Retail Trends

Retail Trends_web

January 2018—

I live in Greensboro, N.C., a town with stone churches and wraparound porches like you’d expect to see in most Southern towns. Here’s something else you’d expect to find: Ice cream shops. The last time I checked, there were nine ice cream shops in my city (pop. 287,027). There are local independents and chains; you can even buy a scoop from food trucks downtown.

That number doesn’t include the bakeries selling ice cream on the side. Throw in the grocery stores peddling ice cream and we’re talking about two dozen retailers. That’s a lot of ice cream.

If that number surprises you, here’s another: For every one of those ice cream stores still in operation, I’m guessing another has licked the dust in the past few years.

For furniture retailers like yourself, there’s a lesson to be learned in all this ice cream: When it comes to your business, are you chasing sprinkle-covered fads or trends?

Fads are like meteors streaking through the sky—the blaze is brilliant, but brief. Where furniture retailing is concerned they’re sudden, brief changes in consumers’ shopping behaviors or tastes that don’t create a lasting influence on consumers or their habits.

Trends are also changes in consumers’ shopping behaviors or tastes, but, they create a lasting impact and will shift the way consumers buy, or the kinds of demands they have for products and services.

A new report by Alliance Data, a leading provider of loyalty and marketing services, derived from the capture and analysis of transaction-rich data focused on the latter (trends), and you should too. The study offers insight on the retail industry and what trends you can expect to see in 2018. The speed of technology, combined with rapidly changing customer expectations, makes it challenging for furniture store retailers to know what strategies and innovations are worth their time, attention and resources. Alliance Data’s report guides furniture retailers like you through its forecast of the top 10 trends expected to have the greatest impact on your store in 2018.

Furniture store retailers already know the customer is in control, says Shannon Andrick, vice president of marketing advancement for Alliance Data. “Expectations have never been higher—and customers have never been more connected. Technology is advancing at an unprecedented rate, and that means customers have unlimited options for where and how they shop, right at their fingertips,” Andrick says.

So what trends will affect your business? Alliance Data’s forecast gets to the core of what factors will shape retail in the New Year. Just as important, the study dives deeper and provides real, actionable steps you can take to build customer loyalty that endures.

The report, summarized in these pages and at RetailerNOWmag.com, takes a comprehensive look at how brands are navigating shifts in customer behavior and countering increased expectations through elevated service offerings, deeper engagement opportunities, and innovative connectivity. More importantly, it provides expertise on how to focus your store’s resources to adapt to evolving customer expectations.

BRICK-AND-MORTAR MAKEOVERS

The evolution of retail space continues as brands keep redefining what it means to have a physical location. Instead of simply expanding, they’re exploring new real-estate strategies by reimagining and repurposing store environments to be more relevant and responsive to customer needs.

Sephora
Focusing on beauty consultations and services, Sephora launched a new small-format, neighborhood concept dubbed SephoraStudio. The studio includes a variety of sampling opportunities, same-day pickup of online orders, and spa-like skincare, facials, and custom makeover services.

Target
Target plans to grow its college campus-focused TargetExpress store formats, opening more than 130 stores by next year. These smaller format stores—designed to reach younger millennial and Gen Z customers—are more nimble and offer conveniences like buy online and pick up in store.

Nordstrom
Nordstrom continues to evaluate its real-estate strategy by piloting an inventory-free, service-oriented small-format store designed to reach and engage customers on their terms. Nordstrom Local will offer personal styling, returns for items bought online or at other locations, tailoring, manicures, and a beverage bar.

Disney
Disney is unveiling a store prototype to bring the theme park magic directly into stores. The new stores feature large LED screens to live stream the daily theme park parade and fireworks. Associates, including characters, open each day with a small celebration and will interact with shoppers via learning and play activities.
75% of customers still want to see product in a store.

YOUR FURNITURE STORE
Understand how, when, and why customers are engaging with your store to identify opportunities that inform next-gen real estate decisions, what furniture you sell, what services you provide, and traffic strategies.

Give customers a compelling reason to visit your store by creating rich experiential moments that go beyond furniture and accessories, and tap into the emotional elements of your brand.

ELEVATED EXPERIENCES THROUGH ENHANCED TECHNOLOGIES

Brands are finding new ways to infuse technology into the customer experience to satisfy the demands of the 24/7connected shopper. From self-service product discovery tools to augmented experiences and in-the-moment connectivity, brands are adopting innovative solutions to enhance the human element across all channels.

Saks Fifth Avenue
Saks is rolling out a new augmented reality concept dubbed the Salon Project. It allows customers to try new looks and cosmetics without leaving their salon chairs. Customers select products to try on, receive recommendations from their stylists, and complete product transactions in one seamless experience.

