Retail 2021: What will retail look like after a year like no other?

“Lockdown” was the official word of 2020 according to Collins English Dictionary, but “unprecedented”, “turbulent” and “uncertain” must have all been serious contenders for the title. Oh, to be in “precedented times” again…

Among these now notoriously exhausted tropes, was the notion that retail has “gone through 10 years of change in one short year”. While cliché, its undeniable that when we return to “precented times” sometime next year, retail will look very different than it did in March 2020.

When the dust settles, its not just high streets which will be transformed. Ecommerce, supply chains and even retail work will emerge from the pandemic in a vastly different form from which they went in.

Charged has spoken to leading experts from across the industry to examine exactly what we can expect from retail after a year like no other.

News of the imminent roll out of a vaccine has driven a sense of optimism throughout the UK, allowing us to glimpse the light at the end of the tunnel for the first time.

While this is surely justified, there is a lot of work to be done before customers are once again confident shopping in crowded stores the way they did before the pandemic.

“COVID-19 has created new in-store expectations for consumers in 2021,” Edge by Ascential’s senior retail analyst Florence Wright told Charged.

“They are more concerned over in-store and product safety and technology will have a big role to play in helping to reassure consumers and make them feel safe.

“Digital payments will be the key format in retail transactions next year and we’ll see the introduction of more convenient mobile checkout and ‘scan & go’ options, raising expectations for frictionless in-store experiences.”

READ MORE: The technology keeping retail staff safe during the covid “crime epidemic”

Murray Lambell, Ebay’s UK general manager, said he believes temporary lockdowns will continue into 2021, forcing retailers to turn to other channels in order to deal with surplus stock.

Lambell explained: “As we continue to go in and out of lockdown, open stores and shut them again, we expect the problem of surplus stock to continue into 2021.

“Throughout 2020 more retailers have looked to marketplace technology to keep trading and to help solve the immediate issue of shifting excess old season stock that had built up during lockdown.

“We experienced a big jump in the number of big retail brands joining Ebay to do this, including Dorothy Perkins, Jack Wills, LK Bennett and Wallis and Seasalt. The demand has been so prominent that we’ve recently launched a Brand Outlet on Ebay UK, a dedicated fashion hub, stocked with last-season goods from well-known high street and designer brands.”

2020 has seen the downfall of numerous high street mainstays, including most recently Debenhams and Arcadia group, threatening a combined 25,000 retail jobs.

While the high street will not simply fade into irrelevance, Shopify’s head of EMEA Shimona Mehta believes “that physical retail and the high street as we know it will transform”.

“In order to remain relevant in the rapidly evolving marketplace, retailers need to reassess how they approach their physical presence,” she added.

“When the right approach is deployed, there remain many benefits of physical shops but the days of bricks-and-mortar stores being the primary distribution channel are certainly behind us.”

According to Microsoft’s senior product manager Elizabeth Leigh-Bowler, “organisations must embed unique and engaging experiences instore that excite shoppers. Saying that, they must also align with the online and digital brand and customer experience for a seamless customer journey – utilising technology for a true omni-channel experience is key”.

One way to provide unique in-store experiences, according to Edge by Ascential’s Wright, will be the widespread introduction of 5G throughout next year enabling a greater uptake of digital touchpoints in-store.

Wright explained: “5G will set new standards for immediacy and on-demand efficiency across retail, supporting more digitally-enabled store experiences.

“Digital payments will be the key format in retail transactions next year and we’ll see the introduction of more convenient mobile checkout and ‘scan & go’ options, raising expectations for frictionless in-store experiences.”

One of the most obvious changes brought about by the pandemic has been the significant rise in online shopping, which according to Ebay’s Lembell has shown retailers “just how important digital channels are to deliver sales growth”.

While the prominence of online shopping was nothing new at the start of the year, Microsoft’s Leigh Bower points out that “the pandemic has forced new consumers – including some who potentially weren’t digitally native like Gen X and Millennials” onto online shopping and social media channels for the first time.

According to Shopify’s research, 79 per cent of consumers said that they will shop online regularly in six months’ time, and social media is due to play an increasingly important role.

