Cleveland Arcade Photo by Ron Dauphin on Unsplash

2018 Holiday Retail: Four Trends to Watch

In the challenging and changing retail landscape today, companies are finding new ways to minimize delivery costs, integrate customer shopping experiences, reward brand loyalty and capture market share to stay competitive.

In CBRE’s 2018 U.S. Retail Holiday Trends Guide, researchers identified four key trends that will impact the holiday shopping season. We dive into the trends and their implications below.

  1. Optimism and Omnichannel: According to the National Retail Federation, consumers will spend 4.1 percent more this holiday season than they did last year, for an average of $1,007 each. NRF anticipates that record-low unemployment levels and high consumer confidence will be reflected in shopping activity.

With swaths of customers ready to spend, companies are gearing up to meet their demands. The ominchannel approach continues to reign supreme as retailers look for ways to integrate the online and in-store experiences for shoppers. “Retailers should expect this holiday shopping season to be more interconnected than ever,” CBRE’s report said. After years of experimenting with new omnichannel strategies, companies are finally seeing the approach pay off: “Retailers are learning to leverage online channels to drive store sales and vice versa.”

One downside to this integration is the challenge retailers can face on the accounting side – nailing down exactly how a sale was made. For example, an item bought online can be shipped to a store, returned in a store and exchanged for a different item. How is that sale categorized? This distinction difficulty is passed along to landlords, who rely on sales information to gauge tenant “health” and set rents.

  1. Retail gets BOSSy: A theme in last year’s holiday forecasts was the BOPS strategy – buy-online/pickup-in-store. That model is still in heavy use, but retailers are also using a similar concept – BOSS, or buy-online/ship-to-store. “Craft retailer Michaels foresees its BOPS and BOSS programs accounting for almost half of its online sales this holiday season,” the report stated. As consumer demands for faster shipping increased retailer logistics costs, these BOPS and BOSS models allow for retailers to forego the high cost of delivery, while also offering more merchandise that they don’t need to keep stocked in-store. And getting customers in the door to pick up an order can lead to more impulse buys. “Kohl’s found that … the company generates 20% to 25% in additional in-store ‘attachment sales’ from its BOPS and BOSS programs,” CBRE added. The chain is adding an additional incentive for shoppers to use those programs this year by offering “Kohl’s Cash” rewards for in-store pickups.
  1. A New Approach to Loyalty: “Customers today have more shopping options than ever before, forcing retailers to increase their efforts to both gain and retain business,” the report said. To remain competitive, retailers are introducing or amping up their loyalty programs – and offering more than just discounts. VIP access and experiences are the perks du jour: from cooking classes with famous chefs to trips to fashion week to exclusive passes to the New York City Fourth of July fireworks show. CBRE predicts these “members clubs” will play an important role in meeting customers’ growing expectations for loyalty rewards.
  1. The Amazing Race for Toy Share: CBRE’s report specifically called out the toys category for being a “battleground for market share,” as retailers fight to step into the space left by Toys R Us following the company’s bankruptcy. That void means that there’s an estimated $1.3 billion in revenue up for grabs, and the segment is expected to see growth above the total retail sales average – nearly 4 percent. “The few national toy chains left to compete – large mixed-merchandise retail chains – are sensing an opportunity. Kohl’s, BJ’s Wholesale Club, Target and Walmart have all announced plans to expand their toy offering for the holidays in hopes of capturing toy spend,” the report stated. Online sales in the category have also grown, and are expected to increase 19 percent year-over-year, with 35 percent of total toy sales taking place online.
Photo of the Cleveland Arcade by Ron Dauphin on Unsplash.

One Response

  1. I do agree! Retail is only changing and certainly not dead. Every aspect requires redefining and those that can be agile will succeed those that can not will fail! Who could have imagined Sears failing? Who thinks they should have seen the Internet coming before anyone? For pete’s sake they invented the Catalog Retail business and the internet is clearly the most amazing catalog!

    Great photo! It is The Arcade in Cleveland Ohio – one of the very first enclosed shopping malls in the States!

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