With three-plus years of frantic change in the rearview, many of retail’s surviving class enter 2018 primed to explore its new horizons.
But by many accounts, the bankruptcies, store closures, layoffs and digital shifts that have taken aim of the industry in recent years will continue to pose challenges in the year ahead — weeding out the least fit and propping up the rising stars.
Here, we round up eight major predictions for retail in 2018.
Harvest Season for Omnichannel
“Traditional brick-and-mortar retailers will need to show that their efforts to become omnichannel/digital are gaining traction and increasing profitability metrics,” explained B. Riley & Co. LLC analyst Jeff Van Sinderen. “Many retailers have invested heavily in systems to enhance onmichannel, and those need to translate into growing various business segments and enhanced overall profitability metrics.”
Van Sinderen further noted that,at this juncture, fashion firms’ profit and loss statements should begin to leverage with improved traction, and in some cases, retailers’ investment in new systems and programs for omnichannel should start to lessen.
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Tax Breaks Will Yield New Perks
With a new GOP tax bill in motion that leans heavily toward tax cuts for corporations and business owners, experts expect retailers to reap generous financial rewards in 2018.
“The likely tax break should provide a nice boost to earnings and balance sheets,” said Van Sinderen, referring to the sweeping rewrite of the U.S. tax code.
More of the Sales Salsa
“The promotional environment we saw this holiday will continue into the spring,” said Matt Powell, an athletic-industry analyst with The NPD Group. “It will be tough for brands and retailers to return to a full-price market.”
A Larger Bet on Experience
“Pure e-commerce is great at a lot of things, but what can differentiate brick-and-mortar is the experience,” Van Sinderen said. “I think we will see more retailers aim to further enhance the customer experience.”
“Sport lifestyle will continue to rule in 2018, but will need to evolve away from the modern runner look, which is overdistributed at this point,” Powell said. “Athletic footwear will continue to outperform the dress/casual categories, but the lines between will continue to blur.”
As far as brands go, Powell sees continued hotness for Adidas but expects that the rate of growth will moderate.
“I do not see a return to ‘performance as fashion’ in 2018,” Powell noted, regarding overall athletic trends.
Chapter 11 Filings Are Far From Over
“We will see more bankruptcies, restructuring and liquidations, and 2018 could be a year when market share shifts substantially,” said Van Sinderen. “This could boost the business of some survivors as some of the zombie retailers cease to exist in their current form.”
Similarly, Powell said he expects further retail rationalization after the holidays.
A New Kind of Real Estate
“I expect to see continued morphing of retail real estate as part of a multiyear progression of dying centers/malls being replaced with more experiential, multiuse centers,” said Van Sinderen. “This real estate process will take many years, but I expect it to accelerate in 2018.”
Niche Brands Will Rise
Millennial and Gen Z consumers have been hugely responsible for ushering in a new era in fashion, in which smaller, niche brands are seen as trendier than some larger, more established labels. Powell expects that trend to continue — and even accelerate — in 2018.
“2018 will be the year of the small brand as consumers look to differentiate from each other,” he said.