Retail in 2018 will Erode
We don’t think it takes an AI machine to predict the state of retail for 2018. The signs are obvious if you look around your community. In our area, just south of Detroit, MI, many of the shopping centers look like ghost towns. The Sears shopping center has more than 60% of the stores empty. However, there is a resurgence of new businesses and community growth in Detroit proper. We are grateful for the new growth in Detroit and believe it will continue. But, many of the suburbs are loosing more chain and independent stores than ever.
Millenials are a big part of this trend but are not to blame at all. Technology is the reason that e-com has proliferated to the level that it has and so many retail businesses are closing. Technology has made the price of entry easier to create and sell on an e-com platform. More importantly, technology and access to non linier education online has provided a path to success for anyone willing to put in the effort.
Our prediction, based on experience and research, leads us to 2018 being a transformational year for online selling. Right now it’s like the wild west online. We are in the beginning stage of the wild west becoming tamed. That is also due to technology and the willingness of people to use it to buy products and services online. The only thing “millennials” have to do with it is that they were born when they were born.
Check out Online Buying Trends
From MSN Money June 16, 2017 – Millennials are buying everything online – except cars
As many industries struggle to adapt to millennials’ preference for buying experiences and shopping online, one group of retailers seems to have been spared, at least so far: car dealerships.
According to a poll from our partner, MSN, 62% of American millennials (aged 18 to 29) plan to buy their next car in-person at a dealership. Overall, 65% of Americans will head to a dealership when it’s time to buy a new car.
MSN polls its readers, and then uses machine learning to model how a representative sample of the U.S. would have responded, using big data, such as the Census. It’s nearly as accurate as a traditional, scientific survey.
Online car dealerships, such as Roadster, Carvana and Vroom, hope to entice car buyers with promises like free delivery and money back guarantees. Even Amazon seems to be toying with the possibility of selling cars through its site. The idea isn’t new. Online classifieds and auction sites like eBay have long made it possible to research and even purchase cars online.
Still, only 26% of millennials plan to shop online at car-specific websites for their next car.
David M Rothschild from Predictwise.com – did the math for MSN and claims there machine learning program is very accurate. 26% of millennials plan to shop online for a car. Only 5 years ago that would of been 5% or less. In another 5 years it will be more than 50%.
From Business Insider April 11, 2017
Corali Lopez- Casrto, a bankruptcy lawyer from Livonia, Michigan, told business Insider after she attended a recent distressed investing conference in Palm Beach Florida, Retailers are running out of cash and the dominoes are starting to fall & 2017 will be the year of retail bankruptcies.
At the same time retailers are dropping, there are more online sales than ever. Mobile phone shopping is up. E-com stores are getting the picture and making their products available on purpose built mobile apps and websites. Black Friday sales in 2016 exceeded those of brick and mortar for the first time ever.
Even 77% of shoppers between the age of 18 and 35 use social media in some way to shop for products. Half of retail shoppers use their smart phone to look at reviews of the product they want to buy while at the store. Are those reviews coming from the store they’re in? No, Amazon.
According to a recent UPS Pulse Of The Online Shopper report. For most purchases, millennials lead the pack in ditching brick-and-mortar stores: More than half of their total purchases in 2016 were made online.
The Reason E-com will Crush Retail in 2018
This is the first generation of digital natives that have grown up with digital tools. They tend to use them as their default option because they grew up with digital devices. Instead of Mom putting them in front of the TV to take a brake from parenting, Mom handed little Billy an iPad. We’re good with that.
If Retailers want to be good, then they need to evaluate their customer base to get to know them and understand the impact this behavior has had on their business. Millennials are getting older. They are making more money. They have children that will take online purchasing even further than Mom and Dad.
The Solution for Retailers
The Retailers business model needs to be based on the actions and behaviors of their customer base. Their business model, merchandising and overall customer experience needs to cater to their buyers. That is not a new formula. What is new, the mediums that retailers need to get better at using to reach their consumers.
Their advertising budget doesn’t need to be bigger, a portion of it needs to be reallocated to include a digital strategy. Digital asset building will need to be a first thought strategy instead of “a thing we should have.”
A purpose built website for e-commerce and one or two social media channels that best suit the retailer will be the new normal. Retail shops will need a digital strategy optimized for search engines that works in step with the retail store location. The retailers that are already on board with an optimized digital strategy going into 2018 are setting their business up for success. They’re Black Friday sales will enjoy both online and in store record breaking numbers in 2018.
Thanks for reading, Baffman Media