designed. Looking back, the problem wasn’t that people had gotten too lazy to leave their homes; it’s that brands had become complacent about making shopping IRL a worthwhile experience.
This past year, brands have been throwing retail concepts against the wall to see what sticks. (Remember Glossier’s all-pink Instagrammable cafe and Naadam’s $75 sweater shop?) But in 2019, we predict that brands and consumers will settle into a new normal with stores. There will be fewer gimmicks, but shopping will be ever more seamless.
It’s just one of the many ways retail will be transformed in 2019. Here’s the full list of our predictions.
BRICK AND MORTAR MAKES A COMEBACK
In 2018, many startups recognized that stores could be a huge asset because had the power to deepen the customer’s relationship with a brand, increasing their lifetime value. Paul Hedrick, founder and CEO of direct-to-consumer cowboy boot startup Tecovas, saw this in a pop-up the brand launched close to its Austin headquarters. “We found that people still really love strolling down a shopping street, and checking out products in person,” he says. “And we’ve found that interacting with the brand in store makes a customer more loyal.”
The success of the Austin pop-up has convinced Hedrick to open five more stores throughout Texas in 2019. A similar narrative is afoot among fast-growing, direct-to-consumers startups. Many are now quickly expanding their retail presence. Allbirds, Everlane, Naadam, Cuyana, Outdoor Voices, MM.Lafleur, Away, Tamara Mellon, and Glossier have all opened stores in the past few months, or have announced that they plan to do so in upcoming months. The most dramatic expansion will come from Casper: The mattress retailer that got its start online plans to open 200 stores.
BRICK AND MORTAR 2.0 LOOKS DIFFERENT
These shops aren’t going to look or feel like the stores you might find in large malls of the past. Instead, they will be designed to complement the digital experience. Everlane, for instance, developed in-store technology that would connect a person to their online profile, so they can use the credit card they have on file to make a purchase.
Many of these stores will have a smaller footprint, since they will not hold much inventory. Brands expect that customers will come into the store to check out products, but may purchase the product online. And many brands will also use the stores as a place to forge a strong sense of community by hosting talks, parties, and other gatherings there. Everlane’s San Francisco store has stadium seating specifically for such events. (The rest of the time, it serves as a useful spot for tired shoppers to get some rest.)
Grocery stores will see innovations of their own. We’re already seeing some degree of automation with things like self-checkout technology. Amazon has been working on a checkout-free system that will use facial recognition to charge customers for the products that they take out of the store with them. It has opened seven of these Go stores to date, and is planning to open more in the next year, including small format stores in office lobbies. It won’t be long before the technology spreads to other retailers.