At the start of 2020, analysts, journalists, CEOs, and others were busy making retail predictions for the year to come.
On one hand, you’d think that those retail predictions would now be as outdated as all-you-can-eat buffets, large crowds in small spaces, and handshakes. But on the other, everyone seems to be saying that when it comes to retail, the pandemic was just an accelerator of forces already in play.
So which is it? To answer the question, we looked at five remarkable predictions experts made about retail right before the pandemic. We found that some were surprisingly accurate—albeit in ways no one imagined—even in the face of the industry’s monumental changes. Others, not so much. Let’s have a look.
Prediction 1: Retailers who create amazing in-store experiences will win.
Susan Reda, longtime editor at STORES Media/National Retail Federation, closed out 2019 with a Retail Gets Real podcast episode. As part of her retail predictions, she spoke about encounters like touching and trying on makeup at Sephora, visiting the Vitamin Shoppe to chat with associates known as “health enthusiasts,” and being able to press a button in an apparel store dressing room for instant assistance. This idea of retailers starting with what they do best and adding a level of interaction, personalization, and “experience,” she said, was more appealing than the creation of Instagrammable moments.
The verdict:
True on the face of it. Retailers who used stores to wow won, but in pandemic times we define “amazing in-store experiences” differently. The keys to creating that experience in 2020, as it turned out, were safety, convenience, and a sense of community. Those retailers who made products available to customers (often by overcoming supply chain woes and rationing purchases of sought-after items) were also seen as amazing. Equally awesome were the retailers who flexed their contactless chops. Who could have seen that an amazing experience in 2020 would end up being anything but high touch? As retail rebounds in 2021, MIT Sloan predicts that shoppers will mostly expect stores to be easy-to-navigate, convenient, browse-worthy, well-assorted, tactile, entertaining, and/or friction free.
Prediction 2: Buy online, pick up in store (BOPIS) opportunities will increase.
Business Insider quoted Charudatta Ganpule, head of the retail research desk at Tata Consultancy Services, on a number of retail predictions at the time. Among them: “a continued merging of the physical and digital realms,” including growth in BOPIS offerings.
“A hybrid form of commerce where shoppers can move seamlessly between physical and digital worlds of retail as they research products and make purchases is on the rise,” he said.
The verdict:
This has been more true that any of us could have imagined. Yahoo Finance reported that e-commerce surged 44.5 percent between Q2 2019 and Q2 2020. That second quarter of 2020 was at the height of the lockdowns, but the new shopping behaviors have continued. In Q4 2020, e-commerce hit $245.28 billion, up from $185.70B in the fourth quarter of 2019,
“The surge has been driven not just by Americans staying at home but also retailers ramping up their BOPIS options,” Yahoo Finance reported. Shoppers who were reluctant to go into stores for health reasons enjoyed contactless curbside pickup options offered by then-essential retailers. Meanwhile, shoppers who wanted products from non-essential retailers whose doors were closed to customers could often pick-up of products from stores, thanks to employees still working inside. Further, Yahoo Finance said, chains such as Walmart, Target, Best Buy, Urban Outfitters and Dick’s Sporting Goods had all cited BOPIS as a “game-changer on recent earnings calls—and they don’t expect the trend to slow after the pandemic.”
Prediction 3: Grocers will place a high priority on digitally engaging shoppers.
Remember the days when consumers still said they wanted to squeeze, sniff and thumb produce on their own, rather than having a grocery store worker do it for them?
At the start of 2020, when TotalRetail predicted that grocers would need to engage customers digitally to own them “outside of the store,” it mentioned strategies such as extending loyalty programs, coupons and circulars to online purchases. It also spoke of the importance of getting the ecommerce basics right.
“For grocers, 2020 is no longer the time for experimentation,” Sean Turner wrote in the piece. “It’s the time for refining in-store and omnichannel experiences, which means big changes on the horizon to make shopping feel effortless to their customers.”
The verdict:
Well, yeah. Digital engagement stayed important. But in 2020 grocers juggled a bunch of unexpected competing priorities—safety, hygiene, hiring, acquiring PPE, and making products available to name a few—which meant they couldn’t spend as much time on the digital user experience as they might have otherwise.
