A look at the future of retail in 2019 and beyond

There is a crack in everything, that’s how the light gets in

– Leonard Cohen, Anthem

The tectonic shifts in the retail space in 2018 have served their purpose in defining 2019. Retailers should expect to see a 30 per cent growth in online sales over the coming year, with 70 per cent of those sales transacted on smart phones. Retail collaborations and strategic partnerships will be the go-to, and in-store, the experiential focus is creative play as specialist retail steps boldly forward.

Just as the mechanical loom signaled the start of the first industrial revolution way back in the 1800s, surely the cloud, which effortlessly localises the online user experience, heralds the fourth epoch.

Each stage of any economic revolution, industrial or digital, signals a dramatic upheaval or transformation of society, a process which will see the accepted norm become the unacceptable anachronism.

The Jeff Bezos Amazon era is just beginning, locally and globally, and the sharp divide between buying and shopping is beginning to bite. If the march towards that divide began in 2018, get ready for the momentum to build this coming year. The divide between ‘chore/convenience’ and ‘cherish’ is looming larger right now and as 2019 dawns, expect some magic to unfold.

Speak to any consumer in our major global cities, and they will describe a world of convenience, from click-and-collect to fulfillment within hours. But they will also think and express the new face of physical experiential retailing – and for our island economy, this wave of consumer lifestyle experience is crucially now on the horizon.

Yet, as Danish quantum theorist and Nobel Peace Prize winner Niels Bohr said last century, “Prediction is very difficult, if it’s about the future”.

Brushing aside the hype associated with such a quest, what does the Retail Doctor dare to predict for 2019?

Expect Amazon to ramp up – a large push on Prime, click and collect, marketplace scale, conversion of retail space, such as in newsagents and post offices, into collection lockers, with others to follow. This will only accelerate in 2020/2021.

The direction of service and experience over product within shops will begin to increase.

Retailers that can embrace serious data collection, collation, and build retail ecosystems will be a focus area for 2019 – and will challenge funding and liquidity for some.

Retail specialisation rather than generalisation will be paramount in 2019.

Artificial intelligence will gain scale and ascendancy over the next half decade and will certainly begin its march into back-end retail processes.

Machine learning will be an increasing element of retail network investment. Customisation and personalisation will gain momentum in 2019 – albeit, still with a little more sizzle than substance for a few more years.

It’s still early days in the digital retail space, but 2019/2020 will be foundations years for future growth in voice control (this is not the time to expand the keyboard business), online sales (generated from smartphones) and subscription retail (thanks to Amazon and our own retail pioneers). The movement from base camp towards the summit will see the online average percentage of sales to grow from the current 8 per cent to 12 percent by June 30, 2019.

House of brands specialty retail with large legacy networks will be the most exposed in 2019 – expect the start of significant contraction in this space, mostly impacting 2020/2021.

The focus on the quality of retail physical offerings over mass distribution will accelerate – stores will be critical and boring retail will pay dearly.

The online retail marketplace is expected to grow at similar rates to 2018, and Catch, eBay and the like will consolidate in this space over next five years.

Specialty retail will focus on curation, with a greater focus on retail metrics and customisation. Savvy retailers will be building more ‘play’ into their shop experiences.

Retail collaborations, acquisitions and partnerships will be more common – with the emphasis on strategic, economical and distribution efficiency. This a key pivot point in 2019, given the ongoing cost increase of investment and trading costs

The digital space is growing exponentially, but don’t expect virtual reality to impact significantly until 2020/2021. When it does, look out. Mobile commerce will accelerate exponentially.

There is certainly a lot of hype around digital integration – creating ‘seamless retail’ and some nice global examples of long pockets (e.g. Nike’s latest offerings) will create traction in 2019 and beyond.

While the specifics of each theme may change, their impact is likely to stay. For example, convenience in the future may relate to payment technologies, store opening hours, or other assistive technology in the pipeline. Whatever the case, the drive for convenience is likely to persist.

Robotics in 2019 will continue to evolve. Apart from the growth in chatbots and large-scale fulfilment centres (other than Amazon), the robotics story is an interesting one to watch in 2019.

Size will increasingly matter at the bigger end of town. At the niche community end, the community high street, done well, will start its climb back into relevance – the middle ground is where the exposure will continue to be felt.