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10 Retail Predictions for the Automotive Aftermarket in 2018

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10 Retail Predictions for the Automotive Aftermarket in 2018

The NPD Group Inc. likes to collect data. And analyze it. And forecast what will happen next.

It recently released its “10 Retail Predictions for 2018,” eight of which directly or indirectly apply to the automotive aftermarket.

“2018 will be another challenging year for retail,” says the report. Here are the top eight, with expectations and recommendations from some of NPD’s industry advisors and analysts.

1. Retailers will need to ramp up their in-store, (experience-based) offerings. “2018 will be the year that physical stores challenge the proliferation of online shopping,” says Marshal Cohen, chief retail industry advisor. “Key categories will try to show more growth in stores than online, giving e-commerce a good fight.”

2. Direct-to-consumer will grow. “2018 will be the year when brands must realize and act on the importance of selling direct to the consumer, which becomes more critical for brands as there continues to be fewer retail outlets to sell in,” says Cohen. “And the retailers that are left are selling more of their own product. So brands that want to maintain volume will need to find others to sell, or sell it themselves. Another key benefit of direct-to-consumer is the ability to showcase your brand rather than a select representation of it.”

3. Digital commerce will accelerate. “A slow migration to e-commerce for automotive products will continue to be a hot topic in 2018,” says Nathan Shipley, executive director, automotive industry analyst. “One of the industries with the lowest online penetration is the automotive aftermarket. Manufacturers and retailers alike will continue to find new ways to compete in this space, most notably in the ‘buy online/pick up in-store’ offering for consumers. Identifying and executing on new ways to drive foot traffic, which should be treated as a non-renewable resource, will prove key to long-term success."

4. Private label also will win. “In 2018, private label will take a giant leap forward again, cycling back in vogue with retailers as they try to build unique assortments and control their pricing more closely,” says Cohen. “When a retailer carries a brand that gets promoted elsewhere, needed or not they must match pricing, which erodes their profit. But with increased private label product comes increased risk, as the retailer owns it from start to finish.”

5. Retail will remain very promotional.

6. Consumers will redefine convenience.

7. People will spend more time at home.

8. High-priced devices will fuel the technology market. “We expect the mix of technology products that will sell in 2018 to trend toward more expensive category segments like high-end wireless headphones, larger-screen TVs, and more feature-rich computing and mobile devices; the trend will move away from entry-level products,” says Stephen Baker, vice president, technology and mobile industry advisor. “In a business with a mature and highly saturated installed base, we believe consumers will continue to value product and features over price, offering opportunity for increased revenue growth.”

For more on 2018 expectations, visit NPD’s 2018 Outlook page.

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