Prediction is very difficult, especially if it’s about the future.

Niels Bohr

Happy New Year to our readers, clients, colleagues and friends of the Inside Retail community.

Each year we begin our series of blogs with our top five retail predictions for 2018. So without fear or favour, here they are below. As always we welcome your feedback. I also wish to acknowledge Steve Dennis, as a Forbes contributor.

If 2017 was about being relevant, then 2018 is the year of being remarkable.

Bricks over clicks

Physical retail rules the world and please don’t let anyone tell you otherwise – technology is the accelerant to changing the experience of retail and boring physical retail is lying dormant on the battlefield. The vast majority of consumers want the social immersive experience that the best retail brings.

Consumers don’t want or have tolerance for boring retail any more, with too many other options and consequentially, boring retail is inexorably and somewhat painfully dying.

Yet vibrant, strong experiential brands continue to grow and write strong business. Many retailers who are old, boring, undifferentiated, unfit and under-invested will close in 2018,   while many fit, innovative, clever, replicable relevant retailers will open.

Brian Walker says don’t believe the naysayers predicting physical retail’s demise

In fact, it’s simply not doomsday out there for the vast majority of retailers. For example, according to the National Retail Federation, data from the IHL Group shows “a net increase in store openings of over 4,000 in 2017. In fact, for each company closing a store, 2.7 companies are opening stores.”

It’s a similar story in the UK, where data from the British Independent Retailers Association shows that more shops were opened than were closed in the first quarter of 2017.

This was an increase of 414 shops in the first three months of 2017, compared to a net increase of just four shops for the same period the previous year.

Please don’t believe the naysayers who talk of physical shops retail demise – in fact, quite the opposite is true – watch the likes of Amazon move into physical retail in 2018, the real action will be in physical retail.

They know where the bigger game is played, it is about the experience and only remarkable  physical shops can deliver tactile immersive experience.

So we see increasing store openings and great retail brands (Apple, Costco, Sephora, etc ) continuing to thrive, with their overwhelming investment in bricks and mortar stores. It is Darwinism, adaptation, and innovation that will see business growth.

However one change worthy of mention, is that the composition of the market structure is changing and the market is continuing to polarise from strong value offers at one end of the spectrum to highly differentiated speciality retailers and luxury brands doing very well within this growth. And as we know, the middle ground between is more like quicksand and that will become more obvious, regrettably in the year ahead.

Equally, there are 75,000 retail shops in Australia at present – approximately one shop for every 320 people. We are currently third per capita to the USA and Canada in shopping density. So being remarkable in this density requires greater alacrity of thought and precision to avoid the quicksand. Some will win in this opportunity and others will not.

Conversely, look closely at the retail brands that fell over in 2017 and ask,where they truly able to maintain remarkable? Or where they habituating the quicksand? Did they seek advice? Were they wholly invested in their brand? Could they read the tea leaves? Oh and by way of an example, look at an Oroton shop front image in 1995 and 2018 – spot the difference, apart from the models hairstyles…

Unremarkable retail is out – along with over stocks, gaps in fulfilment, inconsistent retail service, underinvestment in staff skills, (or even lack of staff) fit outs nearing 10 to 20  years old. All of these areas providing great opportunities to become more remarkable in 2018.

Omnichannel ousted

Resting by the great graveyard of boring undifferentiated retail, will be a head stone that simply reads,“Omnichannel- it was a brief and exciting time”. Its offspring, ‘retail ecosystem’ will thrive for those who get it and 2018 will see more refinement in this approach.

Not to be a mass of ‘channels’ awkwardly thrusting into the broad lands of customers, rather ecosystems will be relevant, precisely focused and remarkable – helping to understand customers with remarkable insights, segmented to address the consumers’ questions.

The hunter will reign supreme, the herd that treats all customers equally won’t. Advances in big data, the neuroscientific understanding of the way our brain works and “why“ we buy – are replacing the largely assumptive models that we grew up with.

Building a segmented, aligned shopping experience to the right current and future customer is the big opportunity for many retailers in 2018 and it  will require more focus and support in being differentiated and innovative, than ever before.

Crossing the divide

There is world of difference between shopping and buying – and herein lies the divide, (with thanks to Steve Denis for this nice and correct delineation). The growth in online is in the “buying space”. This is much more activity than aspiration. As Steve says, the activity  of buying is typically about best price, range,assortments and maximum convenience. This is the fertile ground for e-commerce and where Amazon and Alibaba plays –  representing largely where online growth is coming from.

Shopping is experiential, human, tactile, interesting, exciting, fun, social, interactive, rewarding and the shops are pivotal.  Retailers who can’t see the difference and try to out muscle in buying simply are racing to the bottom. Confuse the two and your customer is confused.

There is a huge difference increasingly between shopping and buying – understanding this increasing seismic change is fundamental in 2018 and in years to come.

E-tail opportunity

The growing role of digital as a direct catalyst to the physical store experience will continue dramatically. We can be confident that shopping visits typically involve some form of digital experience at somewhere between 40-70 per cent of occurrences and this figure is increasing. Clearly in-store digital technology is an investment opportunity for retailers in 2018 supported by remarkable staff and in store experience.

Differentiation the name of the game

From replication to remarkable is the catch cry for 2018 – it will be less about the size of stores per se, less about replication and more about remarkable. This will continue to impact on all of the industry from shopping centre developers, designers, owners and investors.

Right-sizing to align with future demand, integrating with digital technology and building retail ecosystems with the physical stores at the hub matters most.

And yes, data, AI, and relevant technologies, will all make their presence felt as will delivery and fulfilment services, although they don’t make this year’s RDG  top five (certainly within the top 10 ) as the core structural changes matter more

Oh and one last trend that never tires of being a trend: Be brilliant at the basics – not good but great – actually remarkable.

I can share many retail visits where it was truly remarkable retail and conversely talking with well meaning and under trained staff, seeing blatant out of stocks, higher and lower stock levels that were incorrect, merchandise assortments that were just messy, pricing that didn’t make a lot of sense. And I know it’s an ongoing cycle although the foundation of remarkable is relentless on the detail.

Brian Walker is founder and CEO of Retail Doctor Group and the Australian elected member of the global retail expert’s alliance Ebeltoft Group. Brian can be contacted on (02) 9460 2882 or [email protected].