Audi
To entice customers back into the showroom, Audi is unveiling a new virtual reality experience that brings car buying to life.

Customers can preview customizations prior to purchase and take a virtual test drive. With many dealerships only stocking a handful of cars, the virtual reality experience also brings the entire Audi catalog into the showroom.

Wayfair
To enable product discovery, experimentation, and a seamless purchase experience, Wayfair launched a new augmented reality-enabled mobile app that allows customers to see furnishings and décor in 3D. Users can see how items would look and fit within their space and make purchases seamlessly within the app experience.

Lowe’s
The home improvement store has enabled in-store wayfinding via an augmented reality experience in the Lowe’s mobile app. Lowe’s Vision is available on any Tango-enabled mobile device, providing turn-by-turn digital directions to help customers find products quickly.

YOUR FURNITURE STORE
Drive conversion, spend, and brand loyalty through technology solutions like augmented and virtual reality that bring your brand to life and augment the overall shopping experience.

Identify areas of your store where technology can provide operational efficiencies, support reduced staffing environments, and enable associates to provide a more robust customer experience.

PURPOSE-DRIVEN PARTNERSHIPS

Brands are using strategic alliances to adapt in an ever-shifting retail landscape. By moving beyond one-off collaborations and in-the-moment engagements, they are forming unexpected partnerships to create unique value and exclusive benefits for demanding customers.

Rent the Runway and Neiman Marcus
Runway members have better access to the brand via Neiman Marcus; members can pick up and drop off rented apparel, access a stocked Dream Closet, and schedule in-store stylist consultations.

Hy-Vee and Orangetheory
Supermarket chain Hy-Vee is partnering with fitness company Orangetheory to offer gym and fitness services inside and adjacent to Hy-Vee stores. Orangetheory members can access Hy-Vee dietitians, receive samples of nutritional products, and take guided store tours.

Laurel & Wolf and Home Depot
To expand access, online design company Laurel & Wolf is collaborating with Home Depot. They have created an exclusive, multi-platform design consultation and installation service called Home Depot Pro Referral Service. Home Depot customers can work with the designers at Laurel & Wolf to create custom interior design plans and in-person services using materials from Home Depot.

Barnes & Noble College and Target
Barnes & Noble College is partnering with Target to offer Target’s college essentials program in their stores. The partnership creates a campus presence for Target and includes the testing of orders placed on Target’s website and picked up in a Barnes & Noble store.

YOUR FURNITURE STORE
Seek partner alliances that increase customer traffic, or provide products and services that complement and extend access to your brand such as interior painting services or window treatment specialists.

Examine the entire customer journey to identify areas of opportunity—including “brand-adjacent” moments—where a strategic alliance could solve customers’ needs and improve your overall brand experience.

PREDICTIVE PERSONALIZATION

To deliver deeply personalized messaging, offers, and experiences, brands are enhancing their data-collection methods and innovating how they leverage analytics and insights. Through predictive modeling, artificial intelligence, and machine learning, brands have accelerated their ability to predict behaviors and anticipate.

Lilly Pulitzer
Lilly Pulitzer is using predictive analytics to generate insights on the products and designs with the greatest selling potential. The analytics platform leverages online social tools to engage customers and amass real-time data, helping to inform design decisions, pricing, and forecasts for new product performance.

Westfield Malls
To reach customers with the most relevant messages, Westfield Malls is using data to anticipate needs and create targeted advertising. By tracking on-site customer demographics and combining them with big data in real time, the mall can select and play an on-demand ad for relevant products, based on an individual’s profile and surroundings.

Boxed
The online wholesaler of groceries and household supplies offers concierge service to remove friction from the shopping experience. Customers can return any item; predictive analytics allow the company to automatically replenish orders without any effort from the customer.

YOOX NET-A-PORTER
The digital fashion purveyor is using artificial intelligence to outfit their customers. Clothing items are selected based on the type of trip and the destination. The tool also considers weather, upcoming events, and past purchases when making selections.

50% of consumers are likely to switch allegiances if a brand doesn’t anticipate their needs.

YOUR FURNITURE STORE
Explore cases for artificial intelligence and predictive analytics to inform product, merchandise, and marketing strategies.

Use predictive analytics to deliver more relevant marketing campaigns, messaging, and offers to your customers at the right time and in the right place.

CUSTOMER-CONTROLLED DELIVERY

Expectations of instant gratification are driving brands to anticipate needs and make products available exactly when, where, and how their customers want them. With options like instant pickup and on-demand delivery, brands continue to put the controls in the customers’ hands.

Amazon
The latest volley in the delivery-speed wars, Amazon is now offering Instant Pickup services near college campuses in select cities. Prime and Prime Student members can purchase a selection of essentials like snacks, drinks, and electronics, available for pickup in two minutes or less.

