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As we move into 2018 there are ten trends that bear further attention:
- Retail aggregation will continue as large retailers gobble up innovators and boutique plays at an increased pace, at prices that will astonish those who value revenue and free cash flow. Watch for refactoring among bricks and mortar retailers and the geography (malls) they occupy. Expect Target, Macy's and other challenged retailers to be acquired by e-commerce giants like Amazon, Walmart or Alibaba.
- Smart device sales flat line as consumers recognize they have all the imaging, resolution, speed and connections they require, all the capacity they can use and as they realize there is no reason to carry laptops or tablets when a smartphone provides the functions they use. Watch as the competitive battle moves from devices to applications that support the things (home, vehicle and appliances) every consumer owns.
- Successful emerging applications will feature a Voice User Interface - (VUI) and the ability to deliver what consumers want, when they want it ('speak and make it so'). Watch keyboarding and pretty websites vanish as the battle for the home heats up (Alexa, Google, etc.) and everyone figures out that whoever controls the 'last mile' controls the consumer wallet.
- Networks will be disrupted as consumers increasingly chose On Demand services (access when and where they want it). Watch for YouTube as well as other Streaming and On Demand services to grow while serial network programs, news and even sports fall off the table.
- Marketing agencies will realign activities to encourage 'discoverability' when a need occurs (episodic approach), a more seamless client experience (CX), authentic user stories and generating Client Lifetime Value (CVL). Watch as brands attempt to engage/support influencers and invest heavily to sustain client loyalty (not loyalty points/cards) while the new client acquisition costs they must bear climb even higher.
- The end of printed resources (printed anything) nears as online services provide consumers with DIY videos as well as image recognition to support buying and using the things they want. Watch for a negative impact to brand's grip on the consumer as digital services and search engines like Youtube and Google, have become the go to place for consumer support.
- Disruption and upset will develop more frequently outside a market sector than from inside. Watch for those outside a market sector to see more clearly the innovation and opportunity to expand the clients they serve while those on the inside lose grip on the very clients they depend on.
- Rotation strategies trump margin. We all know, the number of times a product turns over in inventory ('turns') each year is more significant than margin. However e-tailers now turn inventory over 25-30 times a year and obtain operating profits with a margin of 11.5% or even less. Watch e-tailers advance strategies that shorten the path to the consumer, attract advance payment and push responsibility for inventory financing onto the brand, distributor or manufacturer. The scale of large e-tailers has placed extreme competitive pressure on brands, distributors and legacy retailers whose inventory turns are much lower.
- The new mantra is 'open source', 'first-to-market' and 'ecosystem' where the comfort and convenience offered by collaborators sustains a relationship built on the trust and satisfaction of the consumer. Watch for patent and protection tactics to fade as the new sharing economy drives strategies that deliver abundance instead of scarcity.
- Regulatory battles will ensue as the strong gain market share at the expense of the weak. Watch for regulators to play a 'monopoly' card and apply pressure to strong players using consumer protection as the justification.
Draw up a chair and watch as 2018 delivers some really interesting plays in the new digital economy.
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