The State of The Retail Industry and the Rise of Customer Service Robots
THE STATE OF THE RETAIL INDUSTRY
The fashion industry remains predictably volatile. Its continued evolution from 2017 manifested itself in macroeconomic and consumer preference shifts, as well as the continued development of a (slowly but surely) data-driven fashion ecosystem - and most industry experts believe 2018 will carry a similar tune.
Despite headwinds, globalization continues to flourish, and the tone of 2018 certainly has an emerging market focus. The economic growth has shifted from Western cultures to developing countries. This year, more than half of apparel and footwear sales will originate outside of Europe and North America, according to McKinsey and Business of Fashion's report.
POSSIBLE TARGET TAKEOVER
Buzz of a possible Target acquisition has overtaken the airwaves this week. Target's demographic and comprehensive store count, not to mention their not so dominant e-commerce presence, indicate they could be the ideal offline partner as Amazon seeks to increase its market share.
The e-commerce powerhouse had little problem shipping five billion items through Amazon Prime during 2017, and the possible merger would be a major blow to Walmart by accelerating its expansion into brick-and-mortar.
The acquisition isn't completely farfetched. With its recent investment in private labels this past year, Amazon has increased its efforts to appeal to a more traditional department store shopper.
BEAUTY'S ONLINE SUCCESS
While beauty products are traditionally bought in-store because of customers' desire to physically test items, millennials actually purchase three times the amount of beauty and personal care products online, relative to other age groups. As a result of this consumer trend, companies lagging in their omni-channel strategies may face extinction. Fortunately beauty retailers have been able to readjust, growing revenues by 40% in 2017 after moving to online channels.
"Experience" has been the theme of 2017 in beauty. From loyalty programs to free samples with purchase and subscription boxes, buying beauty products has never been so rewarding and interactive. For example, European beauty marketplace Feelunique has adopted a digital strategy centered on personalized shopping experiences, generating a not-so-shabby $87.6M in revenues last year.
We all kinda know that human-to-human interaction in the customer service sector has been in decline with the introduction of artificial intelligence. (Why is customer service suddenly so nice and patient?) With more than two billion monthly exchanges between consumers and retailers, the continued rise of AI customer service agents in 2018 is inevitable.
The benefits: consistent application and ability to scale data capturing behaviors, habits, and preferences that ultimately improve customer experience, something that would be nearly impossible with human chats.
THIS WEEK'S BRIGHT SPOT
While the stark reality of struggling brick-and-mortar environments resulted in many store closings in 2017, retailers' 2017 holiday revenues broke the records. Holiday sales increased 4.9% in store and 18.1% online, in comparison to the previous year.
There are plenty of theories about why - but at the core - consumer spending increased as confidence rose. "Unemployment is pretty low. Consumer confidence is high," said Sucharita Kodali, a retail analyst at Forrester Research. Moreover, weather that favored cold-weather apparel sales for the duration of the season helped move critical inventory volume.
All this being said, results are still coming in - and over the next few months - the year-end results will paint the fuller picture.