December 22, 2017
The Evo Pricing team look into their crystal balls and make their predictions for 2018.
I believe 2018 will see retailers get (much) smarter! A sector going through a seismic transformation driven by online growth, forcing all players to become more responsive and aware of demand. I would summarise it as a move from push to pull, where the winners will increasingly be those who are able to interpret and address demand trends in real-time (and we can help them with our data tools).
When I was talking with a fashion store owner they told me that sales are more and more concentrated in particular periods of the year, and that this year the weather was a huge factor, as few people entered the stores when the temperature was “out of the ordinary”. Promotions seem to be more and more appreciated, together with cross-sales (fashion items + other items). Some friends living in small cities underlined that the average ticket seems to continue shrinking and that conversion rate is low.
I think 2018 will be a year in which retailers will become more and more aware of how smart analysis can help to satisfy their customers and better manage peaks and vacancy periods. The offer will be more differentiated in order to cater to different spending powers.
Today we like to buy and ‘live’ good experiences more than owning objects. Because of this, my prediction is that we’ll buy fewer things but they will be more personalised and closer to our needs.
Buying will become a better experience, because retailers will keep developing the tools to predict what we are looking for and they will make the process more seamless.
2018 will see a lot of focus on customer experience. One of the applications of Artificial Intelligence, chatbots, will be widely adopted by retailers online to enhance user experience. It will provide online customers the option to customize according to their personal preferences. Based on my own personal interactions with these chatbots, I believe this is a very efficient way to serve a customer.
These chatbots will, in turn, need a lot of data to process and customize responses appropriately so I see the retail sector in 2018 being very data driven.
I believe that in 2018 many retailers will decide to make more investments in technology in order to increase sales and remain competitive in the market. At the same time, what stores offer will be more personalized, tailored to the consumer, thanks to the data collected with new technologies.
Consumer purchase decisions will be increasingly influenced by new media and models imposed by “influencers”. However, due to the uncertain economic trends and the economic difficulties of the middle class, there will be more importance placed on renting or hiring assets (even, for example, a luxury suit) rather than owning them.
Forecasting future trends is difficult, but in my opinion there are two opposites trends at different scales.
On a large scale, “the winner takes it all”. In fact, today, any edge on analytics leads to great relative increases in market share and revenue. On a smaller scale, the reality of local and smaller enterprises are today possible thanks to smarter ways of connecting people.
As a non-scientist, my anecdotal take for 2018 is that family, friends and people I have talked to in my town are much more price-conscious and, with Brexit looming, more cautious about spending. A few local taxi drivers have been telling me that people are not spending/visiting the town centre for shopping so much. A clothes retailer told me Black Friday was a disaster and the local shopping centre was packed with people but very few people were carrying shopping bags (something I also noticed).
So my my prediction for 2018 is: difficult trading conditions for retailers (in the UK at least) will continue, though food and drink (British people drowning their Brexit sorrows) might do better than electronics and big ticket items. Retailers need to think of creative ways to turn browsers into buyers.
About the author
Martin Luxton is a writer and content strategist who specializes in explaining how technology affects business and everyday life.
Big Data and Predictive Analytics are here to stay and we have only just begun tapping into their enormous potential.