As we say goodbye to what will be known—without an iota of understatement—as one of the most tumultuous years in world history, it’s worth looking forward to see what may await the retail industry in 2021. So far, many of the experts are using a word that didn’t get much traction in 2020: stability.
Retail analysts working for ratings agency Moody’s have upgraded their industry outlook, going from negative to stable. They also see certain retailers such as department stores and apparel ready to have a strong rebound in 2021. This is good news for the retail industry and merchandisers, especially when you consider that some of the brands singled out for success include retail giants like Macy’s, Nordstrom, Kohl’s, and Gap.
Of course, there’s another reason for optimism: early news that two COVID vaccines may be ready for 2021.
Will a COVID vaccine change everything?
Biotechnology firm Moderna, and pharmaceutical giant Pfizer both recently announced promising early results on a COVID vaccine of approximately 95% and 90% success, respectively. The Moderna vaccine seems to be the better option right now because it does not need to be kept at subzero temperatures. But either way, news that a reliable vaccine may be on the horizon for 2021 is fantastic news for everyone—including retailers.
Ironically, some retailers may be hurt from the COVID vaccine. According to a Bain & Co report, grocery retailers such as Kroger, Walmart and Target could lose share of wallet, as Americans begin eating out again. U.S. grocery revenue has risen by as much as 10% in 2020 because people are eating home for virtually every meal. But grocer’s loss will still be a huge gain for most retailers, as the promise of a return to “the old normal” (can we trademark that?) could once again have stores and malls filled at or near capacity.
What to watch for in 2021
2021 is sure to be a turning point for the retail industry. We can count on some of the changes adopted due to COVID sticking around—innovations such as Curbside Pickup are unlikely to be going anywhere anytime soon. The switch to digital is also expected to continue, as retailers will need to continue investing in making a seamless online shopping experience—especially since we aren’t sure when the vaccine will actually be ready.
- Logistics will loom large. Distribution continues to play a huge role in the success of the biggest retailers. For proof, all you need to do is take a look at the Amazon stock price going back the last five years. During COVID, logistics innovations like micro-fulfillment centers and dark stores have truly separated the forward-thinking retailers from the rest of the crowd. Look for that trend to continue in 2021.
- Malls will continue to get creative. The shopping mall heyday of the 1980s is long gone. But Forrester predicts an opportunity for mall operators who make creative use of their empty space. Turning them into online fulfillment centers and logistics hubs could help malls find new revenue streams going forward well past 2021.
- Brands take control. As Forrester puts it, “To take back the distribution reins, the savviest brand manufacturers will proactively remaster their supply chains, entirely revamp their distribution partner network, and harness AI-based retail planning.” This should be interesting to watch from a merchandising standpoint.
The retail industry trends of 2021 will be…
Recently Deloitte Insights released their Global Marketing Trends 2021 report. The report includes a list of the top trends for 2021. Overall, the trends share a common theme: “breaking out of our often-defensive mindsets to more holistically—and authentically—meet human needs.”
You’ll see that many of the trends mentioned here are already in practice by the retailers who have thrived in the past year. Brands that focus on:
- This is more than just the “what you sell” or even how you sell it.” It’s the why. Why do you exist? Who are you designed to serve. What is your purpose in the marketplace?
- Brands that invest in agile marketing strategies are the ones who will continue to be best positioned for success. The pandemic did not reward timid brands. Bold, fast action was required. Look for the best brands to continue on that path.
- If you’re making promises as a retailer, merchandiser or brand, how are you delivering on those promises? What are your values? Do they reflect your customers and/or clients?
- Talent transformation. Teams need to develop new ways to differentiate themselves in a rapidly-evolving digital environment. That means building teams with the skills needed to get an edge in 2021 and beyond. “Traditionally, these roles include those responsible for data insights, dynamic content creation and owned and earned media. And don’t overlook the flexibility created by the gig economy.”
Looking back at our look forward
Clearly 2021 is going to be a year of big changes for the retail industry and merchandisers. But we envision the brands that see the most success are the ones that focus on the basic blocking and tackling. Things like distribution. Logistics. Making smart use of the retail space. Technological innovation.
It’s going to be a time of great change and uncertainty. But if you remain focused on your purpose, keep your agility, and continue to build trust with your customers and clients, we think you’re going to see a lot of success in 2021.
What are your thoughts?