What did retail deliver this year? As the year comes to a close, it’s time to revisit my predictions of 2019 retail trends to reveal which retail trends actually came true, so retailers and consumer goods suppliers can adapt their 2020 business strategy with greater confidence. Here are the 2019 retail predictions, with corresponding evidence and examples.
Predicted Trend #1: Purpose-Led Brands
Verdict: Consumers desire products and companies that help them feel good.
Proof: Retail is evolving from a focus on the functional benefits of products to the emotional benefits for consumers and, increasingly, to social benefits for the greater good through purpose-led brands. When companies do the right thing, consumers are more likely to reward them with their business.
This year Accenture found that 45% of respondents are more likely to shop with retailers that address social issues through their business practices and working conditions.1 Walk-Morris, Tatiana. What do consumers want for the holidays? A better environment. Retail Dive. December 3, 2019. Another study found 62% of consumers want companies to stand up for the issues they are passionate about.2 To Affinity and Beyond: From Me to We, the rise of the purpose-led brand. Accenture Strategy. 2018. As a result, consumers and investors now expect companies to make a positive contribution to society.3 To Affinity and Beyond: From Me to We, the rise of the purpose-led brand. Accenture Strategy. 2018.
Predicted Trend #2: Cannabis/CBD
Verdict: Consumers seek a variety of natural products, including CBD innovations.
Proof:
U.S. retail sales of cannabidiol (CBD), a compound that does not get users high, are expected to pass $1 billion, a 133% year over year increase. By 2024, sales could surge to $10 billion, representing a five-year compound annual growth rate of 54%.4 New Report Pegs U.S. CBD Retail Sales at $10 Billion by 2024. Bloomberg. October 22, 2019.
Following the 2018 passage of the Farm Bill, which legalized hemp, retailers have reported growing consumer interest in health and beauty products containing CBD.5 Hamstra, Mark. Retailers expand CBD sets as category ‘explodes.’ Supermarket News. September 26, 2019.
In response, suppliers are developing innovative products to keep up with demand for CBD. Aurora Cannabis plans to aggressively pursue the U.S. cannabis market with an acquisition in the hemp-derived CBD space. Aurora already entered the U.S. CBD space in 2019 through a research partnership with the Ultimate Fighting Championship.6 Wallace, Alicia. Aurora Cannabis’ next big play: The US CBD market. CNN. November 11, 2019.
Also, USA Triathlon is collaborating with CBD manufacturer Pure Spectrum CBD to educate triathletes of all levels about CBD and to grow consumption within a flourishing health and wellness community.7 Mitchell, Cam. USA Triathlon partners with Pure Spectrum, a CBD manufacturer. Triathlon Magazine. October 28, 2019.
Predicted Trend #3: Less sugar
Verdict: Consumers’ sugar cravings continue to decline.
Proof:
Amid reports of rising obesity and diabetes, food and beverage suppliers face pressure from consumers and governments alike to offer better-for-you products to support health and wellness.
A recent global survey found 80% of consumers look for healthy, balanced snacks, prompting chocolate manufacturers like Mondelez and Nestle to develop innovative products containing less sugar.8 Smaller, thinner, less sweet snacks? Mondelez makes health drive. CNBC. November 11, 2019. For instance, Nestle’s new 70% dark chocolate has up to 40% less sugar than most equivalent bars with added sugar.9 Gretler, Corinne. Nestle Creates New Chocolate—With No Added Sugar. Bloomberg. July 16, 2019. Similarly, Danone North America launched a new yogurt with 40% less sugar than its regular Greek non-fat yogurt to adapt to consumers’ changing tastes.10 Newhart, Beth. Danone promises to make yogurt ‘vibrant’ in 2020 with new launches. Dairy Reporter. December 17, 2019.
This consumer goods trend is also influencing foodservice, as McDonald’s USA has reformulated its chocolate milk products with less sugar, thanks to a collaboration with Dairy Management Inc.11 Newhart, Beth. DMI partners with McDonald’s for new chocolate milk. Dairy Reporter. November 4, 2019.
Predicted Trend #4: Less plastic
Verdict: The war on plastic is just getting started.
Proof:
According to National Geographic, 8 million tons of plastic waste escapes into the oceans each year, prompting consumers to demand changes to reduce plastic in retail.12 Parker, Laura. The world’s plastic pollution crisis explained. National Geographic. June 7, 2019. Environmental icon Greenpeace recently ranked grocery retailers for their efforts to reduce plastic waste and its top five included: Aldi, Kroger, Albertsons, Trader Joe’s and Sprouts Farmers Market.
This year Kroger announced a reuse and refill pilot program with Loop in partnership with Walgreens, Procter & Gamble, Nestle, The Clorox Company and Unilever.
By 2025 Unilever plans to reduce its non-recycled plastic packaging by half to 350,000 tons of plastic packaging annually. The consumer packaged goods (CPG) giant will invest in reusable and refillable materials, and it will collect and recycle over 600,000 tons of plastic every year.13 Zialcita, Paolo. Unilever Vows To Reduce Plastic Packaging Use By 2025. NPR. October 7, 2019. In addition Albertsons plans to increase recycled content in some of its private label products.14 Shopping for Plastic 2019. Greenpeace. 2019.