Shopify’s Mehta explained: “Younger shoppers are increasingly expecting brands to sell through the channels they most like to use. Our Future of Commerce report revealed that 54 per cent of 18 to 34 year olds who purchase from independent retailers now discover brands through social media while 28 per cent of the same demographic purchase through social channels”.

Furthermore, Poplar Studio’s chief executive David Ripert believes “the acceleration of tech solutions in response to the crisis” has opened the door for technologies like augmented reality (AR) to flourish, filling the void left by physical retail.

READ MORE: L’Oréal Paris launches its first virtual makeup – “only wearable online”

“2021 will see the use of augmented reality (AR) and other innovations to boost customer engagement, increase sales and provide a new level of personalisation,” Ripert said.

“I expect to see the bond between social and commerce strengthen even further, with AR forming the bridge.

“Virtual try-ons, product visualisation, digital shop fronts and branded social filters will give brands the opportunity to gain an edge on their competition.”

This dramatic shift online could also prove to be a double-edged sword for retailers next year, opening their customer base up to the entire world, but also directly pitching their business against countless international rivals.

Global-e Europe’s chief executive Neil Kuschel cautioned that retailers must “seriously consider that their online competition has jumped from a few domestic players to dozens of rapidly growing online retailers that are capitalising on the global appetite for cross-border trade”.

Data from Global-e suggests that retailers which “quickly expanded their ecommerce operations to target international consumers” were much better equipped to withstand the negative effects of the pandemic.

Crucially, with a no-deal Brexit becoming an increasingly likely outcome in the new year, Kuschel argues that “maximum flexibility” will be a key requirement for online retail next year.

“Even if a deal is reached, retailers need to fully understand the changes in EU trading and rapidly adopt a new online strategy to overcome some of the challenges and avoid missing out on the considerable opportunities that cross-border trading in Europe still presents,” he said.

A knock-on effect of both the high-street’s struggles and the rapid shift online, has been the rise in direct-to-consumer sales, which grew to be worth £96 billion this year.

According to new research from Barclays Corporate Banking, 57 per cent of consumers are now choosing to buy directly from manufacturers, enabling them to bypass traditional supply chains and retailers.

While Barclays’ research suggests the percentage of items bought directly from manufacturers will grown nine per cent to 29 per cent by 2023, Microsoft’s retail industry director Ali Rezvan explains this shift was born throughout 2020.

“The high street will repurpose, transform and grow following a change in consumer shopping habits and operations,” Rezvan said.

READ MORE: Direct-to-consumer sales worth £96bn this year as over half of shoppers cut out retail middleman

“The shift has already started and will take a few years to grow in momentum, but we will see a rise of the COVID Entrepreneur in retail – an army of small businesses have already been born – from mask making to social and digital D2C brands that will move back into the high street reshaping the UK economy.”

Shopify’s data also suggests that the pandemic has encouraged customers to shop with independent businesses, with 65 per cent of consumers stating they “want to support small businesses”.

However, as Mehta points out, their intentions are not yet fully reflected in their purchasing habits with only 29 per cent having shopped with independently owned businesses since the start of the pandemic.

“Those independent brands that invest in discoverability and making the customer journey seamless will benefit long term as shoppers look to balance their support with convenience,” she added.

An estimated 150,000 retail jobs are thought to have been lost in the UK alone throughout 2020.

While a portion of these may be reinstated as shops are able to open without fear of long lockdown-closures throughout 2021, the roles of those continuing to work in the sector will change significantly.

Retail Insight’s chief executive Paul Boyle believes the “days where store associates will rely solely on old wisdom and experience” are “long gone”.

“We’ll start to see them increasingly become digitally connected, with action-focused insight at their fingertips,” he predicted.

“This will help them better inform consumers as well as handle competing priorities, all the while making the shopping experience as hassle-free and streamlined as possible for the customer.”

Technology is set to change the role of the store associate in further ways, as retailers’ need to “adapt their supply chains and operating models at scale and at breakneck speed” has ushered in a new age of automation.

According to Edge by Ascential’s Wright, the increasing demand for online orders set to extend throughout 2021 will put retailer “under pressure to fulfil orders at rapid speed”.

“We see automation increasingly becoming adopted across the supply chain for retailers, from automated warehouses, to shop floor robots and automated vehicle delivery,” she added.

“This will not only expand ecommerce capacities but drive more efficiencies on the last mile.”

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