The Four Key Trends That Will Define Retail In 2021
It can take anywhere between 18 to 254 days to form a new habit and an average of 66 days for a new behavior to become second nature. The onset of the pandemic, however, has significantly accelerated the time it takes for consumers to form new habits, especially when it comes to how they shop and pay.
Retailers, in response, have made strong efforts to boost their omnichannel capabilities. Those who have successfully executed a seamless omnichannel shopping experience are today well-positioned to excel well after the pandemic.
But there’s more to retail survival than providing additional ways to shop. Consumers (more specifically Gen Z) are gravitating toward brands and retailers who are taking more sustainable approaches, provide fair treatment in the workplace and provide an overall more meaningful mission and relationship to the consumer.
Data from GlobalWebIndex suggests that now is the time for brands to display and really tune into their company values as Gen Z is in no rush to make purchases. So instead of solely focussing on sales, brands must also demonstrate community support and focus on values that consumers can relate to. Findings from a mid-March DoSomething survey reveal that 75 percent of Gen Z consumers want brands to ensure employee and consumer safety, with 73 percent wanting businesses to ensure their employees’ financial well-being.
“Young people are attuned right now to how employees are being treated by brands and organizations in particular. That’s where their loyalty lies.” – Meredith Ferguson, managing director at DoSomething Strategic
But while keeping a focus on these issues has become critical to survival, expanding on digital footprint has become increasingly critical to remaining competitive.
McKinsey & Company reports that in the United States alone, roughly 20,000 to 25,000 stores were expected to close in 2020, which is more than double when compared to 2019.
As the world continues to struggle with the effects of the COVID-19 pandemic, it is important to assess how retailers can best navigate through the continued uncertainty. What will be the defining themes for the retail industry?
Digital First Is Now
Nike led the way toward digital expansion and announced refocusing efforts with investments in its highest potential areas, ultimately leading to job cuts. In August, the athletic brand announced 500 corporate layoffs as part of its next phase in its direct consumer acceleration strategy.
“We are announcing changes today to transform NIKE faster, accelerate against our biggest growth opportunities and extend our leadership position,” said John Donahoe, President & CEO, Nike.
“Now is the right time to build on NIKE’s strengths and elevate a group of experienced, talented leaders who can help drive the next phase of our growth.”
Nike then followed up with plans to close nine of its wholesale accounts: Boscov’s, Belk, City Blue, VIM, EbLens, Dillard’s, Fred Meyer, Bob’s Stores and Zappos.
“As part of our recently announced Consumer Direct Acceleration strategy, we are doubling down on our approach with Nike Digital and our owned stores, as well as a smaller number of strategic partners who share our vision to create a consistent, connected and modern shopping experience,” said a Nike spokesperson.
Soon after, Nike saw its digital sales surge by 84 percent with triple-digit growth in North America and double-digit increases in the EMEA, Greater China and APLA region, the company revealed in its Q2 fiscal 2021 financial results.
Zara and David’s Bridal are some of the other major brands that pivoted their operations and benefitted from refocussing on their digital offerings. Zara cut 1,200 roles and put €2.7 billion in digitizing and assimilating its online and in-store experience. Meanwhile, David’s Bridal launched a sleuth of digital-first services to serve the evolving needs of its customers.
Rethinking The Traditional Store Experience
During this time, retailers have also looked to reimagine their in-store experience.
Nike, for one, announced plans to open nearly 150 to 200 smaller format stores in the next couple of years, which will draw inspiration from its Nike Live stores that are focussed on delivering personalized, omnichannel experiences.
“The global pandemic has made it clear that consumer behavior is changing rapidly, providing the opportunity for us to accelerate the pace of our transformation,” said CEO John Donahoe said on an earnings call. “Over the past few years, we have shifted from a legacy, wholesale distribution model to investment in a model that gives our consumers a more premium shopping experience.”
Lululemon also looked to improve access to its physical locations during the holiday season. The retailer increased the number of pop-up locations from 50 to 70. The effort looked to ease pandemic-related pressures during the holiday season.
Contactless Experiences Is Of The Essence
Consumers have been increasingly gravitating toward options such as curbside pickup, buy online, pickup in-store (BOPIS), contactless delivery, and contactless mobile experiences such as mobile wallet coupons, gift cards, and loyalty cards.
Players such as those in the consumer-packed goods (CPG) industry are making efforts to boost their contactless experiences which can ultimately help retailers with in-store traffic during the time. For example, Snickers put a spin on the traditional gift card through a partnership with Popwallet to reward front-line and essential workers at the height of the pandemic with a free Snickers bar. To redeem the free Snickers, recipients had to present their mobile wallet gift card at checkout at their local Walmart.
Source: Popwallet
Personalization Means The Most
No matter the approach, offering a personalized experience is indispensable. This can mean offering a curation of products based on previous purchases, extending experiences such as virtual or in-store appointments. Adding a personalized touch can go a long way in staying relevant and on top of consumers’ minds.
Luxury lingerie and loungewear brand Journelle, for one, took the pandemic as an opportunity to get more intimate while still allowing customers to feel safe with social distancing protocols while in-store and online through its recently launched mobile application.
The company has looked to extend its services that are often limited to the in-store shopping experience through its mobile app. The app’s “Style from Home” feature allows shoppers to seek stylists’ recommendations. In contrast, the virtual fitting feature enables customers to try on different pieces in the comfort of their own space.
Key takeaway
Personalization, convenience, safety and reinventing the old are all retail themes that will continue to dictate how retailers can win customers in 2021. Reimagining the in-store and online shopping experience that is aligned with these key trends will be vital to remaining relevant in 2021 and beyond.
