Our Retail Outlook 2020 report is here.
We’ve skimmed through tons of data and reports, and used our inhouse magic crystal ball, to tell you what exactly you should expect from retail in the year 2020.
Let’s be honest- we live in times when we could all use a magic crystal ball, particularly when it comes to predicting how people will buy. This report comes very, very close.
But before that, how did 2019 do? What worked and what went awry? Let’s take a look.
The 2019 Bestsellers
Here’s what we said would happen with retail in 2019. Here’s what actually happened. (Hint: It’s pretty close.)
- Omnichannel retail did, indeed, become the norm all through 2019. We say it with several small retailers choosing to experiment with channels with more confidence. According to some reports, about 35% of online retailers started offering click-and-collect facilities.
- Experiential retail gained massive new ground. If you follow any of the bigger retail reporters in the United States, you couldn’t possibly have missed the Macy’s Story. Physical stores, as we predicted, didn’t die. They transformed into experience centers.
- Social shopping took off, and how! Instagram launched its shopping cart feature, thus leveling the playing field for retailers big and small. Today, people can discover products in the Shop based solely on their interests.
- Consumer insights went 360-degree. And it wasn’t Salesforce alone leading the charge. Many businesses began to understand that people aren’t the demographics they represent alone and began listening more keenly to customers.
- Circular markets became a huge deal, particularly in fashion retail. We consume way more than we should, and brands have decided that they need to do something about that. From H&M to Stella McCartney and Nordstrom, several retailers have offered incentives to bring back old clothes and put them to use.
- Everyone wants a faster checkout. From splitting up queues to self-checkout, the years past have seen quite a few new innovations.
The 2019 Dead Stock
- Voice-based shopping still has a long way to go. People are still getting used to the idea of scanning a product and being able to buy it instantly.
- It has made considerable waves in healthcare and insurance, but AI in retail is not yet the norm. Considering what it is capable of, it is safe to say that retailers are not using AI to its fullest potential yet. A hopeful 2019 headline said, “AI can save retail businesses”, but we still have some time before that happens.
Now that we’ve seen what transpired, let’s look into the future. Here’s our retail outlook 2020 segment.
In-store Retail Trends For 2020
There is no retail apocalypse:
So much for the retail apocalypse, eh? On Quora, one of the most common questions we get asked is this one- will eCommerce completely replace offline selling?
Our answer is always the same- no. Going into 2020, we expect to see even more creative uses of physical retail space. LEGO and Snapchat already set the precedent by opening a clothing store with no clothes. As gimmicky as that sounds, ideas like these give retailers a chance to produce only when they see demand, leading to lesser wastage and more accurate forecasting.
Physical retail is going to go in some very interesting directions in 2020, and the most innovative retailers are sure to grab headlines this way.
New avatars of self-checkout:
Not every retailer may have the data and the muscle to introduce stores without a checkout process like Amazon. But what is possible today is being able to check out from anywhere in a store using mobile POS devices. In 2020, we’re getting ready to say goodbye to traditional POS systems at the end of a long line.
Instead, systems like Primaseller’s iPad POS will allow you to assist customers in a more personal manner. Store employees can show off the entire catalog digitally, and help them place orders from anywhere in the store (including the trial room where the barrier to buying is at its lowest).
The tech that powers human interactions:
One of the greatest fears of the digital age is losing jobs. As a collective, we always assume that systems will replace human workers overnight. What’s happening instead is that humans and tech are working together to make the buying experience utterly delightful.
Tech allows store reps to see inventory levels for a particular product and place an order with the fastest chance of delivery. Put together a knowledgeable store employee and a robust inventory management system. What you have is the ability to place orders across channels, offer personalized recommendations on the fly, accept returns without the hassle and much, much more.
The end result is a very happy customer who would love to come back for the experience. In a world of too many brands, the way to stand out is with good experience and technology can enable humans to deliver just that.
