The Challenge of Adapting The old business models and practices, especially in the retail sector, have been discarded or turned on their heads. Media has morphed into new forms, with advertising dollars in hot pursuit. Consumers prefer an experience instead of a shopping trip.

Successful Disruptors The world’s largest ‘taxi’ company owns no taxis – Uber The most popular media owner creates no content – Facebook   The world’s largest movie house owns no cinemas – Netflix

A Good, But Not Great, Economy The 60 economists The Wall Street Journal surveys monthly forecast a GDP of 2.3% for Q4 2016, and a similar positive increase for the first three quarters of 2017: 2.3%, 2.4% and 2.5%, respectively.   Although there are many Americans who have stopped looking for work, the unemployment rate for 2017 is expected to remain at its current 4.6%, which historically indicates “full” employment. Realtor.com forecasts that existing home sales are estimated to increase 1.9%, new home starts 3.0% and new home sales, 10.0%.

Retail Steady, But Not All Sectors Of the many 2017 forecasts for the retail sector, Kiplinger predicts a 3.7% increase for the year, which would be just a bit less than what should be the final result for 2016. Department stores, however, are likely to continue to suffer during 2017, based on Thanksgiving and Black Friday’s net sales at brick-and-mortar stores decreasing 5.0% while online sales increased 18% to $5.27 billion.   Although a majority of American consumers still prefer to shop at brick-and-mortar stores, specialty apparel stores are planning to open more stores during 2017, as more department store locations close.

Apparel Retailers Losing to Amazon The most important trend to watch in the apparel market is the forecast from Cowen & Co. that Amazon will become the largest clothing retailer in the US during 2017, surpassing Macy’s. Amazon’s clothing and accessories sales will increase approximately 30% during 2017 to $28 billion, compared to Macy’s decline of 4% to $22 billion. Total online footwear and apparel accessories sales are forecast to increase 10.3% for 2017, to $69.82 billion, and another 38.1% by 2021, to a total of $96.41 billion.

Losers and Winners Amazon is not the only reason just 7 major department stores – Kohl’s, J.C. Penney, Sears/Kmart, Dillard’s and Macys – closed a total of 692 locations during the period 2013–2016, and have another 145 planned for closing during 2017. Many of these stores are now in neighborhoods where middle-income households have declined significantly or have totally disappeared. Many are also located in shopping malls that are more likely to resemble ghost towns. European-based supermarkets Aldi plans to open 1,500 new stores and Lidl will open its first 150 stores by 2018, while Dollar General will add 1,000 stores by 2020 for a total of 15,000.

TV Reps Have the Advantage US digital ad spending surpass TV ad spending by the end of 2016. Both media will have almost identical shares, at 36.8% for digital and 36.4% for TV. According to Borrell, local TV advertisers’ total average annual advertising budget was approximately 300% more than all local advertisers, at $325,719 and $105,595, during 2016. It’s a win-win for you because you represent the dominant traditional media channel and are best positioned to help clients with their digital media advertising – and TV and digital are the most effective complementary advertising channels.

Digital’s Ad Growth Is Undeniable Magna Global predicts that total digital ad spending will increase 13.6% during 2017, with desktop declining 4.7%, but mobile will increase 34.5% and social 26.3%; however, this is a slower rate of growth. The mobile channel will increase so much because mobile wallets are becoming standard features on smartphones and Facebook and Google’s location-based digital ads provide online-to-offline retail sales attribution. It’s another win-win for you, as the smartphone has become the dominant device in use while watching TV. Your clients need TV to drive consumers to their smartphones for more information and to make purchases.

Looking for an Experience According to Alliance Data’s 2017 Trends Report: Now, New, Next, “32% of US shoppers want to learn new lifestyle and creative skills at their favorite store.” Lowe’s virtual reality Holoroom allows customers to step into their virtual creation of a dream kitchen and bath. Lululemon Local is the retailer’s new “part store, part meeting place” concept, where guests can shop, do yoga, attend events and view locally curated products, such as artwork and interior design.

The Nuclear Family Has Exploded An important trend that is and will continue to affect media and retailers is what Activate, a New York-based consulting firm, calls Post-Household America: A New Era of Users. One of the distinguishing characteristics of this trend is that some “household members” don’t live under the same roof, but share tech and media. Although lower-income households have difficulty affording tech and media services, 52% of households with less than $25K annual income have standalone home Internet service and 49% have a cell plan.

The Future in Your Face During the day this Special Report was being written, Amazon announced its first commercial drone delivery. A British man living near Cambridge received a Fire TV and a bag of popcorn. Theatro provides retail sales associates with an earpiece to communicate with all other associates as well as back-end inventory and point-of-sale software to obtain product information and availability. Wayfair and A&E Television Networks are launching an hour-long show, The Way Home. Viewers will learn about DIY renovations and home improvements using products only available from Wayfair, which will be promoted with on-screen popups.