Upgrade by Downsizing: Retail Trends for 2018
There is currently an overall weak retail environment in the US when compared to European and Asian markets. This is due to an overcapacity of retail space in America and the continued growth of e-commerce platforms. This has caused a significant number of traditional brick and mortar locations to face either downsizing or store shutdowns. To combat the growing competition, retailers need a strategy for reducing their retail footprint while using space effectively.
Most people expect price increases from year to year, but a proposed tax bill has the potential to set this into hyperdrive. Analysts predict that everything from apparel to gasoline could go up in price thanks to the bill, and the average American family could end up having to spend an extra $1,700 in the plan’s first year.
This means consumers will have less money to spend with retailers. Because of this, many companies are reducing their inventory and focusing on the display of more limited and niche products. This allows retail businesses to keep their profit margins high even if consumer spending drops.
America has an overcapacity of retail space. When looking at the country as a whole, there are 25 square feet of retail space for every person in the nation. By comparison, Canada only has 15 square feet per person. This is far more space than is needed, and this is especially the case since many experts agree a recession is coming in 2018.
While downsizing is one way that many retail stores are responding to this trend, others have taken even larger steps. Neiman Marcus, for instance, is converting its current locations into experiential retail space. The growing movement is to use less space in a smarter way, and this trend is unlikely to end anytime soon.
As businesses reduce their inventories to survive emerging retail trends, they’ll need to make what they do carry more appealing by utilizing big-impact displays. This is why companies are now using focal point displays that can tell a story and attract consumers. This can be as simple as portraying the store’s select availability as a chance for consumers to be part of a unique buying crowd.
The right displays, however, aren’t all that a company can do to make a big impact in a small space. Companies that have proven resilient to economic downturns often utilize the following tips:
- Utilization of vertical space: Less retail space doesn’t necessarily mean a lack of products. Displaying products vertically can prove just as successful as having everything at eye level.
- Think Outside of Shelving: Shelves can maximize your wall display space, but consider other ways to showcase your products. From vintage wall decorations to antique headboards, there’s plenty of ways to display specialty products.
- Utilize Vibrant Colors: Dull displays simply won’t grab consumers’ attention. Make sure the displays you do have around are vibrantly colored so they stand out to shoppers.
The market at large currently sees a small chance that a 2018 recession is coming. There appears to be a perception versus reality gap, though, since chief economists put this possibility up at 60 percent. This has already hurt big companies like Sears and Toshiba, but a few strategic moves on the part of business owners can help them avoid following the path of these former industry giants.
Paying more attention to focal point displays is just one way for budding entrepreneurs to conquer 2018. It’s also possible to downsize while still offering a variety of items via an online ordering system. A retailer can have thousands of products, but if they use their brick and mortar store simply for their new niche, they’ll be making the most of their space while still providing a wealth of products.
The retail trends of 2018 may seem gloomy, but retailers who downsize while utilizing display and marketing strategies that hold appeal will come out of the year successful. While retail spending is expected to increase upwards of 4.2 percent by the end of 2017, this will largely be driven by businesses that can effectively respond to these retail trends.