PetSmart
PetSmart is giving their customers control over when, where, and how they receive their products by enabling customers to schedule delivery from within a few hours to a few days. Customers can select specific delivery times and follow their deliveries with a GPS tracking feature.

Office Depot
In order to keep up with customers’ demands for instant gratification, Office Depot is now offering same-day delivery of online orders. This new offering is in addition to its in-store pickup and ship-from-store programs, giving it an additional way to serve customers quickly and efficiently.

Latch
Tenants of apartment buildings equipped with Latch smart security locks can now receive in-home deliveries without having to physically be there. Residents can use their smartphones to allow Latch partners, like the United States Postal Service, time-limited access to their homes.

YOUR FURNITURE STORE
Identify customer needs (and pain points) based on region, demographic, and personal preference to enhance and improve your store’s delivery and logistics strategy.

Determine which pickup and delivery solutions would give your customers more choice and control over how to receive their products, and answer their need for instant gratification.

CONSUMER-DRIVEN COMMERCE

Using advanced listening tools and product customization, retailers are empowering customers to feel like they are a part of the brand. Engaging customers in two-way conversations, brands are encouraging feedback, dialogue, and participation to drive product interest and deeper brand connections.

Lucky Brand
Noting that the top 10 percent of its customers drive a large part of sales, Lucky wants to ensure this key audience’s needs are met. Using email, social media, and a special website, Lucky engages customers for their input on products and the customer experience.

Ministry of Supply
This apparel retailer is enabling customers to design and create their own jackets on demand via a 3D robotic printing machine. Once customers choose the color, cuffs, and buttons, the robotic printer creates the garment in less than two hours.

NYX Cosmetics
To establish deep relationships with its young customers, NYX Cosmetics leverages user-generated social media content and predictive analytics in its digital marketing. Its new app will include shopping videos and crowd-sourced selfies, and use predictive intelligence to recommend products based on a shopper’s browsing and shopping history.

Barneys
Barneys empowers handbag lovers to individualize their own bucket bags. Customers can select from colors, accessories, straps, and handles to craft a custom creation. After receiving the product, they can continue to update their customizations throughout the life of the bag.

41% of consumers are loyal to brands that offer them the opportunity to personalize products.

YOUR FURNITURE STORE
Make sure your store leverages customer feedback and connectivity on social and messaging platforms to inform product and service strategies.

Turn custom design moments into an experience that encourages customers to express their individuality and feel more connected to the brand.

CURATED COLLECTIONS AND SERVICES

Customers have come to expect tailored services and personal experiences. To meet this need, more traditional brands are delivering an offering typically used by emerging brands—subscription services. Providing a new avenue for product discovery, brands are able to respond to the desire for curated offerings while accessing greater data on customers and their product interactions.

Gap
Gap is launching a new subscription box service for baby clothes, babyGap OutfitBox, tapping into the surprise and delight factors these services can bring. OutfitBox provides a valuable avenue for product discovery and makes styling little ones easy and convenient for time-strapped parents.

Hasbro
Expanding its customer reach, Hasbro is launching its first foray into a direct-to-consumer subscription service. Hasbro Party Crate will send customers a selection of three newly released board games on a quarterly basis.

Fender
To make guitar playing accessible and rewarding, Fender is launching a new subscription-based digital lesson service, Fender Play. Students interact with short video lessons that respond to their progress and are tailored in real time to keep pace with their individual abilities.

Volvo
In response to changing feelings about car ownership, Volvo has introduced a monthly subscription service for cars. Through Care by Volvo, customers pay a monthly fee to use the car that also covers registration, maintenance, and insurance. Customers can also share the car with their friends via the Volvo app; friends can request specific dates and if the customer approves, the app will unlock the car and allow them to drive.

YOUR FURNITURE STORE
Utilize a subscription approach to provide a level of excitement and to engage your customers in an ongoing way—such as product discovery, product usage, and testing new offerings from market.

Test subscription models (furniture for parties?) as an avenue to provide easy access to your brand and reinforce its most aspirational elements.

SERVICE BEYOND EXPECTATIONS

Brands are delivering elevated experiences that rise far above typical customer service and clienteling elements. They are providing truly memorable interactions that redefine personalized service and hightouch offerings. Brands are looking beyond products to transform service and convenience into something spectacular.

Williams-Sonoma
To create a high-touch, elevated customer experience, Williams-Sonoma brands now offer free consultations through its Design Crew service. Design Crew features expertly trained staff members who offer services like gifting, decorating, design, installation, and more.

