February 2018

Why Boutiques are the Future of Retail

Author: Kent Thune

We live in a world where technology, convenience and freedom of choice have converged to enable massive retailers like Amazon and Walmart to thrive, while bringing about the decline and eventual death of the mid-sized retailers like Sears, Kmart, JC Penney, and Macy’s. But this same environment provides enormous potential for the small retailer.

This is where boutiques enter the picture. While general, commoditized items have their place, at the end of the day, humans are still individuals, and they like to look, feel and shop that way, even if it costs them a bit more to do it. Amazon.com won’t meet the needs of the customer who enjoys a complete shopping experience and Walmart won’t satisfy the person looking for a unique product, while being pampered by top-notch customer service.

And so, it should come as no surprise that the rise of boutiques is one of the biggest but least talked about retail trends today, at least not in mainstream media. According to BigCommerce.com, almost every adult demographic, including Millennials (46 percent), Gen-X (49 percent), and Baby Boomers (42 percent), have shopped at boutiques, either online or in a physical location. Those are significant numbers that promise great potential for entrepreneurs.

But what exactly are boutiques? The word boutique is defined by Miriam-Webster.com as “a small shop dealing in fashionable clothing or accessories; a small shop within a large department store; a small company that offers highly specialized services or products.”

So, a boutique can be a small clothing retailer, but there are boutiques that sell other products, such as food, and ones that offer services, such as investment advice. What all boutiques have in common is that they are small businesses that serve a niche market. In 2017, the biggest trends in boutiques are baby care, self-care products and cosmetics, craft supplies, food, clothing, subscriptions, health and fitness, and men’s grooming products.

Although boutiques have seen success in the brick and mortar space, the biggest trends are online. According to the E-commerce site, ecomdash.com, entrepreneurs looking to get onboard the growing online boutique trend should pay attention to online search habits from potential customers. For example, there were recently 512,400 searches per month for wedding dresses. Although this is a large result, it’s also a high-competition market and, therefore, not a good market for a boutique shop to enter. However, there were 1,218 searches for vintage style wedding dresses. This is a relatively small result, but there is low competition in this market, which indicates an opening for an aspiring boutique owner who does not need a large number of customers to be profitable.

But aspiring boutique owners would be wise to consider blending the brick and mortar world with the online world. In a recent nytimes.com article, “Imagining the Retail Store of the Future,” Jose Neves, founder of Farfetch, which is the global online marketplace for independent luxury boutiques, shared his thoughts on the store of the future. Neves believes that the new retail era will be one that can he described as “augmented retail,” which is a blend of the digital and physical that allows the shopper to shift seamlessly between the two retail realms.

Although online boutiques are growing more successful every day, Neves said, “I am a huge believer in physical stores. They are not going to vanish and will stay at the center of the seismic retail revolution that is only just getting started.”

A recent report released by Bain & Company suggests that Mr. Neves’ vision for the future of retail may be right: Although 70 percent of high-end boutique purchases may be influenced by online interactions, the findings of the report reveal that physical stores will continue to play a critical role, with 75 percent of sales still occurring in a physical location by 2025.

This combination of the physical and online elements of retail boutiques should come as no surprise to the thinking person. Consumers are certainly spending more and more time shopping online, but when it comes to some products, such as niche markets in clothing and food, people will still like to have the choice of walking into a store to see, touch, smell or sample their products before making a purchase. But then they might also like the choice of making a quick purchase online in the convenience of their home or while on the go during a busy day.

Perhaps the future of retail will include virtual fitting rooms inside the home, 3-D printing options, and delivery by drones. This may seem so futuristic that it’s years or decades away, but all these technologies exist now and are being tested in several markets today. But is high-tech the total future of retail? Not likely, say many leading retail experts.

Boutiques, or any consumer driven industries, are wise to stay in front of the target customers, wherever they want to find them. Consumers of the not-so-distant future won’t likely be too different from those of today—fickle shoppers who want a choice in shopping experience to match their preferences or whatever mood they happen to find themselves in on a particular day or even the spur of the moment.

We humans are funny creatures when it comes to our things. We want to buy our stuff quickly and easily. And if we can’t have it now, it had better be delivered to us within two days, free of shipping charges. But then we get bored with routine and with the nearly-effortless acquisition of goods and services on the big retail websites; so, we go out to the store for the thrill of the chase in finding that unique item or simply to get out of the house for the human touch that we all still need in this world filled with technology and convenience.

No matter what the future of retail brings, there will always be a significant empty space that can only be filled by a small business that’s not available to anyone and everyone with Internet access and a pulse. Boutiques will no doubt fill that empty space.

Kent Thune is a freelance writer and owner of a Hilton Head Island investment advisory firm, Atlantic Capital Investments. He is also a personal financial counselor to service members on Parris Island. You can follow his musings on mind, money and mastery of life at TheFinancialPhilosopher.com or follow him on Twitter @ThinkersQuill.

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