The future of retail: How the industry is changing in 2021: part 1.
With 2020 delivering a seismic shock to the world as we know it, retail was one of many sectors facing an existential challenge like never before. Some companies thrived, many struggled to survive.
Now, with a semblance of normality on the horizon, retailers of all stripes are witnessing a shifting global landscape characterised by altered customer behaviours as well as rapidly evolving technology, infrastructure and supply chain trends accelerated by the pandemic.
Among our clients, we spotted two distinct types of retailer: those that shut up shop and panicked, and others who adapted. The latter are up year-on-year by an incredible amount – they’ve probably moved forward two or three years in terms of revenue. For others, it’s nearly killed them. We know companies that have had to sack their entire teams and have moved back five years.
Fortune has played its part in this, with certain verticals. Yet the pandemic has also highlighted the failures of certain sales strategies. There are a lot of large companies who rely very heavily on traditional retail and a split of 90% offline sales to 10% online can be pretty standard. For these firms, that meant 90 percent of their business suddenly vanished and share price is falling through the roof. It’s made us all realise how much things need to change.
Adapting to new consumer behaviours
As well as providing a dramatic wake-up call to retailers, the inevitable surge in e-commerce during lockdown has had a major influence on consumer shopping habits. The biggest growth was among older users – there has always been a group of high-earning sceptical purchasers who would rather go out shopping but they’ve been forced to change their habits. This demographic has realised how easy it is to purchase online and they may never go back. Overall the audience now is much bigger and confidence is a lot higher.
E-commerce has moved forward 10 years in the course of 12 months. This increased volume has brought with it challenges, though, with many retailers’ customer services facing pressure to adapt. Elsewhere, increased online activity from an older demographic who value research prior to purchase may mean some retailers need to enrich the product information currently online.
Supply chains have also been tested to their limits. Behind the scenes, the big challenge has been implementing efficient and fair returns policies to match up to customer expectations. A lot of companies don’t offer free returns and that doesn’t go down very well. To replicate an in-store retail experience free returns need to be part of the model.