Brick-and-Mortar Stores Become Hubs For Experiential Shopping
Brick-and-mortar stores will look to boosting their advantage over online stores by taking the touch-feel-smell-try experience to a new level. Through a combination of technology, product, and people expertise, this new crop of “experiential retailers” will seek to provide a comprehensive, lasting and memorable experience to the customer.
For instance, Canada Goose recently launched a new store that sent customers into a freezing Arctic chamber. More reasons, if ever, to invest in that heavy down jacket.
Nordstrom’s Nordstrom Local concept made a New York debut this year. Store managers report that over 30% of Nordstrom’s online orders are picked up in-store where they can also be tried for size. Styling consults, accessory repairs and a gift wrapping station bring people to the store even when they have placed an order online.
In 2020, we expect that customer experience at such stores will become a thing to quantify and measure success by. No longer will retailers use gross revenue from a store as a benchmark. Instead, it will all be about the number of people who tried a new experience, those who ordered a product from inside a store, and so on.
eCommerce Trends For 2020
Shopify Fulfillment will take off:
In direct competition with Amazon, Shopify has launched a fulfillment service for businesses that ship 10-10,000 orders in a day. Early access applications are now open.
What’s interesting is that while Amazon is a marketplace, Shopify allows brands to build their own eCommerce and sell through them. This solves one of the greatest problems of the marketplace model- a lack of brand awareness for the retailer.
Offering customer support even before it’s needed:
If that sounds like too much enthusiasm, get used to it! Anticipating the need for customer support is vital today because customers buy from a ton of different retailers. They don’t always remember until they stumble across an old payment invoice they never heard back on.
Anticipatory customer service, however, is about being one step ahead. It’s intuitive. It is not just noticing something. It’s anticipating something. For example, you call a customer and he responds by saying, “I was just getting ready to call you.” In other words, you were one step ahead.- Shep Hyken, Customer Service Expert
Anticipatory customer service isn’t a new concept. However, using chatbots to achieve this, is. With a good CRM system, you should be able to predict how soon customers message to check on their order status, and time your order status messages to go out before they do.
This is just an example of what you can achieve with anticipatory customer service. Larger retailers will use it in 2020 to service requests in bulk.
There’s a funnel before the funnel:
Even before customers make a purchase, retailers can use insights from browsing behavior, ad performance and expression of interest to tweak their supply chains accordingly. Using AI along the supply chain can help make forecasting more precise using markers from thousands of people browsing for products online.
Marketing Trends For 2020
Hyper segmentation will gain ground:
Individuality will be a driving force in making retail selling even more granular. Marketing experts everywhere are already talking about doing away with personas!
Going into 2020, the challenge for a retailer will be to put this into action and have the tools they need to treat every customer as an individual.
Collating customer data from multiple sources: social media, digital footprints, transactions, and reviews will be integral to further breaking down each segment to its final unit, a single individual.
Welcome to the age of ultra-personalization.
More brands will collaborate:
With the retail sector growth as it is, more retailers will find ways to offer enhanced value through collaborations. They can be in the form of complementing products, or even collaborations that make the result more fun for consumers, thus creating new experiences.
What’s more, there’s no such thing as big and small anymore. Digitally Native Vertical Brands have shown us that you don’t need a large presence or a big budget to succeed in retail.
Both established brands and new players will try to grab a piece of the pie through partnerships, collaborations, and co-promotions, and boost each other’s business in the process.
As a retailer, the best thing you can do is find another retail brand that complements your products. You can both then leverage a wider audience without spending a penny extra. Many Instagram sellers already do this informally.
Selling through social media will continue and reach new heights
Speaking of Instagram, social proof is still the largest driver of sales. People buy what their trusted community supports.
It is no wonder, then, that in 2019 Instagram emerged as a major player with its direct shopping feature. This “social shopping” scene allows a consumer on Insta or Pinterest to go all the way from awareness to conversion on a single platform.
