Looking back at the top 5 Retail Trends for 2018

Looking back at 2018 trends - how did we do?

Looking back at the top 5 Retail Trends for 2018

13 December 2018

Before we look forward to 2019 trends impacting the retail industry, it’s worth looking back at 2018 and more specifically, what did we predict and how did we do?

At a high level, beyond our predictions, we saw many of the larger players go on a significant spending spree. Walmart focused on international expansion, acquiring 77% of Flipkart while increasing their stake in JD.com to 10%. Tesco made a move into the wholesale market with a successful takeover of cash-and-carry chain Booker in the UK. And Amazon decided to expand into new verticals, by acquiring Pillpack and continued to grow their in-home device portfolio, with the acquisition of Ring. 

They also made a big splash opening more Amazon Go stores. Meanwhile in Asia, we saw the Alibaba Hema Supermarket give a glimpse into what will surely be an innovative 2019.

But first let’s look back at some of the big predictions for 2018.

Grocery ecommerce in the U.S. reaches a tipping point

Here is what we said:

There have been two major contributors that make 2018 a year for explosive growth in this category:

Investment into the enabling technologies: According to CB Insights, an estimated $5B was invested across 315 supply chain and logistics startups in 2016. These investments have enabled major technological leaps in the efficiency of the last mile, which grocery specifically relies upon.

The results are in for early adopters: Many in the space have been taking a wait and see approach, letting a few early adopters establish best practices and validating the opportunity. After several years those efforts have proven fruitful and can no longer be ignored.

As predicted, these developments coupled with increasing consumer interest in buying groceries online were a likely catalyst for the flurry of acquisition and partnering activity that took place this year. Instacart acquired grocery ecommerce platform, Unata, Target acquired grocery ecommerce marketplace Shipt, and Kroger acquired a stake in UK online grocer, Ocado, with plans to leverage their ecommerce supply chain technology in the US market. 

We also saw many grocery retailers make strategic investments in their own ecommerce capabilities; Albertsons, which saw its ecommerce business grow over 100% over the last year partnered with Takeoff technologies to build out their fulfillment capabilities. Other more mature players such as Ahold Delhaize have begun to leverage their ecommerce offering as a major media platform, which I predict we will be seeing a lot more of in the coming year.

Chat as a sales channel

Here is what we said:

According to a study by the Baymard Institute, 1 in 4 shoppers abandoned their cart due to a “too long / complicated checkout process” and that the average U.S. checkout flow contains 23.48 form elements displayed to users by default.

What if, instead of presenting the user with a complicated form to complete their purchase, you took a page out of Drift’s playbook and started gathering the data you need via a conversation.

This is one area where I expect retailers to start exploring. One might even say that Alexa is doing just that.

Though chat looked promising as a new sales channel, I am not sure we saw the breakthrough we were hoping for. If you consider voice as a form of chat, the growth in this area was not particularly dynamic, with only 2% of Alexa users having used a device for shopping. While chat as a form of customer service continues to grow, its ability to help convert sales for retailers has yet to be maximized. We will keep an eye on how this unfolds and if this trend is a late bloomer.

Voice as a platform

Here is what we said:

Amazon knows that to win the voice platform wars, it needs to grow its Skills marketplace and will amplify that growth by untethering their reliance on their own hardware devices.

I look forward to asking my washing machine to order more detergent or my car to place my Starbucks order. Voice as a platform has the potential to change the way we interact with our everyday items and change the way we shop as a consumer.

While Amazon released a number of new, Alexa enabled, Amazon branded hardware devices (15 to be exact), they also expanded their integration capabilities with third party devices. P&G and Hamilton Beach are both early partners on this front.

Google has taken a slightly different approach leveraging its assistant technology and Android operating system to allow consumers to link together multiple devices across their home.

As more devices become internet enabled, I expect this ecosystem to continue to expand with both Amazon and Google battling it out to be the go-to Voice operating system.

Crypto Currencies

Here is what we said:

Almost every article I read treats Bitcoin as an investment vehicle rather than a better form of currency to buy things. For retailers to start to benefit from this incredible growth, they will need to begin to integrate crypto payment capabilities.

While crypto currencies such as Bitcoin have struggled over the last few months, their usage still remains mostly as an investment vehicle with a number of investment services, such as Robinhood, allowing consumers to buy and trade crypto assets as they would stocks.

However, towards the end of this year, we began to see signs that crypto assets may start to be used as a loyalty currency. A startup called Lolli, who rewards users with Bitcoin, when they shop at their partner retailers, recently raised capital from an impressive group of investors such as Bain Capital and Forerunner Ventures.

The next move, perhaps, is to redeem that currency in the form of new goods. Given their continued growth there is an emerging use case that cryptocurrencies could be an effective form of universal loyalty.

The Tech Enabled Store Associate 2.0

Here is what we said:

The competitive advantage brick and mortar holds over ecommerce is the personal interaction of the store employee and customer. Giving them the tools to amplify the experience will be vital to the stores’ success and a pathway to the omnichannel experience everyone has been waiting for.

We almost had this one right. What we should have said was the “Tech Enabled Consumer”. Although there was certainly significant investment in technology for store associates, with many having a tablet or mobile app that allows them to quickly assist your shopping experience, the biggest impact has actually been the investment in technologies that enable the consumer to do more in-store. 

For many of these experiences, they leverage the consumer to use the device in all of our pockets to complete orders more seamlessly and to make quicker and better purchase decisions.

Both the Hema Supermarkets and Amazon Go stores leverage the smart phone as a personal identifier. In many cases without ever having to remove it from your pocket. While other retailers such as Sam’s Club concept “Sam’s Club Now” only allows the use of their mobile Scan & Go app to complete your shopping journey.

One of our portfolio companies, GrocerKey, has also released their own mobile self-checkout technology with several retailers signing on for early 2019 release.

A future of no checkout lines could be closer than we think. The impact of store layout and experience could change dramatically as a result. This is one we will certainly be looking out for over the next year.

So while 2018 saw some impressive technology-enabled initiatives from retailers really pushing the boundaries to create new experiences for shoppers, there are still some trends which are yet to take hold, particularly at any meaningful scale. 

Stay tuned for our 2019 predictions – coming soon – where we’ll be digging deeper into some of the emerging trends that could impact future strategies for retailers and brands.  

Head of Venture Investments at dunnhumby

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