Published: February 25, 2018

5 Things to Know About the Future of Retail

5 Things to Know About the Future of Retail

Teresa Rivas

Retail has been on a wild ride. After a dismal showing for much of 2017, it bounced back at the end of the year on strong holiday sales, although the debate continues as to whether or not that trend can continue in the face of competition from e-commerce, especially Amazon.com (AMZN)—hence the volatility in stocks like  Walmart (WMT).

So where do we stand now? Cowen & Co.'s Oliver Chen and his team attempt to answer that question on Friday. They have five main points about the new normal in retail: First, that people still really like stores (despite gloomy reports about the death of malls) and that physical locations still have a role to play in the new retail landscape, perhaps if tey can evolve into “'community-points' and integrate into the everyday lives of new consumers who expect to save time, desire to multi-task, and need to be nourished or entertained."  

Second, Chen writes that the future of retail is likely dominated by the triad of "superpowers:" Walmart, Target (TGT), and Amazon, as they continue to push their physical and digital presences, expand into grocery offerings, become more efficient, and build a base of loyal customers.

Third, he writes that while mall traffic is falling off, consumers are still shopping--just taking their dollars online, especially to mobile. With the rise of voice technology, Chen thinks that voice shopping will be the next big thing to hit the industry.

Fourth, he argues that as Generation Z will be 40% of the population by 2020, they will drive the future of retail, and they have different sets of values,  a "sense of community and collectiveness and embodies participation, engagement, and deep value concepts even more than millennials," that stores will have to respond to.

Finally, Chen concludes that retailers will have to be "fluid and connected" to consumers from pre-purchase to post-purchase, meaning that only engaging with shoppers at the point of purchase is a thing of the past. Those companies that can provide convenience and brand curation via this system will engender loyalty in their customers, he writes.

Walmart and Target are down less than 1% on Friday morning, while Amazon and the SPDR S&P Retail ETF (XRT) are up less than 1%.

https://www.barrons.com/articles/5-things-to-know-about-the-future-of-retail-1519400549

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