In the toy category, a recent report found 90% of toys on the market are plastic. Toymaker Hasbro announced it will start phasing out plastic packaging from its new products, and it plans to stop using the packaging material entirely by 2022.15 Nguyen, Terry. A major toy company is phasing out plastic — but not in its toys. Vox. August 22, 2019
Predicted Trend #5: More value and premium products
Verdict: Selling upmarket and downmarket helps retailers succeed.
Proof:
In 2020, Dollar General plans to open 1,000 new stores and, in its third quarter of 2019, the discount retailer saw its best customer traffic and same-store sales increases (up 4.6%) in nearly five years.16 Grill-Goodman, Jamie. 5 Ways Dollar General is Growing, Beyond Opening 1,000 Stores. RIS News. December 17, 2019. This year Dollar General also partnered with FedEx to offer package drop off and pickup services at 1,500 Dollar General stores, expanding both companies’ reach in rural locations to boost convenience for consumers.17 O’Brien, Mike. FedEx Expands Pickup Network with Dollar General Partnership. Multichannel Merchant. June 19, 2019.
On the other side of the spectrum, premiumization is growing, including in private label. Consumers are much more willing to splurge on private label products (40%) than they would for name brands (26%).18 The Rise of Premium Private Label and its Impact on Discount Retailers. Nielsen. August 2, 2019. In addition, Nestle launched its first range of global coffee products under the Starbucks brand to expand its portfolio of premium coffees.19 Schouten, Rebekah. Nestle grinds out first products in Starbucks partnership. Food Business News. February 13, 2019. Starbucks launched a line of creamers to reach more customers at home as part of its partnership with Nestle to deliver upscale premium products to more coffee lovers.20 Weiner-Bronner, Danielle. Starbucks, in partnership with Nestlé, is launching a line of creamers to reach customers at home. CNN Business. July 22, 2019.
Predicted Trend #6: Experiential retail
Verdict: Retailers are making stores more tantalizing than e-commerce.
Proof:
Since nearly 90% of retail sales still take place in brick-and-mortar, retailers are investing in making their stores social, fun and Instagram-worthy destinations.
For instance, Lululemon’s new experiential store model features workout studios, locker rooms and snack bars, so consumers can feel reinvigorated in a yoga or high-intensity interval training (HIIT) class then savor coffee and smoothies all in one place. Based on the early success of these experiential megastores, the company expects 10% of its stores could grow to a footprint of 19,000 square feet.21 Salpini, Cara. How Lululemon’s Mall of America megastore puts experiential retail on display. Retail Dive. November 20, 2019.
Meanwhile, Macy’s launched an in-store concept, called Outdoor Story, in partnership with Dick’s Sporting Goods and Miracle-Gro that will feature more than 70 different brands and events like gardening workshops. As part of the experience, consumers could purchase “furniture that grows,” including a couch made of real plants.22 Vembar, Kaarin. Macy’s Story goes outside with Dick’s Sporting Goods. Retail Dive. July 10, 2019.
Predicted Trend #7: Augmented reality (AR)
Verdict: AR personalizes the customer experience to maximize fun and engagement.
Proof:
This year Target invested in AR on Snapchat, including Halloween-themed experiences and a shopping mini-game that challenged users to catch home goods and seasonal products in their cart by tilting their heads.” 23 Target And Other Retailers Give Augmented Reality A Deeper Look. PYMNTS. October 18, 2019.
Toys “R” Us Canada also partnered with Snapchat to use AR for an interactive experience in which toys pop out at consumers. The portal’s gamified lens lets Snapchat users collect the mascot Geoffrey the Giraffe and take pictures with him for a fun, interactive customer experience.24 Lombardo, Christopher. Toys “R” Us Canada gamifies Geoffrey the Giraffe. Strategy. November 13, 2019.
In time for the holiday season, Giant Food Stores introduced a new AR promotion designed to send kids on scavenger hunts in stores while their parents shop to make the store visits more pleasant for the whole family.25 Ryan, Tom. Giant thinks AR-games are ripe for grocery aisles. RetailWire. December 23, 2019.
Predicted Trend #8: Strategic partnerships
Verdict: Retail’s rapid evolution means companies can no longer afford to act alone.
Proof:
Ta-da! Every single trend listed above includes at least one example of retail partnerships.
In addition, Walgreens, Albertsons and Kroger have partnered with FedEx to boost the convenience for shoppers by delivering to more than 62,000 locations. These collaborations will help the retailers compete against aggressive rivals like Walmart, Amazon, Costco, Target and CVS.26 O’Brien, Mike. FedEx Expands Pickup Network with Dollar General Partnership. Multichannel Merchant. June 19, 2019.
To gain a competitive advantage with greater economies of scale, Kroger and Walgreens created a group purchasing organization to combine forces to boost purchasing efficiencies, lower costs and spark innovation.27 Redman, Russell. Kroger, Walgreens form group purchasing organization. Supermarket News. December 11, 2019.
2019 retail trends in review
All these 2019 retail predictions came true, so I may need to hit the racetrack next. Underlying themes among this year’s retail trends include fragmentation from a mass market to niche needs and investments in meaningful, social engagement to draw consumers closer.
Notable additional 2019 retail trends that deserve attention include soaring consumer demand for plant-based meats, sustainability and supplier diversity.
To prepare for the new decade, stay tuned for 2020 retail trend predictions, coming in January. Happy holidays!