Let’s talk about retail. And, more importantly, the leaps and strides that 2018 offered up in retail offerings and the emergence of a third wave channel.
Firstly, the winners. Of course we have to start with a channel that needs no introduction, in fact, just one word will do: Amazon. If we thought this e-tail giant had nailed 2017, this year has been pretty much a slam dunk for the e-commerce dominator. Such was its hold that it was valued as world’s second $1 trillion, only falling behind Apple. However, it wasn’t without a challenge, namely from Walmart, which launched a new text-order service to challenge the successful Amazon Prime service.
Indeed online thrived in 2018. Just some highlights to throw at you: Chanel Korea launched a dedicated online store, Estée Lauder Companies reported a thriving Q4 sales boosted by its online arm, Colgate-Palmolive invested in online start-ups to push e-commerce sales, Beiersdorf collaborated with Netease Kaola to develop its online presence in China, while Alibaba expanded its presence in Pakistan with the purchase online retailer Daraz.
However, such is the stronghold of online, it was to the detriment of department stores, or, for the purposes of this review, the losers. Department stores are increasingly losing out to online and fresher retail approaches. In the UK the likes of House of Fraser battled all summer to avoid collapse while many others are undergoing brand facelifts in order to win back consumers. John Lewis and Debenhams are two examples, while Saks Fifth Avenue has opened up a 32,000 foot ‘experiential’ beauty floor at its New York Flagship, featuring 120 brands and a significant focus on beauty services and treatments.
However, let’s not rule out the high street just yet. According to a recent report by CEW UK, the UK beauty market is outperforming other retail sectors, reporting sales growth of 18 percent for premium department stores and 9 percent for traditional specialist retailers between 2015-2017. Not only this, online beauty sales reached £1.1 billion, while sales within specialist retailers such as Boots, Superdrug and The Body Shop exceeded this, rising from £3.4bn to £3.7 bn in the two-year period. Point to high street.
Of course, it’s not just the high street retailers challenging the likes of Amazon, which leads me on nicely to the Third Wave retail, namely pop ups and the rise and rise of in-app shopping on social media channels such as Instagram and Facebook. Let’s start with pop ups. Beauty brands are falling over themselves to attract millennials and Gen Z’s with these new short-term retail avenues that lure in consumers with a whole plethora of exciting, interesting and experiential experiences that go way beyond traditional shopping. Nars, L’Occitane, MAC, Chanel, Crème de La Mer, Unilever,Elizabeth Arden arejust some of the brands this year grabbing the trend with both hands, with the offerings ranging from cafes, mural artist collaborations, beauty vending machines, rainforests and most recently Estée Lauder’s Hong Kong pop-up counters featuring Quantum Human technology. This allows users to create their own 3D avatar that will then be able to carouse through a fairy-tale setting created by the brand, featuring an array of products in a 22-second long virtual reality film. I mean, come on.Game changer or what.
Not only has it been the year of pop ups, 2018 was also the pioneering year for in-app shopping. Both Facebook and Instagram have upped their game and innovated the retail market by offering consumers the chance to buy from brands directly from the app. And, of course, there was that Snapchat/Amazon collab. If that wasn’t enough, Instagram has even opened up the option to buy not only from feed posts, but also via the popular ‘stories’ function and a new shopping function directly via the Explore tab. Phew. I mean, where does retail go next? Head to our in-conversation with… ‘2018 Review’ for further industry opinions.
Firstly the development and regen of department stores to compete with the new wave of social media shopping is one to watch. We also predict a further merge of retail channels, with savvy marketers continuing to work out how to unite both offline and online retail through experiential online experiences that can drive them in-store. While the revolutionary advancement of in-app shopping is sure to be merely in its infancy, with the year ahead set to be a hot bed of colossal growth for this channel. I for one am eagerly awaiting, bank card in hand, the next retail innovation.