The future of retail and the trends therein have never been more difficult to predict; whether it was the impact of a global pandemic or the souring of relations between the US & China, the start of the new decade saw sweeping bankruptcy & mass layoffs and furloughs become a depressing reality in the ‘New Normal’ across the retail landscape
2020 was a trying year for retail in every sense; whether it was the impact of a global pandemic or the souring of relations between the US & China, the beginning of the 20’s saw sweeping bankruptcy & mass layoffs, whilst furloughs become a depressing reality of the ‘New Normal’ across the retail landscape.
CoStar Advisory Services: ‘A Record Number of Stores Announced for Closure in 2020’
2021 is stacking up to be just as difficult for many brands. As we saw at the beginning of February, the Arcadia group were bought out by ASOS seeing the e-commerce titan inherit Topshop, Topman, Miss Selfridge and HIIT brands but not the physical retail stores, representing a substantial casualty for retail on the high street.
Arcadia is by no means the exception to the rule and we can expect trying months ahead of the retail sector according to The Centre for Retail Research, who anticipate that by the end of 2021, retail sales will still be lower than they were during 2019.
Whilst we do expect trade to bounce back during 2022, there are salient issues to address before we can realize the future of retail:
- How long do limits last? What’s the path from beating Covid to restoring shoppers’ freedoms?
- As we reduce Covid restrictions, will there be a surge in consumer demand? Will it last?
- How well will the economy perform over the next two years? Can it bounce back?
- How will governments reverse the rise in national debt? How soon will taxes be raised?
- How will we respond if Covid-19 mutates? How would we respond if another virus appears?
Answers to these questions and concerns will reveal themselves as the year progresses but there are actions that executives can and must take now to ensure that when retail does return, it doesn’t just survive, but thrives. To do so, they must be aware of how the retail market is expected to change in 2021.
What predictions can we make about the future of retail?
Here are 9 predictions we can make about the future of retail:
- More Bankruptcies
- Increasing Mergers & Acquisitions
- The Rise of the Startup
- A Push for Experiential Retail
- Gamification of Retail
- Doing the Right Thing
- A Change in Message & Tone
- Ramping up Safety
- Fostering Convenience
More Bankruptcies: If, as we’ve suggested, that business bankruptcy is synonymous with the new normal then we should expect business insolvency to become one of the key retail trends before the year is out. There’s the aforementioned case of Arcadia, but already in 2021 Christopher & Banks have filed for Chapter 11 with plans to close most of its 449 stores, whilst Godiva Chocolatier announced it will close all US stores, moving to e-commerce. It’s foreseeable that the retail landscape we return to could be far sparser than things were pre-pandemic, and out of this continued pressure we can also expect to see more M&A’s in 2021.
Increasing Mergers & Acquisitions: As we saw with Arcadia, e-commerce powerhouses and larger conglomerates will continue to consume ailing retailers on the cheap. We saw it last year when private equity firm Sycamore Partners’ purchased Ann Taylor and other Ascena Brands and when Simon Property Group bought out JCPenney. The total value of U.S. retail deals transacted in 2020 was about $36 billion, nearly triple the $13.9 billion tallied in 2019, it’s a retail trend likely to continue.
Statista: ‘Covid Accelerates Declining Retail Industry’
The Rise of the Startup: From the ashes of bankrupt retailers, startups will rise to meet the gaps in demand. During 2021, Global investors pumped a total of $3.3 billion into 301 deals for e-commerce startups according to Crunchbase and this will accelerate in 2021. Increasingly, larger retailers are being encouraged to think and operate like startups as versatility becomes an essential business driver. Already, in 2021 startups like Imperfect Foods, Vuori & Italic have started to capture consumer interest.
A Push for Experiential Retail: Brick-and-mortar retail stores will never be able to compete with the convenience of e-commerce providers or the versatility of the startup, but they do have an advantage where CX is concerned. Based on research from RetailEXPO, 73% of customers will spend more money and time in stores that provide better experiences and we can expect several retailers to focus on providing experiential events and tech to drive footfall. As part of this retail prediction, we can also expect to see greater…
Gamification of Retail: Where the experiential retail model looks to provide a deeper experience for the consumer, gamification looks to engage them. Gallup recently reported that a fully engaged customer represents a 23% share of profitability, revenue and relationship growth compared to the average customer. This represents a substantial opportunity and if you can remove the chore from brick-and-mortar retail stores and instead provide positive distractions which help you generate data and customer satisfaction, you’ll more likely engage them both now and in the future.
Doing the Right Thing: With the future of retail and in regard to engagement, consumer trust is a vital metric to deliver upon, not just in terms of the product you sell but increasingly, ethically speaking. During 2019, Edelman reported that 81% of consumers needed to be able to trust a brand in order to buy from them & concurrently, throughout 2020, we saw numerous brands enter the arena to voice their support for social justice movements like BLM, workplace initiatives targeting mental health and even engaging with politics. It is not enough to be silent, and organizations owe it to their customers and themselves, not to be.
Nike: ‘Believe in something’ Campaign
A Change in Message & Tone: In line with this, brands will reappraise their message and tone to ensure that it fits with the time. Much has changed in a year and though you may have had a peerless strategy surrounding your brand prior to the pandemic, there is always room to optimize. People have struggled and continue to struggle, and they need to know that their favorite brands understand that, that they’re not just a means of improving profit margin, but part of a community.
Ramping up Safety: Safety concerns are no doubt difficult, but they do represent an opportunity to support the community that you’ve begun to cultivate in your newly optimized branding. As we return to physical in-store interactions, retailers will ensure that they provide peerless CX yes, but also that their shopping experiences are safe and seamless. Coresight Research showed that two-thirds of consumers plan to continue avoiding public places after restrictions end and shopping centers sat at the top of the list; retailers must work on their safety policies to entice them back in 2021.
Fostering Convenience: There will of course be customers who want to take advantage of any and every experience in-store, but equally there are those who want to move through to purchase at pace. We spoke before of the speed and ease of the e-commerce experience and retailers must look to replicate this in 2021. We’ve laid the groundwork for convenience in brick-and-mortar stores with click-and-collect and self-order kiosks but there is still work to be done to streamline physical retail.
The future of retail may seem uncertain but by harnessing these new retail trends, any organization can drive results and guarantee success once lockdowns are lifted. At GDS we provide you with the opportunity to meet with your peer group to understand the threats affecting your industry and how you can align to and ultimately surpass them. At the NG Retail Virtual Summit, in September, we will look into this and other retail predictions to look at how you can bolster your business, click here to find out more.
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