Since online shopping became a reality, retail has become increasingly digital and internet-driven. Bricks and mortar stores have adopted elements of the online experience to encourage us to continue visiting them, and also played to the strengths that in-person experiences can offer, such as more personal levels of service.
But the coronavirus pandemic has affected the way every trend will play out in 2021, and offline retail has been hit particularly hard. This has led to widespread job losses and famous names disappearing from shopping centers around the world. At the same time, online retail has boomed more quickly than ever before as consumers choose to remain safely indoors, and home delivery infrastructure becomes increasingly sophisticated.
And in these unpredictable times, digital technology is advancing at a furious rate while a global pandemic continues to change the way consumers live, communicate, work and shop. Hardly a day goes by without a new wrinkle, complication or obstacle for retailers, challenging their ability to adapt to an ever-changing “new normal” swiftly.
Yet, where there’s disruption, there’s opportunity. Adobe Analytics predicts that 2020 will be a banner year for ecommerce, with $189 billion being spent online during the holiday shopping season (up 33% year over year). And 2021 also promises to be a profitable year for digitally native merchants. Several key business and technology trends are emerging or have already taken shape and it’s wise to consider them as 2020 ends. Here are top retailing predictions for the coming year and why you should keep an eye on them.
1. Omnichannel - Offline is online, online is offline
Despite a massive shift to ecommerce, physical stores aren’t going away anytime soon. They’re just going through a corresponding transformation. Several prominent retailers focus on blending online and in-store shopping, emphasizing creating a more engaging and socially distanced shopping experience. For instance, Walmart recently grabbed headlines when it announced that it would overhaul 200 of its supercenters into airport-inspired stores, complete with more prominent signage, contactless checkout and other innovations.
Brands are pivoting away from the traditional concept of aisles and fully stocked shelves. The physical store should no longer be considered the final destination in the purchase journey. Combining the strengths of both online and physical stores makes it possible to introduce a more compelling hybrid model that transforms a retail space into an experience center.
This might mean offering sales appointments so customers can experience and try products and then order online (thus eliminating high-pressure in-store sales). Retailers also could build demo environments such as Canada Goose’s arctic room that goes to -20 F and allows prospective customers to test the jacket’s credentials in real-world arctic conditions. Augmented reality and virtual reality are also making their mark.
VR environments will increasingly be used by online retailers to provide immersive, feature-rich shopping experiences. At the same time, AR will be deployed by offline retailers to allow customers to access information about products they find on the shelves. While this pandemic continues, retailers are using tech-driven solutions to allow customers to virtually try out clothing and makeup, reducing contact between shoppers and in-store items.
This convergence means offline and online retail both benefit from advances in technology and changing patterns of behavior.
2. AI increasingly customer-facing across the retail industry
AI-driven big data retailing has been maturing for some years now, with major retailers relying on advanced analytics to understand what should be stocked in their stores and drive efficiencies in logistics. Newer developments have seen this technology moving from back-of-house to front-of-house, with customer-facing initiatives such as chatbots and virtual assistants. Likewise, while robots have been hanging out in warehouses and stock rooms for a while, assisting with inventory management, in 2021, we can expect to see them taking to the shop floor too.
With so many of us stuck at home and retailers unable to find new customers by enticing us to walk into their stores, more resources will be focused on growing customer numbers with AI marketing outreach. This is used to work out whether their best customers are likely to be spending their time on Facebook, Netflix, or taking part in Zoom calls, and assigning advertising budgets accordingly.
AI-powered voice recognition technology has improved to the point where it can truly be used to add value both in-store and via e-commerce apps. Just as it is becoming increasingly common to use our voices to control our devices or search the internet, we will increasingly use them to get information and make purchases, and retailers will adapt their infrastructure to fit these changing habits.
3. Delivery becomes the new normal
This one's been on the horizon for a while, but with the pandemic-driven changes we're making to our behavior this year, we're likely to see ideas such as self-driving delivery vehicles and drone delivery really coming to life. Though switching to online ordering and deliveries reduces the likelihood of coming into contact with people carrying viruses, there's still a fear of contamination caused by poor hygiene at order fulfillment centers or delivery networks. Autonomous fulfillment and delivery reduce risks around this, which is a factor likely to lead to accelerated acceptance and adoption of these new technologies.
