Future of retail predictions

Illustration by Christina Locopo

Retail has seen unprecedented upheaval over the last several years.

Some of the industry’s key decision-makers expect even more evolution ahead.

Covid-related shocks have upended retail, after clogged ports and merchandise shortages gave way to excess inventory levels and shifting consumer demands amid persistent inflation. 

Those disruptions accelerated transformations in the industry that were just hitting some companies before the pandemic, such as the growth of curbside pickup and increased use of mobile apps.

As retail leaders enter 2024 hoping the turmoil is now behind them, they’re building businesses for the future and making changes that will transform the industry.

Over the past few months, CNBC has spoken with a dozen of the retail industry’s top executives and leaders to get a sense of what’s next.

So what will retail actually look like five years from now, and how will it change? 

The following is a sampling of their insights, which were edited for brevity and clarity.

Mapping out the future of the retail industry

In five years, what will the role of stores be and how will brick-and-mortar locations change?

Fran Horowitz, Abercrombie & Fitch CEO: The future of retail is small, efficient, omni stores, and they’re located where the customer tells us. [For Abercrombie] these big, massive stores were just not productive and not efficient — the consumer was responding to a much more intimate associate experience, and then economically, they were not productive. You don’t get the kind of traffic through the stores like you did in the past when there wasn’t a digital option, so you have to provide a location that is financially sound, which has X amount of traffic and X amount of digital orders that come together.

Fran Horowitz, CEO of Abercrombie & Fitch Co.

Patrick MacLeod | WWD | Penske Media | Getty Images

Michelle Gass, Levi Strauss CEO: The role of the store needs to be much more experiential than it is today. I think consumers are going to raise the bar, and they’re just going to expect that because when you can just shop and do a transaction a click away, there has to be a higher purpose for a store. It’s not just about the consumer-facing aspect, but the back end of the operation becomes even more important. The store becomes a mini distribution center. Perhaps what it does is it lessens the need over time to put up the next distribution center, because you’re using your store footprint as these mini fulfillment centers.

Jens Grede, Skims CEO: Higher concentration [of stores] in better locations. Trends come and go, but Fifth Avenue by the park will be Fifth Avenue. It was that a hundred years ago, it will be so in another hundred years, right? So important locations are only becoming more important. I don’t know where that leaves the B and C location, but I think the B and C location will struggle because they’re not offering the experience. I think when people go shopping, they go to an A location or they go online, but there really is very little…

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Future of retail predictions

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