By Craig BennettRetail trends in 2020
It’s been another tough old year for the retail sector. Store closures and rationalisation have hit the headlines on a monthly basis, while the ONS has reported one of the most troubling years on record. To put this into perspective, over 140,000 jobs were lost and over 9,000 stores closed their doors. Online and ecommerce continues to disrupt the way shopping is done and changing buyer behaviours make it harder than ever to predict how to hold on to the share of spend.
However, it’s also potentially an exciting time for those retailers who are prepared to embrace the fluidity of the sector and try things a little differently. Technology is already influencing the purchasing process in a huge way; from AI and VR to cash-free payments. Architects and designers are adopting a more playful approach to store design and there are some very clever brand partnerships appearing to make the most of precious retail space and increase the level of footfall.
In a new and perhaps unexpected movement for retail, activism and ethical shopping is emerging as a key priority, largely driven by millennials and Gen Z shoppers who want better for the planet and who are demanding their voice is heard.
So, what does 2020 hold for this troubled sector. Here’s our top five predictions at Sigma.
Sustainability
This is a huge area for retail that covers a whole breadth of issue. As a sector, retail is one of the largest contributors to global carbon emissions largely due to the amount of import/export that takes place. It is also a heavy user of plastics across a multitude of packaging. Last year, a high number of brands across fashion, beauty and food retailing (amongst others) committed to reducing their packaging and being more environmentally friendly in the packaging they do need to use. This is set to continue at pace in 2020.
Supply chain management will remain in focus as retailers look to ensure that the source materials that are used in the products they manufacture or sell are ethical and sustainable in their origins. For example, high-street stalwart Debenhams has unveiled its new sustainability programme to highlight new benchmarks for UK department store retailing in the 2020s. Its new commitments include sustainably sourcing 100 per cent of its cotton by 2022, and all own-brand products sold in store will have at least one sustainable attribute by September 2020.
The focus on food waste is likely to continue as consumers become more aware and eco-conscious, placing increased pressure not just within the home and personal waste but on food retailers to be as responsible as possible. There will be increasing pressure on retailers to forecast their food waste as accurately as possible and where it does occur, to partner with local food-donation programmes so that true waste is minimised as much as possible. As a result, retailers are likely to invest in understanding consumer behaviour and events that affect demand – from traditional factors such as the weather or payday to more emerging indicators like basket size or purchase behaviours.
Driven as much by customer demand as by retail corporate social responsibility, the pressure will continue into 2020 to ensure that the sector is taking care of the planet as well as the bottom line.
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Technology
There’s simply no getting away from the impact that technology has had, and will continue to have, on the sector. It has completely transformed, and disrupted, the industry, from the expectation that almost every consumer has access to online through to the introduction of cash-free payments and as is being trailed by the likes of Amazon, interaction-free shopping where clever algorithms work out what you’ve picked up and charge you accordingly.
There has been a real shift towards a true omnichannel experience for customers and this has to continue. With the continuing roll-out of 5G, there is an expectation that an online experience will be as fulfilling as offline and brands need to meet, or exceed, this to keep their customers happy. Buying behaviours have changed and it’s those brands that recognise the multitude of journeys a customer might take and ensuring that whichever route is selected that it is seamless, quick and simple that are winning the battle for customers and spend.
Virtual and augmented technology is already here and is being adopted by the more innovative brands – Adidas has launched virtual mirrors in its flagship London store – but there’s so much more to come. This tech has scope across marketing and advertising as well as brand apps, making it easier for customers to see what something will look like before they purchase.
Access to accurate personal data has exploded thanks to brand apps, meaning retailers know more than ever about their customers and their preferences. Using technology and digital journeys, brands are going to be able to be ever more targeted in their marketing and advertising efforts, reaching the right customer at the right time and place with product recommendations that meet a direct need.
