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Predictions 2018: Customer-Obsessed, Data-Driven Retailers Will Thrive In 2018

Sucharita Mulpuru-Kodali Vice President, Principal Analyst
Brendan Witcher Principal Analyst
November 14, 2017

In a world of hyper-adoption – and hyper-abandonment – successful retailing in 2018 comes down to obsessing about your customer’s experience. It’s a tall order: Digital and physical touchpoints now must work together flawlessly – yet also do what each touchpoint does best on its own. And organizations must remove silo shackles to unify disparate data to develop deep customer insights.

Forrester’s 2018 retail predictions call out that as retailers work towards these goals, they must navigate growing their business in an ever-changing world where:

  • Retail will grow. Bolstered by strong consumer confidence, not only will total US retail sales grow, but digital will impact more than half of this $4 trillion market. But retailers will need to be nimble and innovative to grow, right-sizing their store networks and real estate footprints and testing everything from Target-style flexible small-scale formats to service stores (think Nordstrom Local) and urban distribution centers – and more.
  • Online grocery sales will finally take off. The $800+ billion US grocery market has been lively: In 2017, Amazon bought Whole Foods, Lidl entered the US market, and Aldi and Walmart both invested significantly. The kicker: Even those not in the grocery business, retailers must watch out for the “grocery play”– think Target and Walmart and how they are expanding their grocery business to capture customer purchases from bananas to baby goods, pasta to pet supplies, soda to sheets… you get the picture.
  • Customers will be “Prime”-d. Long term customer loyalty builds the business – but the mandate now is to create emotional – not just transactional – loyalty. Estimates put Amazon Prime members at more than 80 million last April – customers who are enticed to pay their annual Prime fee in exchange for “free” shipping, streaming media, photo storage, and far more. In this vein, inventory management and fulfillment agility will become make or break capabilities for all retailers – and we haven’t seen the last of formerly improbable partnerships such as Kohl’s accepting Amazon returns in its stores.
  • Artificial Intelligence (AI) will become real for retail. In 2018, retailers will grab AI by the proverbial horns. How so? Prescriptive analytics will finally overtake predictive analytics, sweeping away any opening for decisions based on opinion, instinct, and intuition (none of which can possibly keep up with rapidly evolving technology and customers). And the tsunami wave of voice activated devices shipping to consumers in 2018 will change how they shop and the brands they choose – though not overnight. Learn from faster movers, and focus initial efforts where AI will have the best initial impact, such as simple structured questions that customers ask frequently.

We’ll be keeping a close eye on all things retail in 2018 as even more changes unfold. Stay tuned!

Related Forrester Content (For clients or purchase)

Predictions 2018: Customer Obsessed, Data-Driven Retailers Thrive
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