Retailers Plan for a Transformative 2018

January 2, 2018

For many traditional retailers, 2017 was not a good year. Along with the more than 20 chains that filed for bankruptcy, established brands like Sears and J.C. Penney also announced that they’d be closing hundreds of locations. Unfortunately, the outlook doesn’t look much better for 2018. As Amazon continues to disrupt the industry by dominating e-commerce, experts predict that more bankruptcies and store closings could be on the way. “I think the early part of next year will be pretty bad… I think it will be tough,” said Charlie O’Shea, the lead retail analyst at the financial agency Moody’s.

Still, the future of retail doesn’t appear to be all doom and gloom. Some companies such as Target and Kohl’s are finally starting to see payoffs from the billions they’ve invested in e-commerce platforms. The same is true for Walmart: despite the company’s initial opposition to online retail, it has since taken major strides to become a tech powerhouse. America’s largest employer also acquired a few promising apparel brands like Modcloth and Bonobos to compete with Amazon’s expansion into the fashion business. In fact, analysts expect Walmart to acquire even more clothing companies in 2018.

Elsewhere in the apparel sector, though, the news is not nearly as rosy. In the past few years both Nike and Under Armour have lost ground in North America to old competitors like Adidas as well a new generation of sportswear makers. Longstanding chains such as American Eagle and Gap have experienced similar declines, although each of those companies ended 2017 positively. To keep that momentum going in 2018, it’s possible that some of these retailers will broker distribution deals like Lord and Taylor did with Walmart. After years of struggling like many of their competitors, the department store agreed to transfer its online operations to Walmart’s website. The company will likely develop more online partnerships with outside brands if this cross-promotion proves to be successful.

Questions:

  1. Do you think other retailers stand a chance against the growing might of Amazon? Why or why not?
  2. Why is Walmart brokering so many deals with outside brands?

Sources: The Motley Fool, “Store Closings: 17 Retailers on the 2018 Death Watch,” USA Today, December 27, 2017; Phil Wahba, “Here’s What Retailers Have to Prove in 2018,” Fortune, December 27, 2017.

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