How Retailers Will Thrive in 2021, According to 11 Experts
Tuesday, January 12, 2021
As retailers reflect on the last 12 months of the rollercoaster the industry rode—er, might still be riding—you can’t help but chuckle at some of the predictions made for 2020. Curiously enough, while few forecasted the actual impact of COVID-19, many themes still held up. Were we right about the continued rise of D2C brands investing in storefronts? Not quite. The emphasis on unique in-store experiences and community events? A little off the mark. Yet a call for deliberate and frictionless customer convenience? Nailed it.
Amenities like curbside pick-up and BOPIS/BORIS, same-day delivery, contactless payments, mobile wallets and virtual shopping appointments ended up carrying more weight than many could have fathomed. These pivots, quite literally, saved retail businesses across the country.
Though it’s likely to be a number of months before the world returns to what we once knew as “normal,” a shift in the direction of normalcy is on the horizon. What does that mean for retail in the new year, and will any of 2020’s themes carry over? We spoke with 11 retail industry experts—all Heartland partners—about what they think is in store for 2021, and what retailers must do to meet the trends that customer expectations are driving.
For the first half of 2021, consumers will still be wary of the high-contact, pre-COVID retail environments they once enjoyed. Retailers need to leverage their newfound savvy in the digital world and begin to blend it into their physical environments. This doesn’t require a massive investment in big, flashy in-store tech equipment—it could be as simple as a scannable QR code on an item tag. Linking the in-store experience to richer digital content will satisfy the urge of immediate interest and increase the connection and trust with the brand, while keeping the shopper in control of the process.
The online share of the retail pie experienced incredible growth in 2020 for obvious reasons. Growth may slow down, but customers who have gotten used to doing business online are going to continue to favor businesses that offer a seamless online-to-offline experience. Retailers who find an online formula that works for them and iterate rapidly while still executing on tried and true retail fundamentals will win the day and end up stronger than ever.
Sharon Gee, General Manager of Omnichannel Partnerships at BigCommerce
To succeed today, retailers need to put a stake in the ground and define a unified channel strategy from a digital and physical perspective. That means having a comprehensive, up-to-date omnichannel strategy which considers how consumer needs and behaviors have changed and recalibrates your understanding of target customers.
If you are over-invested in any one channel to sell your goods or products, and that channel goes away for any reason, you'll be in a tight spot.
But the reassuring strength of an omnichannel sales approach is that it's a risk mitigation strategy at its core. It allows retailers to ask, 'Where are my shoppers and how can I be where they are?' and then make changes accordingly.
2020 moved us forward a decade in the need for brick and mortar retailers to shift to becoming brands. Retailers no longer have a storefront that has a website but have a brand that has an in-store experience, an online experience, a social media experience, etc. Those that have a great experience everywhere will grow in 2021 and those that only lean on their storefront will continue to struggle.
Customers will need a new product selection that is more digestible, so retailers will need to edit down their selections. When ordering products for Spring/Summer, think about how you can start trimming styles and colors to avoid consumer decision paralysis that derails the buying process. The benefits here will be a reduction in end-of-season markdowns, increased inventory turns and more profitable sales.
This last year has caused the trends we were already seeing in the marketplace to accelerate. So, as we look at the year ahead we expect that formal clothing categories will diminish as consumers continue to gravitate toward casual, online and social shopping will be key components even for brick and mortar retailers and all merchants will be running tighter inventories. 2020 has shown us that we can still profit while running lean, and as demand picks up in the third and fourth quarters, there is a lot of opportunity.
It goes without saying that customer buying habits have been transformed in 2020. We expect 2021 will further drive retailers to keep customer experience at the forefront of their business strategy. Retailers that embrace this new environment along with the technologies that support it will reap the rewards.
In 2021, owning push notifications will be crucial. The world moved online in 2020 faster than ever before, and the ability to stand out will not only come from product assortment, authentic video and branding but knowing how to get customers' attention with the tools social media gives us in a crowded space. This might be live video notifications, TikTok recommendations, mobile app push notifications, SMS marketing or Facebook Messenger.
Being on social media isn't enough: Having a strategy that works with the algorithms on multiple channels is.
2020 made it more important than ever for retailers to build relationships with their clientele that keeps them coming back time and time again. It is this relationship that enables the retailer to have a deep understanding of the client’s needs and create an amazing customer experience. In my opinion, the conversation in 2021 will be about how to use technology to enhance these relationships to create more personalized human experiences, turning first time shoppers into long time clients.
Hyper-personalization and the Shift from Third-Party Data
Erin Raese, SVP Marketing & Partnerships at Annex Cloud
In addition to the new normal we're all getting used to, marketers at retailers and other organizations are being faced with significant changes in privacy laws. So significant that they can no longer rely on third-party data to identify customers and augment data sets. Now retailers need to shift their strategies to focus on collecting first party data: This will mean new marketing strategies, new technology and new practices across the board. Loyalty concepts and technologies are a perfect answer to support organizations going forward. At the core, loyalty is based on a value exchange. The customer shares their data and identifies themselves at every touch point, in exchange for the brand or organization personalizing their experience with relevant messages and offerings. We expect to see a surge in loyalty strategies, yet, these will take a very different form than we've typically experienced: less focus on programs, tiers, points, etc. and more focus on hyper-personalization based on empathy and relevancy.
As we come out of the Covid crisis I see people wanting to burn the jogging pants and loungewear they have hibernated in over the past 12 months. I expect people are ready to celebrate their social lives again and retailers should be ready to dress them for their "coming out of Covid" party. Human interaction will be craved now more than ever, so brick and mortar stores should be ready in terms of inventory, staff, efficiency and security. There will be money to spend on the rebirth of social events and people will be looking to up their fashion game as they emerge from their isolation! That being said, this will not happen overnight so being financially responsible will continue to be trending for all retailers to survive. As retailers are spreading themselves across multiple channels, the opportunity for mismanaged record-keeping and inefficient use of time remains high.
Implementing systems and processes is the key to thriving going forward.
In a season with so much uncertainty, a few things remain clear: An emphasis on customer convenience and relationships, a seamless omnichannel strategy and the technology to support such will all be key to survival in 2021.