Trends & ForecastsDecember 30, 2020

3 Predictions for 2021 Brick-and-Mortar Retail

The Drivers of Physical Retail Trends? Convenience and Safety

By Julia Raymond | Editor-in-Chief

“Is anyone else annoyed that 2021 sounds like ‘2020 won’?” That was a viral Tweet I came across recently. Days later the question still echoed in the back of my noisy mind. Perhaps it’s because I’m a sucker for a clever play on words or my affinity for a good ‘ol fashioned debate.

 

In fact, I’d argue that 2020 did not “win” anything, especially in the context of retail. The overarching industry sentiment is that the global pandemic served only as a “great acceleration” (credit to retail thought leader Carl Boutet for coining that phrase), of what was to come regardless — such as bankruptcies, traditional mall closings, greater shifts to ecommerce and fuller pockets for the (cough cough) monopolies.

 

Yes, I think we can all agree that 2020 was one the most intense, distinct and downright bizarre years of our lives. But with all the loss, it’s also been a changemaker. It lit the fuse on groundbreaking transformation efforts spanning industries.

 

As we all do an internal reset and hit the ground running, I feel so much gratitude. Though staying home hasn’t been easy, there’s no denying that the retail industry has made purchasing goods, gifts, and groceries from our couches easier and more efficient than ever. In many ways, life has never been more convenient.

 

And I know the elephant in the room is ecommerce. Retail ecommerce jumped to record highs of reportedly 36% globally during the height of the pandemic.

 

With that in mind, I’d like to recap a few figures around ecommerce:

 

  • 2019: Globally online shopping represented 14.1% of retail sales. Notably, China skewed higher with 20.7% of total retail sales made online.

 

  • 2020: Retail ecommerce jumped to $3.9 trillion, or 17% of global retail sales, excluding food and delivery services.

 

  • 2024: It’s predicted up to 25% of retail sales will be made online.

 

 

In other words, in a few years it’s possible that on average 1 in 4 global retail sales will take place online — a significant jump.

 

Still, we’re left with physical stores accounting for the majority of sales. With that said, I have three predictions for brick-and-mortar trends in 2021. These trends are based on two overarching drivers: convenience and safety.

 

The demand for convenience has been steadily increasing in parallel with all things digital since the birth of online shopping. When the pandemic hit, everyone was blindsided and suddenly, the desire for convenience reached all time highs. Why? Because convenience was, and will continue to be, tied to the other driver: safety.

 

A heightened focus on safety has reflected in consumer behavior as our shopping activities shifted away from discovery and almost fully towards intent-based purchasing. For retailers, BOPIS, curbside pickup and “ship from store” options went from a nice to have to a service critical for survival. Amazingly, many retailers rolled out these solutions at a mind-blowing pace last year.

 

With convenience and safety in mind, the top three trends that I predict will shape brick-and-mortar in 2021 include:

 

1. Dedicated shared spaces (not pop ups): When I was predicting 2020 retail trends, “unexpected partnerships” was at the top of my list. And it’s come true with too many examples to name, many out of necessity. Most recently, I think of Sephora’s partnership with Instacart and then with Kohl’s — which followed Target’s partnership announcement with ULTA beauty. These partnerships signal a move away from the “pop up” trend and towards dedicated shared spaces that create synergies among the retailers and convenience for consumers.

 

Image courtesy of Target: “An early concept rendering of the distinctive Ulta Beauty at Target experience that’s currently being designed to appear in select Target locations starting in 2021. Not reflective of the final design.”

 

 

2. Contactless connected stores: I immediately think of a sentiment shared by Shannon Ryan, the EVP North America for Valtech, in our RETHINK Luxury: Connected Experiences episode:

 

Historically it used to always be about how you could interact with the store, and now we’ve sort of turned that around a little bit and the store interacts with you. – Shannon Ryan, Executive Vice President at Valtech

 

People will increasingly want to use their phone as the controller across touchpoints such as interactive displays, curbside or in-store pickup or checkout, etc. One best-in-class example of this technology in action is the MAC Cosmetics concept store, developed in collaboration with Valtech, in NYC. In the first month, store engagement increased 200%. RETHINK Retail reported on the full story here.

 

The MAC Innovation Lab in Queens Center, New York. Opened October 2020. Features contactless technology.

 

Contactless and touchless capabilities provide safer experiences that people can feel good about when shopping in our new normal.

 

As Dan Goldman told to RETHINK Retail:

 

Once the pandemic is hopefully behind us, I believe winning retailers will find ways to bring their physical store and brand experiences to life in ways that are super engaging and reinvigorate consumer interest in shopping in person. –Dan Goldman, Vice President of Strategy & Business Development at GAP Inc.

 

3. Health and wellness retail: Retail operators will have the opportunity for redevelopment, especially as big department stores continue facing challenges and bankruptcies and, in turn, lose some of their historical influence over operations. This redevelopment will be driven by the rise of consumer demand for health and wellness products and services, including cannabis retail.

 

Hear from Curaleaf’s SVP of Retail Chris Melillo on how the biggest cannabis company in the world by sales approaches the in-person cannabis retail experience.

 

If anything positive came of the year 2020, it was the reminder to appreciate and care for our health, well-being and overall safety. As Alexander Genov told RETHINK Retail:

 

Brick-and-mortar retailers will continue to develop online capabilities, although a true customer-centric omni-channel mindset is hard to achieve and takes time; ‘online’ cannot be just a technology tack-on. Online-only retailers will venture into opening brick-and-mortar stores, hopefully the smart way: smaller spaces that focus on the health and well-being of both employees and customers. Alexander Genov, Head of Customer Research at the Zappos Family of Companies

 

Genov reminds us that “retail as hospitality,” as borrowed from Author Danny Meyer’s concept, is a potential path forward for retail as the focus is on experience versus just selling. Without as much travel due to ongoing concerns, open-air markets will need to cater to locals and nearby visitors looking for a bit of entertainment. We’ll again see the importance of great food and immersive environments that offer a sense of discovery through unique retail concepts.

 


 

That’s all for now, folks.

 

What do you think of my predictions? Let me know your thoughts. Find me here on LinkedIn or Twitter.

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