Tweet This
In my 2018 retail predictions, I wrote of how the retail industry had hit its tipping point in 2017, urging readers to brace themselves for the year ahead. Well, 2018 sure as heck did not disappoint. If 2017 was the tipping point, then 2018 was the year the industry crossed the chasm. Headlines abounded -- from Amazon Go's going, Toy "R" Us' leaving, to Walmart's, Macy's, and many others' constant searching for the fountains of youth.
The past year all calls to mind that great line from Russell Crowe as Maximus in Gladiator, "Are you not entertained?" For, if you were not entertained by all the change within the retail industry this year, there is likely a Blue Light Special from the 1970s with your name on it still waiting for you in aisle 9.
Retail is as exciting and alive as it has ever been, and therefore 2019 promises to be what 2018 was and so much more. 2019 could just be the watershed year that shapes the industry's direction for the next 20 to 30 years.
Here then are my hot off the press, no-holds-barred predictions to get you ready for what is to come in 2019 and beyond:
1. The Amazon Go Rumor Is As Real As Real Gets
It is only fitting to begin this discussion with Amazon, for no retailer impacts the industry right now more than Amazon. Amazon once again delivered the most important innovation to hit the industry in 2018 -- Amazon Go.
Amazon Go is the exact right innovation for its use case. It helps busy people in urban locations get in and out of a convenience store experience quickly. When I visited Amazon Go back in May, one phrase kept popping into my head -- Yuppie Nirvana. Amazon Go is what you would expect the offspring of a Gregor Mendel gene splicing experiment between Whole Foods and 7-Eleven to look like. It is near perfection for the busy, on-the-go consumer.
Back in September Bloomberg reported that Amazon may be planning to build 3,000 of these Yuppie Nirvanas by 2021 too. While some have pooh-poohed this report, I have only two words: Believe it.
Three thousand Amazon Go stores by 2021 is entirely realistic. Amazon has already opened Amazon Go stores this year at a rapid pace across Seattle, San Francisco and Chicago, and very soon will be opening installations in New York City, too. In a short amount of time, Amazon has opened Go stores in disparate locations, essentially giving rise to what I am dubbing its eventual “four corners” domination of the American convenience market. Throw a Florida Amazon Go store in the mix and quite soon Amazon will be able to control the national convenience landscape much like Dean Smith controlled the tempo of basketball games at the University of North Carolina in the 1960s and 1970s.
Amazon Go stores are small, approximately 2,000 square feet, so 3,000 additional Amazon Go stores are not many by historical standards either. If one compares these plans to remodel programs or new store growth programs that other retailers have implemented in the past, the plan is paltry at best.
My prediction -- expect as many as 500 more Go stores in 2019.
2. Amazon Will Begin To License Its Tech
The scary thing about Amazon Go is that Amazon doesn’t have to build and operate Go stores on its own either. Amazon could license the Amazon Go platform to entrepreneurs or other mom-and-pop retailers anywhere in the world, just as Amazon did with its web commerce portal back in the early part of the millennium.
Same goes for another important capability that Amazon demonstrated this year - GH Lab.
GH lab, as seen in the video below, is an installation at the Mall of America, where Amazon has partnered with Good Housekeeping to create an entirely new form of guideshop retailing.
GH Lab is important because Amazon's mobile application serves as the default scan-and-go shopping application for the experience, and all the product on display within the store is sold and fulfilled through Amazon's fulfillment network.
Nothing is available for carryout.
It is a Bonobos-style guideshop, or, said another way, the store is essentially the physical manifestation of a digital affiliate display advertisement that lands people on Amazon when clicked, only this time the consumer isn't staring at a computer. This time the consumer can touch and feel the product right in front of his or her eyes before buying and scanning it with his or her mobile phone.
Amazon has already licensed this tech to Good Housekeeping, so who is to say that the licensing of the tech, along with Amazon Go's capabilities, will not happen in the near future.
It is entirely plausible.
And, if and when Amazon does license the tech, the barriers to entry for physical retailing (i.e. inventory, labor costs, etc.) will go down significantly, fueling even more competition in an already cutthroat space.
3. The Next Dominant Toy Retailer Is A YouTube Celebrity
2018 was all about the big guys -- Walmart, Best Buy, Amazon, and others -- jumping into the fray to grab the share Toys "R" Us left behind, but 2019 will give rise to even more formidable new players in the space as well.
Cue the YouTube celebrity and Exhibit A -- Ryan ToysReview (video below):
With GH Lab-like technology, YouTube influencers/celebrities like Ryan and others can set up their own retail shops both online and offline more easily than they ever could before.
They also bring with them a loyal following and the same street cred that used to be the calling cards of thousands upon thousands of merchants and buyers across retail, whose jobs it historically had been to curate the best of the best products for customers. Well, now, through technology and the social connection of YouTube and Facebook, influencers can do this job as well if not better than buyers ever could. It is why little Ryan reportedly made over $22 million last year, too.
It is no longer like the old days. Influencers, not merchants, tell us what to buy. So, if influencers can displace buyers, is it not also rational to believe they could one day replace retailers too?
They are essentially doing the same job as merchants already. The only thing standing in their way of becoming retailers is access to tools -- tools that the likes of Amazon and Facebook will no doubt gladly provide in the years ahead.
