Four Retail Trends for 2021
Delivery is here to stay, and recommendation engines boost revenue.
2020 shook things up.
While it’s easy to focus on the negative, 2020 also brought with it a flood of positive innovations and advancements for the retail industry. As the proverb goes, “Necessity is the mother of invention.” To quote Trendwatching, “Disruption allows new ideas to take hold.” This year, consumers had new needs and it became necessary for brands to consider how to meet those evolving needs in new ways.
In 2020, brands made their experiences more seamless, intuitive, and delightful. They considered how to deliver additional value to customers at every stage of the purchase process. Brands became more purposeful and more practical in ways that customers appreciated and affirmed.
So, as retail executives look towards 2021, what trends will stay and which will go? How should leaders orient their business strategy?
Here are four (tactical) retail trend predictions for 2021:
Delivery is here to stay.
Consumers have latched onto delivery options and aren’t letting go. Since the pandemic began, demand for retail deliveries has more than doubled. Grocery and food delivery companies like UberEats, GrubHub and Instacart have forever changed the way that people shop for necessities. Amazon Prime has redefined customers’ retail expectations — and traditional delivery services like USPS, FedEx, and UPS are straining to meet demand this holiday season. As a result, many retailers are partnering with last-mile delivery services that leverage gig workers to make local deliveries. This is beneficial on multiple fronts. For traditional delivery companies who partner with last-mile delivery services, this presents a highly-scalable opportunity. Anyone with extra room in their trunk or backseat can deliver merchandise. This expands the capacity of delivery companies while providing people with another way to earn income in this season and allowing customers to get their deliveries faster than ever before.
It also allows local stores to compete with eCommerce behemoths like Amazon, as they can offer same-day delivery too. For example, Bed, Bath and Beyond recently announced a partnership with last-mile delivery company Shipt to offer same-day deliveries at a flat rate of $4.99 for orders over $39. Shipt already has similar delivery agreements in place with other retailers, including Costco, CVS, and Target.
Alternative business models offer greater value.
In the traditional sales model, a one-time transaction took place in which customers paid a set price for value (e.g., a product or service). In today’s environment, customers are becoming more comfortable with paying for value over time. A growing number of companies are now making products available — and even automatically refillable — with subscription models. Buy-now-pay-later options are also more popular than ever. Popular pay-over-time company, Affirm is now valued at $2.9B and launched a new app “that enables current and new users to make purchases and pay over time at nearly any online retailer and in-store location where Apple Pay and Google Pay are accepted.”
In addition, retail is seeing the rise of the sell / return / resell model in which returned items can be resold individually to consumers or resold in bulk to other wholesalers. Nordstrom, Macy’s, and Patagonia are already embracing this model. It makes sense for retailers, as nearly 25% of all online purchases are sent back and would just be counted as a loss without the opportunity to resell. Customers appreciate the ability to purchase high-quality, hardly-used (or not-at-all used) items for a lower price.
Brick-and-mortar stores aren’t going away — they’re just evolving.
In-store experiences are being redesigned to capitalize on what consumers appreciate about online shopping. For example, Walmart recently announced that it will start overhauling its stores to offer a more ‘airport-style’ experience with bolder signage, in-store checkout, and app usage for navigation and inspiration. These mirror consumers’ favorite elements of online shopping — the ability to search for inspiration, apply filters and navigate easily (e.g., clear signage), and checkout in a contactless way.
Other brands are pivoting to make their in-store experience more, well, experiential. For example, Canada Goose is building an “Arctic Room” demo environment for consumers to try out their products in-person before perhaps purchasing online.
Companies are also finding ways to leverage their brick-and-mortar stores as additional fulfillment centers. This allows them to leverage space that they are already leasing instead of paying additional costs, and cuts down on delivery times to customers by leveraging local stores for shipments.
Customer service goes digital.
For years, eCommerce stores have been increasingly embracing virtual assistants and chatbots as ways to cut down on service costs while offering customers a more personalized online experience.
With the rise of video conferencing tools like Zoom, retailers are now starting to offer sales consultations and customer service offerings over video. This allows for a personalized, one-on-one experience while allowing customers the flexibility to call in from anywhere. This allows customers to speak with specialists, view virtual demos, and receive individualized specs and pricing.
Ecommerce retailers are employing recommendation engines — or, AI-led tools that offer recommendations to customers based on their data. Data includes available information on customers’ behaviors, experiences, preferences, and interests in addition to the behavior of similar users. Netflix’s recommendation engine is a great example. Instead of requiring customers to search through the thousands of titles available, Netflix distills recommendations into categories like “Suggested for You” that saves viewers time and delivers a better experience.
About What’s Next Labs: What’s Next Labs is a publication of INTO, an agency that empowers businesses to transform their aspirational goals into actual growth. Learn more about INTO at into.agency.
