We look ahead to the big issues likely to affect retailers and brands in 2018.
1 Creating a unique experience
Experience became an industry buzzword last year, as multichannel retailers sought to drive footfall to their increasingly expensive bricks-and-mortar stores – and the pressure to create a unique and on-brand in-store environment is likely to increase in 2018. From blow-dry bars to yoga classes and department store concierges, more and more multiples and department stores will be faced with the challenge of creating memorable experiences in their stores. However, experience for experience’s sake is a waste of time – and resources. Retailers must ensure that their store interiors enhance the overall customer journey, rather than being distractions from or sticking plasters for poor retailing.
2 Streamlining the customer journey
This year, retailers will need to hone in on the customer and improve the multichannel journey in order to succeed in an increasingly competitive environment. Customers don’t view retail in channels – they shop when, how and where they want to. Retailers must ensure this journey is as joined up and seamless as possible by intertwining their systems, and their teams, to capture that all important spend.
3 Retail price inflation
The fallout from the Brexit vote will roll on this year, and the weakness of sterling will continue to eat into margins. As retailers struggle to absorb higher costs, retail prices are likely to rise and consumer confidence could dip further. As squeezed shoppers pay more for their daily essentials, spend on clothing and footwear may suffer. More than ever, retailers will need to give consumers a reason to shop. As well as improving the in-store experience and customer journey, business leaders should obsess about whether their product offers something different, and represents good value for money. Retailers are also advised to review their supply chains in a bid to accelerate their speed to market.
Fashion retailers are increasingly reliant on discounting to drive sales, and this trend looks set to continue in 2018. Spend on Black Friday was up 7% in 2017, according to Barclaycard, and many independent retailers who had previously resisted, took part for the first time. It didn’t stop there: more retailers offered promotions in the final week before Christmas than even during Black Friday, according to auditor PwC. Some retailers – such as Marks & Spencer, Jigsaw and Fat Face – have reined in their Sales, but others will find it difficult to wean themselves off the discounting drug this year.
5 Brexit uncertainty
As the UK’s departure from the European Union in March 2019 ticks closer, we are still none the wiser about what life will be like after Brexit. Retailers need clarity on any export or import tariffs that may be introduced, as well as any changes to employment law and immigration. A new trade deal is a top priority.
The UK Fashion and Textile Association and other representatives from across a range of manufacturing companies met with minister for international trade Mark Garnier at the House of Commons in December, to discuss their concerns about Brexit. Meanwhile, the British Retail Consortium and British Fashion Council have been lobbying the government on behalf of different parts of the industry. The challenge in 2018 will be to ensure these voices are joined up, and coming through loud and clear.
6 Key policy changes
While the Brexit negotiations continue, at domestic level a number of policy changes are set to affect UK retailers in 2018. In April, the national living wage for over-25s will increase by 4.4% to £7.83 per hour. In the same month, new rules to tackle the gender pay gap will require all British companies with more than 250 employees to publish figures breaking down their pay.
The General Data Protection Regulation (GDPR) will come into force in May, and will require more transparency from retailers over how they use customers’ personal data. Failure to comply will result in fines of up to €20m (£17.8m) or 4% of annual global turnover, whichever is greater.