Over the next year, autonomous delivery initiatives are likely to remain focused on “last mile" solutions, employing self-driving vehicles and airborne drones for trips between fulfillment centers and consumers’ homes.
Again, several trends will be involved here, including AI, to manage logistics and routing. Others will also most likely include blockchain, to ensure security and transparency along supply chains, and digital twinning, allowing sophisticated models of logistics and fulfillment operations to be built, driving efficiency.
And of course we couldn't talk about shipping without talking about the shipping time. It seems like customer expectations for shipping times are only getting faster. First came 2-day via the rise of Amazon Prime, then next-day, then same-day. And big-box stores are following in Amazon’s footsteps, with Target growing their Shipt service and Walmart expanding their two-hour express delivery options.
In the age of instant gratification, shoppers want their orders ASAP. And same-day, store-fulfilled orders are seeing more traction from customers and brands alike. PwC reports that 88% of consumers are willing to pay for same-day or faster delivery. From Amazon’s Prime Air — which uses drone technology to deliver shopper’s orders in 30 minutes or less — to the rise of delivery robot startups, delivery is only getting faster.
While same-day shipping is far from a new concept — in 2018, 51% of ecommerce retailers already offered same-day delivery — we’re likely to see it become the norm and beyond as order fulfillment technology and standards evolve in 2021.
4. See it, like it, buy it!
Forget shop both online and offline – purchases directly from manufacturers through influencers, advertising and even TV shows is likely to become an increasingly prominent part of the retail landscape throughout 2021.
Retailers have long encouraged bloggers and influencers to earn money by sharing affiliate links, and advertise via product placement. Increasingly, brands are able to cut out the middle man and sell directly to the consumers who follow and engage with these online taste-makers. The trend started with megastars like Kim Kardashian but has increasingly trickled down into niche markets served by micro-influencers. This has largely been enabled by tech-driven supply chain innovation, making "drop-shipping" possible– direct delivery from manufacturers to customers via a sales agent, such an influencer or popular website, that can run a retail business without the hassle of buying stock or fulfilling orders. Brands, including Body Shop, have successfully co-opted the direct sales model pioneered by the likes of Avon, creating networks of micro-influencers often selling to friends and family.
Another exercise in cutting out the middle man of the traditional retailer is seen in experiments with shoppable TV. NBC rolled out technology that allows app users to be notified when products they see on screen are available for direct purchase. This actionable product placement means customers can interact and make purchases directly from TV advertising, but we can also expect to see it rolled out through sports coverage and entertainment TV, as brands look for new ways to engage with their digital audience.
5. Personal shopping at scale
Well-heeled shoppers are used to receiving personal attention when shopping at high-end stores, and personalising their high-value purchases such as cars, bespoke clothing, and jewelry. However, technology is now ushering in a new age of mass-personalisation, allowing this to be carried out at scale across a growing range of goods and services.
Recommendation engines are used in e-commerce to point us towards products we’re most likely to want or need. The same technology is now being rolled out in retail outlets, arming shop assistants (or possibly robotic ones, see above) with information on who we are, and our past purchases. Beauty product retailer Sephora collects information on customer preferences via an app as they explore and rate products online, and makes them available to sales staff when they visit a store in person. According to analysts at McKinsey, initiatives like this typically reduce marketing costs by around 20%.
Retailers are also beginning to recognise the value of video chat as a consultation and sales tool. Whether a consumer is buying a car, furniture or upscale clothing, why not offer an option of connecting to a sales associate or product expert whenever it’s convenient? This can be after work, on the weekend, even late at night.
Besides the convenience factor, online consultations make it possible to share product videos, review technical specs, walk consumers through features and functions in a demo, and boost trust via face-to-face interaction. Today, most car buyers already know what they want when they arrive at a dealership because rich online tools have removed the need to kick tires. Retailers are beginning to realise that this same sales model can work wonders for many other products and services.
6. Alternative business models ring up gains
Once upon a time, retailers sold products to customers. But digital technology is driving fundamental changes to the old-fashioned transactional model and making consumers more comfortable with paying for value over time. A growing array of brands are making products available on a subscription basis. Some retailers are exploring ways to use things like smart speakers and IoT to replenish items automatically.
Also, many companies are blurring the line between rentals, sales and subscriptions. Consider the way Apple sells its gear. It allows consumers to break up purchases into monthly allotments, which makes large sales more palatable. But it doesn’t stop there. It also makes trade-ins drop-dead simple.