4. Facebook Takes Off The Training Wheels And Becomes A Retailer
Ah, yes, Facebook. Facebook is the sleeping giant in retail that no one talks about at parties but should. Amazon and Google may have cornered the market on explicit search, but Facebook knows what consumers implicitly want better than they know themselves because consumers tell Facebook far more about themselves, by way of their social media activity, than they tell Amazon and Google.
This dynamic is why the rise of social commerce is probably the most important trend that will impact retail over the next several years.
A complete, connected horizontal data stream from a social network on the one end to commerce on the other would be incredibly powerful in the hands of Facebook, with its over 2 billion plus user base. The potential of this power is why Facebook launched Instagram shopping, it is why Facebook continues to bolster its marketplace, and it is why the industry needs to pay attention to the recent stories of third-party sellers becoming dissatisfied with their treatment on Amazon.
A world of a digital marketplace, without seller fees, where sellers only pay commissions for what sells, similar to how digital advertising schemes are run now, is not far off. And Facebook is better prepared than anyone to bring it to fruition.
5. Not To Be Outdone In Social Commerce, Amazon Will Buy Snap
Jeff Bezos reads the above paragraph, gets scared, sees that Snap's stock price has fallen precipitously over the past year, and says to himself, "It will be mine. Oh, yes, it will be mine . . . Evan."
6. Glossier Becomes A Household Name Everyone Can Pronounce
The model for social commerce 101 is already alive and flourishing too. Glossier is a microcosm of what Facebook could become, and what Amazon wishes it could become too.
Glossier CEO Emily Weiss’s concept of emotional commerce is the model for the future. Weiss understands the "horizontal" mentioned above and depicted below:
First a blog, then a digital player, and now a physical retailer, Glossier is a connected end-to-end approach to commerce. “The customers are the brand,” Weiss is fond of saying, and she is dead right.
Weiss lets her consumers inform the brand from the ground up, rather than force the brand upon them from the top down. It is why the Glossier fan base is rabid and why Glossier's first store in New York had sales metrics to rival Apple.
(Tie) 7 and 8. Walmart And Macy's Continue Their Tales Of Sound And Fury, Signifying Nothing
Macy's and Walmart were a cavalcade of press releases this year. Every week it seemed like one or the other was announcing a new robot, implementing an odd self-checkout scheme, investing in some new furniture VR initiative, buying some digital native pure play on the cheap, or, my personal favorite, trying to make some ludicrous initiative for posh Manhattan apartment dwellers sound cool by putting the word "black" on the end of it (i.e. JetBlack).
While many admire and are pulling for both Doug McMillon and Jeff Gennette (myself included), it is difficult, amid all the noise, to understand why shopping in a Macy's or a Walmart store is better than it was a few years ago, and it is really hard to understand why consumers will still want to shop at either retailer five to ten years down the road too.
Everything either company has done to this point has been incremental. Neither company has had the guts to greenfield and reimagine an entirely new Macy's or Walmart experience fresh from the ground up.
Will 2019 give the industry a glimpse of Macy's and/or Walmart's plan in this arena?
Doubtful.
9. Point-of-Sale and Digital Financing Will Explode
If Glossier is the model for social commerce, then Alibaba's Hema Supermarket is the model for the store of the future. The beauty of Alibaba’s Hema Supermarket is that it showcases a world of New Retail where shopping and buying are no longer one in the same. Rather than leverage expensive Amazon Go visual recognition technology (where, oddly, shopping and buying are still one and the same), Alibaba predicates its Hema experience on one of the most widely available tools in the world today -- its customers' mobile phones.
The customer's mobile phone serves as his or her remote control for the entire Hema experience. If a customer sees something he or she likes, he or she simply scans a barcode, pays electronically, and walks out the door or can also decide to have the product delivered to his or her home. Shopping is celebrated within Hema, while product acquisition is meant to be a friction-free afterthought.
If this model takes hold globally, which it should, because it is cheaper and more personalized than Amazon Go, then expect a plethora of investment activity in the technologies that enable it now and that will augment it even more down the line, technologies, especially, like cloud point-of-sale and digital financing.
Cloud point-of-sale systems bridge the online and offline worlds to create real-time experiences for customers that can be personalized within their own digital real estate, enabling them to choose their own adventures of how they want to shop and how they want to buy in a way that is unique to them as individuals.
Digital financing supercharges these efforts, whether it be via mobile financing from the likes of Affirm or Klarna or interest-free installment plans from the likes of Sezzle and Afterpay. Alibaba shows that a world in which consumers can use their mobile phones, not only as remote controls, but also as tools to stretch their budgets on the purchases of everyday items is not far off.
Installment plans on toothpaste, anyone? The wanna-be-millennial in everyone would love it. Bring it on 2019.
10. A Number Of Brands Fly Through Iceman's Jet Wash
It is never good to end on a down beat, but since when, if you have read up to this point, have I ever gone with the prevailing point of view?
In 2019 a number of retailers and concepts will get spun upside down and around like Maverick flying through Iceman's jet wash in Top Gun. They are:
- Brandless: A $240 million investment just a little over a year into business is ludicrous.
- J.Crew: Its recent Mercantile missteps are a signal that the brand has lost its way.
- Victoria's Secret: Here's a secret — it's about the experience, not the product.
- JCPenney: (insert your own pithy remark).
- Meal kits: You know what's a meal kit? A gosh darn grocery store.
Be careful out there and good luck in 2019!