Pay attention to what kind of content you’re putting out on social media. More importantly, notice what other people are saying about you and take charge of your brand’s image.
Retail Outlook 2020: Industry Shifts
Sustainability is a tremendous concern for many businesses today. Every aspect of a retail brand is up for scrutiny and heated debate on social media. Consumers know exactly what they’re buying. And they’re all thinking about the future. An NYU Stern research report shows that over 50% of interviewed customers bought FMCG goods that were marketed as sustainable alternatives.
Companies today get enough questions on sourcing, manufacturing, and disposal. Particularly in apparel, the current trends will no longer work for consumers. Consumers are not shy about switching brands if a company fails to meet its sustainability benchmarks.
There are several ways to create a more sustainable business model, and we’ve listed a few ideas here. DNVBs and independent retailers are also great examples of retail businesses that manage inventory well and thus waste a lot less in each sales cycle.
What is needed now is for us all to look even deeper into procurement and delivery to make a real difference. Sustainability needs to move beyond being just a brand message; instead, customers are actively looking for brands whose entire sales philosophy is based on sustainability.
A Proactive Approach To Data Privacy Is Needed
GDPR rules have only just set the stage for ways to acquire and use consumer data. According to several research reports including from Forrester and HubSpot, consumers don’t mind sharing their data with brands they are considering. What upsets them is when all of that data amounts to nothing.
Several customers report feeling let down when they receive a promotional email for a product that is out of stock or receive newsletters even after they chose to opt-out. These are small acts that erode brand trust. What’s more, it does make customers wonder why they shared all of their data in the first place.
Mistakes on this front, therefore, can be quite costly, particularly with very digital-savvy Gen Z shoppers now in the mix starting 2020. What can brands do? Fix their systems to prevent fraud, use the data they have more efficiently and always own up when mistakes are made.
Mobile Shopping Will Grow Even Further
From highly successful mobile ads driving turnover to become the biggest driver of social commerce, mobile shopping has come a long way and is poised to grow. Especially during high-volume holiday seasons, online shopping on laptops and PCs has decreased in favor of mobile-driven shopping.
Social shopping with sites like Facebook, Instagram, Pinterest, Snapchat, Twitter and YouTube will continue to bring in innovative eCommerce features for faster conversions. An interesting addition to this list may be TikTok, targeting the younger crowd with shopping ads.
Also supporting this trend is the advent of 5G which promises more data delivery per second of usage. Hyper-targeting and delivering ads based on a person’s live location are now going to be possible. This will also help reduce the number of ads brands show their consumers, making fewer interactions better in quality.
But Some Stores Will Close
Apparel stores, in particular, will be the first in line to close more stores. Closures, in general, are higher in number than new openings in 2019 and are expected to do so in 2020 as well.
In fact, the Credit Suisse US Retail Store Closure Index predicts that this will be an ongoing phenomenon for several years to come.
This isn’t necessarily because offline retail is dying, as was a fear these last few years. Many large-format retail stores are not currently located in areas where experiential retail could add value. They will hence need to be scrapped or moved to locations where brands can innovate better.
Brands Will Look To Build Communities
Forums and communities built around a certain idea aren’t new. What’s new is how many brands want to get into the mix. Social proof is the strongest driver for buying- we buy what people like us recommend.
For brands to want to get into the conversation takes a certain degree of innovation. Glossier, for example, has In The Gloss- an online, brand-owned forum for people to discuss makeup and beauty advice. Such platforms are not meant for brands to promote themselves. Instead, any brand moderation on the forum should also add equal value.
In 2020 and beyond, retailers will have to crack the code for communication that doesn’t promote themselves too much. The aim, instead, is to become one with their audience and come from a place of mutual empathy. In other words, when in doubt, don’t sell.
So that’s out retail outlook 2020 report! Which of these trends have you already noticed in your local community? What are your consumers asking you to deliver on? We’d love to hear your thoughts.