Hands On with Adidas’ new London flagship
Adidas recently opened a four-storey 27,000sq ft flagship on London's Oxford Street which it called its "most digital store to date". With over 100 digital touch points and even interactive changing room mirrors.
In a similar way, social media will continue to act as a primary channel for customer engagement, again based on a rich and deep data set that is owned and updated by the customers themselves. The level of information that users are willing to share means that conversations, engagements and advertising can all be hyper-targeted, delivering for both the consumer and the retailer.
Across all digital and tech-enabled channels, the aim is to make the path to purchase as simple and uncomplicated as possible and those who get it right will reap the rewards.
Experiential retail
Physical retailing is now catching up with the fact it has to offer something more than just a transactional experience if it wants to compete, or compliment, online. Going into 2020 and beyond, there’s an expectation that up to half of all retail stores could be dedicated to experience rather than product.
What this means for brands varies, and some are embracing this more than others, but what is important is a recognition of just how critical a customer-centric approach is. John Lewis, Body Shop and Adidas are just some of brands experimenting with the concept, with everything from options to personalise products through to areas where customers can learn about the origins of products and the CSR initiatives in place to support the communities where products are sourced or manufactured.
Beyond this, retailers are looking at how they can differentiate themselves through partnerships, events and through the adoption of technology to attract new a new clientele. From evening wine-tasting or instore beauty tutorials through to live music and inspirational speakers, brands are pulling out all the stops to not just maximise their space and capabilities but also to build more of a relationship with those looking to do more than scan and go.
Shopping is a social experience that online cannot compete with, and as we move further into 2020 and beyond, leveraging this angle will create a whole new pillar for brands to build upon.
Customer loyalty
Leveraging the trust that many consumers have in big brands and through the use of apps and websites, brands have more access than every before to accurate and detailed data about their customers. This should lead to a more personalised and tailored journey for every individual shopper that is sympathetic to their wants and needs based on a data-driven approach.
Loyalty schemes remain one of the sectors oldest but still relevant ways of capturing customers; many leading supermarkets and food/drink establishments have schemes and increasingly this is extending to fashion and other sub-sectors. The ability to personalise offers and communication to this audience in a targeted way means it offers a unique opportunity to capture attention and a call to action.
Discounting is one initiative that retailers undertake when trying to attract customers, and many of them capitalise on sales events such as Black Friday – although this hasn’t always worked in favour. In fact, more and more retailers are turning their back on discount campaigns, instead committing to lower prices all year round. Looking forward, retailers need to be more attuned to consumer sentiment and judge their discounting accordingly, with those who follow the less-expected path of big sales and mega-discounts and instead offering a more personalised incentive perhaps becoming those who are more trusted by their customers.
As with every area of retail, the experience that brands can offer their customers through a loyalty or ‘club’ programme is going to be the thing that differentiates them.
Brand purpose
Tying all of these themes together is the foundation of purpose. Driven by a generation who are more vocal about a global need to be more sustainable, ethical and thoughtful in our purchasing habits, brands who can demonstrate their purpose and relevance are the ones who will reach the greatest customer base.
Whether on or offline, retailers will need show that they are listening to what their customers want and not just delivering this on a superficial level with a luxury store experience or shouting about their paper bags instead of plastic but truly demonstrating that they understand the impact they are having at a micro and macro level and that they are addressing the areas that they can. Whether this is through packaging, supply chain reviews, changing manufacturing processes or ensuring customers have access to information that can help inform the choices they make, the ability to tune into this changing need from shopping is going to be key in 2020.
We talk a lot about the transformation of the sector but not without cause; things have to continue to change because ultimately the people who are spending their hard-earned cash expect something more, something different. It’s easy to think that things like veganism and ethical shopping are just generational phases that will pass, but the sentiment is growing and for all the right reasons.
What’s pivotal for retailers is to ensure that they aren’t just innovating or digitising for the sake of it, but truly understanding the problem that they are trying to solve, and the way they go about meeting the needs and desires of their customers.
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