Retailers such as Nordstrom, Macy’s, Eileen Fisher, Walmart, and Patagonia are now adopting these same methods for clothing, tools and more. A rent-buy model—and even selling used and refurbished goods—is particularly attractive to consumers on the fence about a purchase, only need an item for a single use or lack funds. This also builds brand stickiness because customers transact with the company throughout a product lifecycle.
7. Social Commerce
This year’s surge in online shopping is here to stay, especially given the hurdles presented by the COVID-19 pandemic and the closure of brick-and-mortar stores. According to a recent study, in 2020, nearly 41% of customers said they were currently shopping online for things they would normally buy in-store.
Social commerce — native shopping experiences on a social media platform — offers shoppers an even more seamless way to shop online. Instead of clicking through to a third-party website, users can make purchases right from the social media app or site.
And social commerce is on the rise. In 2020 alone, we saw a partnership between TikTok and Shopify, an expansion of Snapchat’s Native Stores for brands, and the introduction of Facebook Shops.
Shops are custom storefronts for businesses on Instagram and Facebook. Sellers can create collections of featured products, as well as modify the look of their Shop with banners, images, colors, and buttons. The same Shop can be accessed from both Facebook and Instagram, so once it’s set up, sellers have the potential to reach a wide global audience on two platforms.
With Shops, Facebook is catering more directly to brands than they have in the past. This is part of Facebook’s effort to create a personalized shopping experience for users in the “Shop” destination of the app, which we expect to become more prominent to users in the near future.
“The idea here is that a user will eventually be able to do all their shopping within Facebook or Instagram, limiting any requirements for direct site traffic. In a way, it’ll be similar to brands trying to sell their products on Amazon by reaching a huge user base and making it easier for them to follow through on a purchase.” — Avi Ben-Zvi, Group Director of Paid Social at Tinuiti
In 2021, we can expect to see social commerce become an even more integral part of the ecommerce experience for brands and shoppers alike.
8. A New Approach to Influencer Marketing
Influencer marketing used to be all about selfies, carefully-constructed captions, and heavily-edited product shots. But in 2020, we’ve seen a major shift in the way brands and influencers work together. Influencer content has slowly transitioned to a raw, real aesthetic, and this change will continue into 2021.
Audiences put trust in brands that showcase authentic voices, and today’s savvy users can spot an overly-produced ad from a mile away. Brands that don’t prioritize authenticity in their influencer partnerships can wave goodbye to high engagement and ROI next year. It’s time to focus on unique influencer content that prioritizes education, entertainment, and the viewer experience.
From a media mix perspective, video will be 2021’s most important medium for influencer partnerships. With many brick-and-mortar stores closed, shoppers can’t try on apparel or test out gadgets in-store — and a video is the next best thing.
In fact, brands have already started partnering with influencers to create and share content on IGTV, Instagram Live, TikTok, and Instagram Reels to build and foster digital communities. Take fitness authority Bandier, for example. Bandier partners with industry leaders to run workouts on IG Live, then publishes the videos to IGTV for those who miss the livestream. It’s a way to bring the brand’s community together through a shared interest while also demonstrating its gear’s durability.
Overall, brands will need authentic video content to keep their influencer campaigns engaging in 2021.
9. Ethical and Values-Based Brands on the Rise
Transparency, values, and ethics have never been more important to shoppers — which means brands need to prioritise them ASAP.
71% of consumers prefer buying from brands that align with their values. And according to Forrester, shoppers are increasingly evaluating products and brands based on a company’s ethics and values, with 41% of US consumers actively seeking to buy from a company associated with social, environmental, and political ideals.
“This isn’t some nice ‘corporate social responsibility’ activity that looks good on the glossy pages of an annual report. Companies that put their values into action grow faster than other companies . . . Embedding your values into your business operations is hard but necessary to convince jaded consumers that you are truly committed.” — Jim Nail, Principal Analyst at Forrester
For brands, this shift to values-based consumers means that brands who are traditionally less forthcoming will no longer be able to get away with hiding any sketchy business practices or environmentally-unfriendly operations.
Offering genuine transparency and taking a stance on ethical issues can be risky for brands, but when done right, it can build lasting customer loyalty and trust.