Looking ahead in 2018

Each passing year we see Australia and New Zealand adapting to international market trends quicker and quicker with globalisation and technology being the catalysts to new market entrants and innovation.

We’re always looking ahead to make sure we’re investing and innovating to deliver the services of the future for our clients. At the start of the year we like to take a moment to see what’s exciting, what are other markets doing and what can we look forward to.

Each passing year we see Australia and New Zealand adapting to international market trends quicker and quicker with globalisation and technology being the catalysts to new market entrants and innovation.

So without further ado let’s get into it - the big topics for the year, what's new in the US (and could be coming here) and our top predictions.

Big topics this year

  1. International giants entering the market
    It’ll be interesting to see how German ‘hypermarket’ Kaufland performs on launch of its first Australian site in Adelaide (date TBC). Their stores are enormous and offer a huge product range, whereas the local Coles and Woolworths are trying to simplify and consolidate their lines. The world’s largest sporting goods retail brand Decathlon, dubbed the ‘Aldi of activewear’ opened late last year offering discount private label signalling the growth of that market and is one to watch.

  2. Data and personalisation for the shopper will continue to increase
    More of what we’ve been seeing last year – the continued use of data to improve shoppers experience and personalise retail. There are big retailers sitting on masses of customer data but some are being criticised for not using it to customise the experience nor provide a personalised shopping offer.

  3. Rising costs continuing to squeeze margins across CPG/FMCG companies
    With the cost of living on the rise, a third of homeowners plan on reducing what they spend on groceries. Brand’s increasing pressure between cost of production and increasing freight costs – particularly around the last-mile transportation issues squeezing margins in the process.

What’s new in the US

  1. Kroger Edge
    Electronic shelf edge labels and POS are beginning to get traction elsewhere in the world, small scale trials have taken place in Australia but not really taken off as yet.  The technology can even help customers select items based on their dietary requirements. Given the cost of labour and tech developments it seems only a matter of time before it really starts to get adopted here.

  2. Walmart centralising merchandising activity
    With a focus on minimising store disruption, consistency across stores, control of quality of work and to improve the customer experience – Walmart has chosen 5 preferred services providers to exclusively operate within Walmart stores. While this is a first, this is the biggest retailer in the world and hard to believe no one else will follow suit.

  3. Department chain Kohl’s partnering to sublet part of their stores
    In a bid to shrink but not close stores, Kohl’s is planning to free up sections of 5-10 stores and lease them to Aldi. This isn’t just cutting costs, but lets them feed off each other’s customer base.

Top predictions

  1. Store closures will accelerate
    Brands continue to be under pressure and ANZ will follow the US market with this trend with more pressure on bricks and mortar stores to work with online being accentuated by the rising costs of doing businesses – labour, energy prices, rent in capital cities, etc. This doesn’t mark the end of physical, as I spoke last year it means that businesses have to adapt to grow and deliver a great experience with convenience. Those that do will continue to thrive and grow.

    US Store Estimated Closings in 2018

  2. Amazon will continue to build
    Amazon will look to expand and launch their extra service offerings with now Alexa in the market and Amazon Prime to follow with the recent introduction of ‘FBA’ aka Fulfilment by Amazon in Australia. The slow start of them might have lulled some retailers into a false sense of security.

  3. Convenience and Ready to Eat growth
    Continued growth due to consumer demand but needs to improve quality given the growth in alternatives such as uberEATS and Menulog. It’s easier than ever for people to get their favourite foods quickly, Ready to Eat need to up their game to keep up. The Woolworths Marrickville has a ‘ready meals’ section (image below) – it’s a great start but more needs to be done. Pret a Manger stores are a great leading example coming from the UK market.

    Woolworths Marrickville

While not an exhaustive list we hope the above provides some thought-provokers to discuss in your business. CROSSMARK is excited to be part of this evolving market, adapting what it takes to connect brands to consumers. We’re working with our clients to make sure they’re staying ahead, driving competition and innovating their brand engagement strategies.

To start a conversation with us and see if we can help with your 2018 strategic retail plans, please feel free to contact us via email or on +61 2 9439 1233.

Andy KIrk

Andy Kirk

Andy has a deep understanding of the Australian retail environment and its shifting dynamics. Prior to CROSSMARK he has held a number of senior leadership roles in Australia and the UK, delivering retail strategy and field marketing initiatives for the blue chip brands. Andy is a firm believer in the power of data analytics to boost sales performance for brands and retailers.