Think Tank: Building a Bright Future for Retail
By all accounts, 2017 was another remarkable year for retail. With consumer optimism at all-time highs, rising wages and economic growth, Americans responded favorably to the myriad ways retailers continued to provide exceptional products and memorable experiences.
Not surprisingly, retailers likely experienced their best holiday season since 2011. NRF’s own forecast — for 3.6 to 4 percent growth — seems solidly on track, and we expect total retail sales for the year to reach up to $682 billion, up from $655.8 billion last year. Though nine out of 10 transactions still take place in stores, non-store sales — which include online sales — are expected to rise briskly once again by 11 to 15 percent, to a total of roughly $140 billion. And though it’s early, there is no reason to believe that 2018 won’t see continued above-trend strength for the retail industry.
For the crucial holiday shopping season, retailers met consumers with great products, services and experiences at competitive prices — regardless of how they chose to shop. Far from avoiding the traditional Thanksgiving weekend holiday rush, our research shows that more than 174 million Americans shopped in stores and online during this critical time. In addition, we learned that more than 64 million Americans shopped both online and in stores, and this multichannel shopper spent $82 more on average than the online-only shopper — $49 more than the in-store-only shopper. This point bolsters our own view that online and in-store continue to work together, not against each other.
It is true that the industry’s ongoing transformation has generated challenges over the past year in the form of store closings, bankruptcies and job losses. But it is also true that when you consider the overall retail landscape, you see an industry that is evolving, growing and succeeding. Retailers also opened thousands of new stores, hired new workers and made their first forays from pure-play brands to retailers with a bricks-and-mortar presence.
While some retailers did close stores last year, and not a small number, many thousands of stores also opened in 2017. Regardless, even the worst-case projections for 2018 store closings only amount to 1.2 percent of the more than one million retail establishments in the U.S. Though no one likes to see anyone lose a job or close a store, 1.2 percent represents more of a blip than an apocalypse.
A more accurate narrative about what’s happening in retail is that companies and visionaries are developing, testing and refining strategies that blend leading-edge technologies with timeless lessons in customer experience. They’re reshaping retail experiences to match shifting expectations, delight customers and boost sales. They’re building the retail industry of the future — a future that remains bright.
The transformation of retail is good for companies, their employees and their customers for three key reasons:
Whether e-commerce or bricks-and-mortar, it’s all retail: E-commerce and in-store are often cast as opposites. But, in fact, they are both integral parts of the same retail industry — and they complement each other. In fact, our data shows that people who shop both online and in stores spend more. Retail has always been — and always will be — about connecting with customers, and today’s retailers are using all available channels and tools to achieve this goal.
That’s why eight of the 10 largest e-commerce sites are operated by what people think of as traditional retailers — and why pure-play online retailers such as Amazon and Everlane are opening physical stores. The result is a more dynamic, vital and channel-agnostic retail world.
Retailers are constantly learning, refining and improving: We’re seeing the future of retail develop right in front of us, right now. Retailers are devising and testing dynamic new strategies across channels and teams. They’re finding the novel combinations that work for their companies and customer bases, increasingly at the intersection of online and in-store. It’s these dynamic approaches that resonate with their customers and delivered the strong growth we saw in 2017. And as retailers compete and learn, they’re delivering better experiences for consumers, better career prospects for employees and stronger performance for investors.
The big picture for retail is positive and promising: Retail’s immense size is the all-important context to keep in mind whenever you hear an industry statistic. For example, there’s a widespread misperception that retail jobs are disappearing, when in fact retail still directly employs more than 13 million Americans and supports 42 million jobs overall. Retailers are creating hundreds of thousands of new jobs in corporate headquarters, in innovation and distribution centers, but the current Bureau of Labor Statistics system doesn’t count them — NRF is actively working to correct this.
Matthew Shay is president and chief executive officer of the National Retail Federation. The themes mentioned here will be discussed and “debated at length” at the NRF’s 2018: Retail’s Big Show. The NRF said it expects more than 35,000 attendees from more than 3,500 companies and 90 countries.
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