Eight Retail Trends to Watch in 2018
By Robert K. Futterman January 24, 2018 12:45 pm
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The year 2017 was one of the newsiest and noisiest retail years on record. It will be remembered as the year retail evolved and changed forever. We will remember it as the year that experiential retail moved to the forefront and brick-and-mortar brands finally embraced omnichannel strategies in a meaningful way. While media reports of a “retail-pocalypse” grabbed the headlines, online stores—Everlane, M.Gemi and Rent the Runway to name a few—were busy opening more physical locations than ever before.
It was the year retailers shifted strategies and realized that consumer engagement must come from multiple touch points. Megamergers and strategic mergers changed the landscape with Walmart’s $310 million acquisition of Bonobos and Amazon (AMZN)’s purchase of Whole Foods Market for $13.7 billion—the latter representing a watershed moment for the retail industry. It is barely 2018 and already there are rumors of new brick-and-mortar targets for Amazon. In general, the “Amazon effect” finally forced the industry to adapt to the needs of the modern consumer and brick-and-mortar to embrace omnichannel.
So, what will take hold in 2018? Here are eight major themes and trends that will continue to transform the retail landscape:
International brands will continue to touch down in the U.S.: We expect exciting international brands to continue growing their presence stateside. In New York City last year we witnessed several new overseas retailers like Sneakersnstuff (Sweden), Innisfree and Line Friends (both from Korea) stake a claim in the market. The U.S. remains a highly prestigious key market and international brands will continue to flock to our largest urban markets to grow and attract new consumers. Asian brands, especially those from South Korea and Japan, are poised for another year of strong retail expansion and brand building. K-Beauty (referring to skin care products from Korea) continues to flourish overseas, buoying a still-strong beauty and cosmetics retail segment in the U.S. I also expect to see more fashion from Down Under as brands from both Australia and New Zealand have recently touched down in Manhattan. Aussie retailer Ksubi opened shop in Soho in 2017, while fellow Australian outfitter Scalan Theodore found a home on Prince Street. Expect more to follow. And of course, European brands will continue to be popular in the U.S.
Market correction: We finally saw much-needed flexibility from property owners who moved to establish new rent thresholds that both landlords and tenants could accept. New opportunities were created in 2017 for emerging, entrepreneurial retailers who entered the market at a lower cost of entry, and I expect price adjustments and more creative deals to continue well into 2018.
The “theme-park-ification” of retail will continue: Global brands like National Geographic, Disney, Mattel, Lionsgate and DreamWorks will continue to take advantage of vacant retail space, leverage their intellectual property and attract visitors with new engaging technologies and social media-friendly landscapes. “Retail-tainment” won’t be limited to big-box spaces in 2018; companies are harnessing the power of Instagram to create small-scale museums and “Instagamable” theme parks in boutique spaces.
Seasonal sales are so 2017: Retailers won’t be relying as much on one-time sales events as they did in the past. As evidenced by this last holiday selling season, the seasonal and event-shopping mentality is flattening out. In 2018, we will see more event-driven and experiential retailing year round as events like Black Friday become less important.
Food, fitness and fun: Clusters of health and wellness-oriented retail (athleisure, juice shops and fast casual with menus showcasing traceable ingredients) will continue to draw shoppers to street retail corridors, lifestyle centers, malls and live-work-play developments in 2018. In fact, fitness centers are one of the key categories and have become attractive, sustainable anchor tenants for repositioned malls.
The still-great American mall: In 2018, developers and mall owners will be working overtime to unveil updated mall footprints. Expect to see fewer department stores and big-box anchors, and more food purveyors, fitness studios, medical uses and converted residential and office units. Malls will be reimagining their food options into attractive quick dining options, making way for more food halls that are an experience in and of themselves. Mall food courts will be getting a facelift for the new year and changing their name in the process. Food halls are here to stay. Keep an eye out for more celebrity chef-driven concepts, as they look to leverage their name brand and star power to start new ventures.
Retail gets snackable: It is no secret that we Americans like to snack. This year will see an increase in small artisanal-style purveyors of snacks and treats like handmade ice cream, gourmet doughnuts and housemade pickles, just to name a few. In 2018, the more detail and care taken in creating food, the more popular these smaller locations will become.
There is little doubt that it is an exciting time to be in the retail real estate industry, and it’s clear that we have already witnessed one of the biggest retail transformations of our time. I am excited to see retail’s next act continue as 2018 unfolds.
Retail real estate pioneer and investor Robert K. Futterman is chairman and chief executive officer of RKF, a leading retail real estate brokerage firm in the U.S.