Amazon
Ensuring customers get comfortable with and acclimated to new devices, online giant Amazon is now offering Smart Home Consultations. An Amazon expert will visit the customer’s home to answer questions, host in-home demos, conduct a Wi-Fi assessment, and teach the customer how to use Alexa.

thredUP
Online secondhand retailer thredUP is exploring brick-and-mortar opportunities to deliver concierge commerce in the thrift space. Secondhand inventory can be unpredictable, so thredUP is being more proactive. The company will alert its customers via text as soon as relevant products arrive, letting them know when to head to the physical store.

True Gault
Most, if not all, retailers are looking to deliver a truly customized experience via mobile devices for their customers. True Gault stands out from the crowd by using a smartphone to scan a customer’s feet and provide exactly the right fit for each individual shoe. The app provides text alerts to let customers know when their shoes have been crafted and shipped.

YOUR FURNITURE STORE
Consider conducting ethnographic research in your customers’ homes to fully understand how they use your store’s furniture and other products, what their challenges are, and where elevated services might be valued.

Capitalize on opportunities to drive deeper engagement and product usage by addressing customer pain points that lie outside of your store’s experience.

RETAIL RE-INVENTION & TRANSFORMATION

New consumer behaviors and technological advances have disrupted the retail landscape. To secure their place, retailers are triggering a transformation by proactively reviewing their strategies. They recognize the need to be more efficient, innovative, and relevant in adapting to their customers’ needs and demands.

Adore Me
To compete in an ever-crowded marketplace, online lingerie brand Adore Me made several strategic moves. It partnered with Lord & Taylor and has a new artificial intelligence-based marketing program to customize customer content. These initiatives have given Adore Me access to new customers and enabled the small brand to make the most of limited resources.

Walmart
Walmart has been aggressively adding new customer conveniences in order to appeal to today’s shoppers. This includes partnering with Google Home for voice-based shopping, offering discounts for in-store pickup, a new mobile service called Easy Reorder, and testing 24-hour, automated shopping kiosks that can process and serve orders in 60 seconds or less.

Kohl’s
Looking for increased relevance, Kohl’s is partnering with Amazon to offer a 1,000-square foot “smart home experience.” Kohl’s customers will have in-store access to the Amazon Echo, Echo Dot, Fire TV, and Fire tablets, and can make Amazon returns at select Kohl’s stores. This also gives Amazon access to Kohl’s customers and provides the opportunity for hands-on product demos.

Nike
Nike is one of many retailers making the strategic decision to host its own “store” on Amazon. With unauthorized third-party resellers selling Nike products on Amazon, the brand decided to offer products on the site. In return, Amazon will monitor its site and no longer allow third parties to resell Nike merchandise.

70% of consumers say technology has made it easier than ever to take their business elsewhere.

YOUR FURNITURE STORE
Compare your store’s long-term strategy against the changing consumer, and her expectations of seamless, relevant shopping experiences, to uncover new opportunities that meet the demands of today and tomorrow.

Adopt a more agile, fluid approach—as the landscape continues to evolve and consumer behaviors continue to change, furniture stores need to modify how they plan for and execute marketing, merchandising, real estate and customer strategies.

CONNECTED ENVIRONMENTS

The physical and digital worlds are becoming more integrated, bringing the future of retail to the present. Customers seek robust interactions that seamlessly connect multiple devices, environments, and technologies to what’s happening “in real life.” It’s all about coalescing consumer ecosystems in real time to create an intensely immersive and distinctive brand experience.

Best Buy
Creating a seamless, nearly invisible service, Best Buy launched Assured Living. The goal is to provide peace of mind for families of elderly living independently. It uses cameras, motion sensors and artificial intelligence to learn the patterns of residents’ behaviors and monitor the home. When behaviors differ from normal patterns, the app sends an alert.

Marie Claire
Marie Claire and Mastercard partnered on a pop-up shop complete with smart mirrors that show additional colors, sizes, and products. Virtual skin care mirrors feature personalized recommendations, and digital displays provide on-demand product information. Customers can make purchases by tapping on a display, an exterior window, or a dressing room.

BMW
The BMW 5 Series is now equipped with conveniences to make the most out of time spent in the car. Offering Amazon Alexa and Prime Now capabilities, the car can live-stream videos for passengers in the back seat, make restaurant suggestions, order items for two-hour delivery, and more.

MYZONE
MYZONE creates an immersive virtual personal training experience. Combining their fitness app data, wearable tracker, and personalized virtual fitness classes, it creates a highly tailored fitness experience for each customer. Each video contains a customized workout that is completely personalized to the user’s fitness goals and abilities.

YOUR FURNITURE STORE
Test opportunities to pair various devices and technologies (think voice commerce applications like Google Home and Alexa, RFID, beacons, mobile applications, Internet of Things and wearable devices) throughout your store to offer rich moments of connectivity that envelop the customer in real-life 4D brand experiences.

Identify which devices your customers use most commonly, and integrate emerging technologies into moments and immersive experiences that complement and enhance day-to-day life.