Feelings and Forecasts for 2014
I’ll hold off on talking about the holiday shopping season in detail until all the numbers are in, but it’s clear that we’ve already learned quite a lot from 2013. In fact, the more I think about this past year the more I think that the holiday numbers aren’t even the most important takeaway. What’s far more interesting to me is what 2013 has to tell us about where we go next. With that in mind, here’s my early take on what 2014 might have in store (and in stores!) for us:
Slow, steady and sustainable growth
I’m hoping that we will see slow but steady retail growth in 2014. The former is more likely than the latter, although 2014 will have a tough time being less steady than 2013. While we saw some nice growth this year — particularly in the first half of the year — it wasn’t particularly consistent or sustainable. The government shutdown and sequestration, the uncertainty surrounding Obamacare, and ongoing government dysfunction and drama definitely seemed to put a damper on the second half of the year. With pent-up demand from the recession no longer a real factor and some of the structural government financial disputes resolved for the time-being, 2014 is likely to see slower growth, but with hopefully less volatile ups and downs.
Performance disparities between retail segments
As for what retail segments will be 2014 winners and losers, I suspect that we are in for more of the same. Consumer electronics will likely remain strong, with apparel a much bigger question mark. Apparel will be especially interesting to watch, and I think it might even be lynchpin as to whether or not next year is ultimately viewed as a good year or a mediocre one. Right now, I think apparel is likely to stay flat. Merchants and designers will need to be at the top of their game to make this challenging and increasingly unpredictable category come in with stronger than expected numbers.
Experiential elements loom larger
I think there is little doubt that retail will continue to move toward making the brick-and-mortar shopping experience more of an “experience.” From coordinated social media promotions to in-store innovations like the removal of cash registers and the move toward point-of-sale payment with a smartphone app or handheld device, stores will continue to innovate and transform. Wherever the continued arc of innovation, retailers will, at the very least, be forced into thinking critically about how they do things and carefully consider the role that experience plays in the retail environment. Apple and its Apple Stores, as well as some foreign brands like H&M and Uniqlo, have made some promising moves in that direction.
Millennial influence grows
One of the most important and influential demographics — the oft-discussed Millennials — are also the group most likely to demand more in terms of the experiential elements I mentioned above. Millennials certainly haven’t written off brick and mortar, but they do tend to have higher (or at least, different) expectations in terms of how they want their brick-and-mortar retail environments to feel. In turn, retailers are going to have to do a better job of understanding Millennials’ priorities and catering to them. The big question to me is how well retailers like Ann Taylor and William Sonoma (which haven’t historically had a strong appeal to a younger demographic) will be able to adapt.
To no one’s surprise (at least no one who follows retail for a living), the continued downsizing of retail formats will almost certainly continue in 2014. This is not a new trend, but a continuing trend. While larger formats like Walmart or Target may be an exception to the rule (although even the giants are experimenting with more modest sized floor plans) smaller retailers will continue to move toward smaller, intimate and more efficient spaces.
Distribution evolution accelerates
One of the 2014 trends that the 2013 holiday season really highlighted was the degree to which the integration between various distribution channels will continue to become more sophisticated and profound. As retailers continue to discover that mobile online shopping has much greater potential than first thought, the lines between online and inline continue to blur and evolve in new and exciting ways. Retailers who aren’t out ahead of the curve might want to consider adapting a little quicker or more aggressively than what might originally have been planned/anticipated.
Those are my 2014 trends to watch — what about yours? I’d love to hear your thoughts on what might be in store for the world of retail once we clink our glasses, watch the ball drop and flip our calendars to Jan. 1. Share your input in the comments section below or email firstname.lastname@example.org to continue the conversation.
Click here for past columns by Jeff Green.