But, thanks to quarantine, shoppers did experiment with pickup and delivery more than expected, which gave grocers with omnichannel prowess an edge. That said, even Amazon, the digital-savviest of them all, suffered from delivery snags and shipping delays that made even shopping online for groceries feel anything but “effortless.” In fact, 83% of grocery shoppers reported having issues with their grocery delivery orders in 2020. Grocery pick-up was no exception, even with other leading retailers.
That said, in 2020, online grocery sales swelled to 10.2 percent of the overall grocery market, up from 3.4 percent the year prior. But wow that we’re seeing the end of the pandemic, grocers determined to succeed in omnichannel retail won’t just focus on the digital experience—they’ll need to be laser-focused on operational efficiency in their stores, which are now charged with both satisfying in-store shoppers and fulfilling online demand.
Prediction 4: Direct-to-consumer brands need physical stores for survival.
Direct-to-consumer brands burst onto the e-commerce scene with promises of efficiency, simplicity and seamless experiences. Retail predictions at the start of 2020, however, noted that brick and mortar stores were increasingly considered a key part of strategy for DTC brands. “In many cases,” reported Retail Dive, “the brands have come to see brick and mortar as an essential piece of the puzzle, though with very different goals for the spaces that other retail sectors have had during their times of expansion.”
The verdict:
Not in 2020. But DTC brands did find other ways to survive—and thrive—instead. The very fact that they already had processes in place for connecting with consumers without any middleman put them ahead of the pack. They were already handling logistics, customer service, marketing and other functions themselves, which was incredibly helpful when physical sales channels failed and some online channels had trouble, too.
But now, midway through 2021, we’re starting to see this trend take hold. Digital brands like Allbirds are opening new stores and predicting that traffic to physical stores will bounce back sooner rather than later. That’s because even with the rise of e-commerce transactions, they see the stores are vital in helping them rise to the demands of omnichannel shoppers.
Prediction 5: Apparel—with the exception of secondhand—will struggle.
Retail Dive also made retail predictions about apparel. The sector was already seeing a number of Chapter 11 filings leading into 2020, with others at high or elevated risk. The saving grace, according to Retail Dive, was secondhand. Resale, the website reported, had already grown 21 times faster than the wider apparel market in the previous three years, and 2020 was expected to continue that trajectory.
The verdict:
Split. There were winners and there were losers in apparel and, certainly, closed stores didn’t help. But there was also a good bit of resilience and resourcefulness. The Collected Group—the parent company of clothing brands Current/Elliott, Joie, and Equipment—Lucky Brand, and G-Star Raw all filed for bankruptcy in 2020. Excess inventory was a major challenge, as was paying rent on closed apparel stores in the height of the pandemic.
But other retailers, including Lululemon and Gap’s Athleta, benefited from the shift to at-home life, in which consumers sought loungewear for comfort and athleisure for wellness. PVH, Dick’s Sporting Goods, and Nordstrom also reported growth in the athleisure category.
Meanwhile, Retail Dive was right about resale. According to a report by ThredUP, resale is estimated to have grown by 27% in 2020. If ThredUP itself, which raised $168M in its recent IPO and saw shares jumping 43% in its first day of trading, is any indication, this is trend has staying power.
Conclusion
The pandemic may have thrown retail a curve ball, but it was also an opportunity. One thing no one expected was that essential retailers would be seen as everyday heroes in 2020. And now, as we enter the second half of 2021, another surprise: American malls, once considered relics of shopping habits of yore, are seeing a rising foot traffic from shoppers looking to spend.
So yes, the pandemic did accelerate some trends that were already challenging traditional retail. But there’s nothing like adversity to inspire resourcefulness. And scrappy brick-and-mortar retailers are already showing they have more than a few tricks up their sleeve.
CB4 is one of those “tricks” for for some of the biggest names in retail. Our mission is to build simple, revolutionary solutions that make the in-store experience easier and more rewarding for store teams and their shoppers. Learn more about our partners and how we’re helping them sell more product and satisfy shoppers.
