Big Changes Predicted in Retail for 2018
Batten down the hatches, 2018 is going to be a crazy year in retail. We’ve already seen so much change in 2017, with Amazon buying Whole Foods, the growth of meal kits and grocery delivery, and new technologies—both the cool and the lame—changing the way grocery shopping works. Now the year has barely begun and several companies are already advancing bold moves that will shift the landscape even further. Here are some of the big changes that are already in progress.
Nestle is Getting Out of the Chocolate Business:
That’s right, the inventor of milk chocolate is calling it quits on its confectionery unit. By the first quarter of 2018, the company hopes to sell the unit, which is estimated to bring in between $1 billion and $3 billion. The chocolate market is “sputtering” in the U.S. and the maker of Baby Ruth, KitKat, and Butterfinger is planning to get out while the getting’s good.
Target is Buying Shipt:
The retailer has bought the delivery service for $550 million in cash. Shipt, a rival to Instacart, will continue to work with other retailers, though it’s owned by Target. Meanwhile, Target will start offering same-day delivery of its products, including clothing, groceries, home furnishings, and electronics early this year.
Instacart is Racking Up Accounts:
Many people expected Instacart to tank after Amazon bought Whole Foods, since Whole Foods was one of Instacart’s biggest investors and customers. But while Whole Foods was now the province of Amazon’s delivery service, other customers leapt to fill the gap including Costco and Kroger’s Ralphs subsidiary. Several smaller partners also joined indicating that while a lot of customers today like doing their own grocery shopping, many in the industry expect grocery delivery to continue to grow.
Recipes Replacing Meal Kits?:
In November, AmazonFresh partnered with nutrition platform and meal planning service EatLove, which will let people create their own meal “kits” based on the way they like, and need, to eat. Customers can check off ingredients they already have and order the ones they lack through AmazonFresh. So while some customers may still purchase the meal kits where everything is pre-measured and pre-packaged, others can design their own meals and only buy what they really need—no more extra turmeric when they already have a full bottle on the shelf. The future of meal kits is still developing but the more customers can define their own experience, the more successful products are likely to be.
The Single Source Retail Merchandising Model will Continue to Evolve:
In an increasingly complex industry, single source merchandising will likely continue to expand and improve. Retailers are having to continually innovate and adapt, much faster than in the past and single source retail merchandising will help them accomplish this by streamlining store displays and layouts to meet the needs of customers who are getting used to having things the way they like them.
Coopetition will also Continue to Evolve:
Retail and CPG will have to take the model of the open source world and engage in coopetition, working together on future products and marketing strategies to make sure customers are getting what they want when they want it, instead of scrabbling over an increasingly shrinking pie. If they don’t, the mega companies who have the data and the financial resources to meet customers’ needs will end up ruling the grocery industry.
The new retail model is simple: Give customers exactly what they want when they want it at the price they want to pay. That’s what the last several years have been building toward and that has become not just a luxury for the few but the expectation of all customers. Now it’s up to retailers, CPG companies, and tech innovators to figure out how to make it happen.
Philip Morris Int. Calling it Quits on Cigarettes:
It’s one thing to stop selling cigarettes and tobacco products if you’re a retailer (CVS, 2014) but to be one of the biggest tobacco giants and stop producing your iconic cigarette line is just jaw-dropping. Philip Morris International announced they are trying to kick the habit entirely and have a smoke free future leaving some industry experts scratching their heads.
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