3 Retail Trends That Will Temper Tea Sales in 2018

In-store sales growth in 2018 will be significantly impacted by declines in store traffic at malls (a trend that doomed Teavana retail and will slow and possibly slay other tea merchants).

Here are three developments in 2018 that will cast a shadow over sales by mall-based tea merchants

and for beverage wholesalers that primarily sell to chain restaurants.

Reduced Mall Traffic

No one buys tea at Sears, Macy’s, J.C. Penny or Neiman Marcus, but foot traffic at the malls they anchor determines the fate of hundreds of U.S. chain tea merchants and food court vendors. Black Friday is the latest example. While sales were brisk, beating last year’s total, foot traffic was down 4% as consumers spent Black Friday at home this year. Mall visits declined by half between 2010 and 2013 and continues its descent. As a result, half of the 1,200 shopping malls in the U.S. are expected to close by 2023. Closings will be disproportionately high among smaller Class C and D malls. An estimated 6,700 retail stores will close this year, a number greater than at the height of the last recession. This even though holiday sales rebounded from last year, unemployment is low, the economy is growing and credit is cheap. It is also true that lower and middle-class consumers have less income while costs for education, healthcare and housing have increased.

Restaurant Closings

Same-store traffic has fallen 27 of the past 29 months, according to MillerPulse. Chain restaurants are cutting units, slowing expansion and taking defensive measures after a decade of rapid growth. Americans now spend more dining out than on groceries, but the pattern is changing. In the past year, chain restaurants closed 1,000 locations. These include U.S. restaurant chains Bennigan’s, Outback Steakhouse, Ruby Tuesday, even Howard Johnson’s closed its last remaining store. Romano’s Macaroni Grill is restructuring; Applebee’s is shuttering 135 stores; Famous Dave’s just shut 13 stores; and Noodles & Company is closing half its locations.

Denver-based Smashburger, a specialty tea bright spot offering fair trade and organic teas, has slowed its expansion plans as has BJ’s, Chipotle and Red Robin, which will pause unit growth until the end of 2018.

Fortunately, the number of locally owned indie restaurants is expected to grow 5 percent per year during the next three years, according to food industry consulting firm Pentallect. Growth at the top 500 U.S. restaurant chains will slow from 3.6 percent to 3 percent through 2020.


Black Friday generated a record $5 billion this year (up 16.9% over last year according to Adobe Analytics) and Cyber Monday is expected to reach an unprecedented $6.6 billion in online sales. Adobe estimates 54% of online visits were via mobile and 37% of sales. When the ledgers close on 2017 consumers will have spent an estimated $655.8 billion during the holidays (an average of $967 per person), according to the National Retail Federation. Holiday sales for e-commerce increased 11 percent in 2016 compared with 2015, according to Adobe Digital Insights, with Slice Intelligence reporting an even more significant 20 percent increase. Comparatively, brick-and-mortar stores saw an overall increase of only 1.6 percent, with physical department stores experiencing a 4.8 percent decline. By 2021, the rate of growth in online sales is expected to decline from the current level of around 11 percent to 7 percent, according to property consultancy Colliers Market Research.

This year 58 percent of retailers say they plan to focus on online shoppers, while 42 percent will focus more heavily on in-store shoppers.

The giants will do both.

Amazon’s purchase of Whole Foods Market sent tremors through the grocery industry because it signals a new competitive front that favors online giants with hordes of cash. Online retailers including Samsung and Dyson, following Apple Computers’ lead, are either investing in brick-and-mortar to bolster sales or, like Nike, are going all-in and shifting their business online by decreasing its retail partners from 14,000 to 40 “showrooms.”

Walmart is hosting 20,000 holiday parties to promote in-store pricing even lower than online. It will be a lucrative year-end for Amazon and Walmart with a smaller slice for all the rest.

In defense, consolidation in many retail categories will strengthen survivors. New brick-and-mortar experiments are underway. Online retailers are turning to social media with authentic messaging grounded in real people and places. Artisan is in and connecting through digital media has never been easier or as targeted. This is not a message of doom. Food and beverage sales are expected to grow an estimated 3.5% in 2018, according to Customer Growth Partners. Local restaurants with authentic dishes and experiential destinations in off-mall locations saw the biggest sales growth in years.

The end of the holidays marks a time of risk for retailers who spent aggressively on traditional marketing and inventory and miscalculated. This is the time to re-think retail. Convenient locations and big department store selections with deep but uninspiring discount pricing – the mainstays of holiday success for generations no longer generate sufficient cash to pay down debts coming due.

Tea retail is no different. Demand is rising, premiumization of tea is well underway. Those who remain “on trend”  and anticipate—and respond to—changing conditions will thrive.

The New Year is the time for beverage retailers to try something new.

Sources: Beverage Marketing Corporation, IRi, Technomic, Mintel International, Slice Intelligence, Pentallect, Think With Google, Colliers Market Research, MillerPulse