By Nikki Baird, Vice President, Retail Innovation, Aptos
While the full impact of the global pandemic on retailing remains to be seen, mostly everyone can agree that disruption and trend acceleration were common themes throughout 2020. As we enter 2021, retailers must abandon the idea that there is an old “normal” to return to. What existed in the retail industry before 2020 no longer exists.
Despite the lingering uncertainty of what lies ahead, there are some retail trends that we can confidently say will make their importance known in 2021. These five retail megatrends were already on the rise pre-COVID, and now their importance and relevancy have been accelerated by the pandemic.
Trend No. 1: Digital Transformation Is Priority Number One
COVID-19 has forced retailers to rapidly adapt to a new, digital-first world. 2020 saw a massive shift in demand from stores to online channels, and engagement from in-person to digital-first or digital-only. Supply chains have had to scramble in response, both to cope with major disruptions in supply and to cope with how to reposition inventory to better meet this shift in demand.
As a result of this volatility, digital transformation will be at the top of retailers’ agendas in 2021. Rather than backing off on IT spending, many retailers will double down on their investments that support creating agile, digitally driven enterprises.
As part of these digital transformation efforts, many retailers will also be rethinking the ways they sell. Livestreaming, pop-up shops, rentals, and subscription services are among the options that will be explored.
Trend No. 2: No More Excuses When It Comes to Omnichannel
Omnichannel – the creation of seamless experiences as consumers cross channels and touchpoints – will continue to be a high priority in 2021. When it comes to omnichannel, “no more excuses” needs to be retail’s new mantra. Previously, retailers came up with a whole host of reasons as to why they were unable to invest in omnichannel, such as margins being too thin, shipping costs being too high, or the fact that their consumers prefer to buy in-store.
As we look ahead, consumers won’t care what your margins or your shipping costs are — they will expect omnichannel offerings no matter what. Greater visibility into inventory levels, more flexible purchase and collection options, and highly blended digital/physical purchase journeys are the new expectations.
Retailers need to plan for an omnichannel future that allows them to capture demand no matter what channel it comes from and fulfil that demand regardless of where inventory is located and where consumers choose to receive their goods.
The value of omnichannel is being seen throughout the pandemic during store lockdowns, with some of the retailers who fare the best being the ones who are able to fulfil online orders with store inventory.
2021 will be the year that more retailers start breaking down barriers between channels to offer a true omnichannel experience. And toward the end of 2021, we expect retailers will shift their focus from not only providing seamless omnichannel experiences, but also providing profitable ones.
Trend No. 3: Sustainable Brands Win Consumer Loyalty
Environmental and eco-friendly awareness was trending prior to COVID-19, with retailers and brands rushing to introduce exciting new product lines, partnerships, and initiatives to showcase their sustainability commitments.
During lockdown, the world saw the direct impact that reduced human activity had on the planet – a realisation that will encourage even more individuals to practice mindful consumerism. Coupled with the devastating effects of drought, fire, and powerful storms, environmental awareness and sustainability will continue to be top concerns for a growing segment of the population.
As we move into 2021, expect to see more consumers show their affinity for brands that prioritise environmental concerns.
Trend No. 4: Apparel Industry Adopts “Slow Fashion”
While fast fashion has dominated in years past, disruptions to the supply chain, millennial and centennial buying behaviour, and an overall increase in mindful consumerism will accelerate demand for “slow fashion”.
This includes a preference for timeless pieces, fashion that transcends seasons, and fashion that can serve multiple functions.
In 2021, we’ll see the full impact of the slow fashion trend taking place. The result will be pared-down inventories, product assortments that are narrower than before, and fewer collections, with more collections that are “season-less”.
Trend No. 5: Retailers Seek Greater Diversification
Brands that are too narrowly focused – or that find themselves only in the “discretionary” or nonessential category of consumer spending during the pandemic – will seek increased diversification across multiple dimensions in 2021.
It’s not enough to sell products; retailers also need to deliver services that become more essential to consumers – services that either enable the products consumers buy or enable the lifestyle that the products promise.
Retailers also seek to diversify their categories of goods. This accelerates a trend that was happening pre-pandemic, with blurring of retail verticals. An example of this is grocery stores that sell their own clothing brands. And with China in particular on the rebound from the pandemic, Western interest in diversifying geographically – especially in China, already a long-established priority region – is on the rise.
In 2021 retailers will face new challenges and complexities as they seek to diversify both business models and geographies at the same time.
Finding Relevance in the Pandemic Era
Retailers are looking for ways to create enterprises built for change that will help them withstand future disruptions. At the same time, it has never been more vital for retailers to be relevant. These five megatrends have the power to persevere in the pandemic and post-pandemic eras.