In 2020, the unexpected pandemic unsettled the world as we know it. Fortunately, the retail industry’s growth rates in nearly all leading economies remained positive. For instance, in the United States, the retail index grew by 6.9% (YoY), with eCommerce sales contributing 21.3% of the total retail revenue or more than a fifth of the GMV generated for the first time. E-commerce sales spike is not entirely surprising since the lockdowns kept the physical retailers shuttered for weeks in many countries.
Despite the favorable growth rates, 2020 was pretty harsh for most retailers as they continue to struggle to adjust to the new reality. In last year alone, 30 major US retailers filed for bankruptcy, closing more than 9500 stores. In the UK, 54 big retailers followed the same path, closing more than 1,300 locations which affected more than 100,000 employees.
The challenge is far from over in 2021. To become increasingly competitive in eCommerce, retailers need to continuously invest in new ways to gain customer insights, test emerging technologies, transform the organization to be digitally aligned and differentiate on customer experience across channels. This is a tall order for any retailer.
So what are the key trends retailers look to invest in this year?
In an effort to shed light on this direction, the ContactPigeon team asked 61 professionals in the retail industry to share their insights and predictions.
Here is a table of contents to help you quickly navigate through this mini-report.
Key insights: The top retail trends of 2021
The top 5 retail trends of 2021 will be:
- Top Retail Trend #1: AI
- Top Retail Trend #2: Visual Commerce (AR/VR/Visualization technologies)
- Top Retail Trend #3: Personalization
- Top Retail Trend #4: Influencer Marketing
- Top Retail Trend #5: Omnichannel Retail
Other emerging retail trends and key observations:
- Contactless Shopping, Social Commerce, BOPIS, Pop up Kiosks/stores, Amazon Commerce, 360 Customer Analytics, Hyper-Local Marketing, Voice Commerce, In-store Digital Solutions (QR codes, etc).
- 19% of the participants agreed that Artificial Intelligence (AI) & Machine Learning Technologies (ML) will have an increasing role throughout every aspect of business operations, from Customer Support, Customer Analytics, In-store Assistance to Inventory Management and Retail Supply Chain.
- 12% of the experts also agreed that the use of technologies like AR, VR and other product visualization solutions will be among the most promising trends in 2021.
Retail Expert #1: Gigi J.K., Founder & CEO, Virtina
Founder & CEO, Virtina
“Alongside BOPIS, MOPIS and COPIS are also expected to rise incrementally in 2021.“
In retail eCommerce for 2021, I expect the BOPIS (Buy Online Pickup in Store) model to grow stronger. More consumers are drifting towards eCommerce, and for urgent and immediate deliveries, they may want to collect their orders from a nearby pickup point.
Alongside this, I expect MOPIS (Manufacture online pick up in-store) and COPIS (Customize online and pick up in-store) also to rise incrementally. It allows consumers to order from their comfort zones and receive the package without breaking any COVID protocols and getting anywhere near other civilians.
If that wasn’t enough, in the coming month’s AR (Augmented Reality) is also expected to rise exponentially. The lack of offline experience and the inability to inspect objects closely means buyers may want to get the best understanding of the product. AR facilitates that beautifully and helps consumers in their decision-making process.
Omnichannel would get cemented further in 2021, so I expect brands to invest in this even more. The rise in mobile shopping and local searches means more and more businesses would look to capture as many touchpoints as possible. The offline store dependency meant fulfillment became a problem due to the pandemic. Thus, Selling wouldn’t be as one-dimensional in 2021. As such, brands are looking to diversify the sales channels. Sell on an eCommerce site, social media, marketplaces, brick and mortar outlets, and other channels.
Mobile Commerce is getting a significant boost in 2021. Furthermore, the reliance on smart speakers and AI assistants would mean that Voice Commerce will also get more prominent in 2021.
Retail Expert #2: Keith Fix, Founder & CEO, Retail Aware
CEO, Retail Aware
“Measuring in-store and real-time shopper behavior has proven invaluable you can optimize your trade spend and improve your ROI.”
In-Store Shopper Behavior Data. “Why can’t measuring data around a product display be as simple as adding website analytics?” Now, more than ever, companies are watching closely as consumers adjust their purchasing habits during the pandemic.
With this year’s massive ecommerce growth and a plethora of legacy retailers filing Chapter 11 retail is having a reckoning. Measuring in-store and real-time shopper behavior has proven invaluable to navigate these changes so you can optimize your trade spend and improve your ROI.
Tracking digital analytics and POS data is easy but doesn’t offer a full and clear picture of the path to purchase. The missing middle piece is in-store shopper behavior. Forward-thinking brands, retailers, and their partners use shelf-level data to understand the full purchase funnel from digital ads to in-store behavior, to POS data.
For the first time, it’s possible to measure real time data points from in-store shopper behavior around dwell time and engagements at the shelf level without expensive camera equipment. These are critical measurement metrics for the customer path to purchase as increased dwell time leads to higher interaction and conversion rates.
Other important data points to track include out-of-stock notifications, shelf placement, execution, and mis-merchandising, all before the negative sales data comes back. These things have saved our clients quite literally, millions of dollars. Several of the brands we work with are using overall customer engagements divided by total unique customers to calculate an engagement percentage. They compare this number against sales data to make quicker, more informed decisions that increase ROI.
We’re at the earliest stages of the in-store data revolution and you don’t have to be left wondering anymore. This data is vital to the optimization and ultimate success of your retail strategy going forward.
Retail Expert #3: Jon Cheney, CEO & Co-founder, Seek
“Integrating innovative technologies like augmented reality in store and online will continue to have a big impact on retail next year”
Integrating innovative technologies like augmented reality in-store and online will continue to have a big impact on retail next year. Over two billion phones are capable of displaying high-quality, true-to-size AR content, unlocking a new reality for shoppers. AR experiences have become highly relevant today both in-store and when shopping online from home as we continue to practice social distancing.
With eCommerce, customers can use their smartphones and bring products to life from the safety of their own homes to increase buyer confidence. In-store QR codes can also be placed next to products so customers can obtain more information while minimizing human contact.
Brands that have been early adopters of AR technology have seen a significant lift in sales for several years. Seek’s customer data shows a 150% increase in conversion and a 25% decrease in returns. Time to make buying decisions has been cut in half.
Retail Expert #4: Helene Berkowitz, Founder & CEO, ReceetMe
Founder & CEO, ReceetMe
“Digital transformation is a top trend for 2021, as consumer demand for digital experiences such as AR solutions, touch screens in fitting rooms, and voice-controlled shopping are on the rise.”
Contactless shopping. With the pandemic as the driving force behind more hygienic retail processes, contactless shopping will be a top trend in 2021. Consumers are hungry for simple, frictionless solutions that reduce physical contact between store associates and themselves.
Biometric payments. This feature is becoming more commonplace in Europe and Asia. It’s likely to start growing in usage in the US and Canada this coming year, as well. Growing demand for shopping without carrying wallets or credit cards will become a new trend.
In-store digital solution. While ecommerce has skyrocketed, brick-and-mortar shopping will still exist, and in some markets like dollar stores and convenience stores, will continue to grow. Digital transformation is a top trend for 2021, as consumer demand for digital experiences such as AR solutions, touch screens in fitting rooms, and voice-controlled shopping are on the rise.
Cash transactional data. Despite the rise in mobile payment options, cash is still king. Retailers want to tap into the unbanked and cash-centric market and will utilize digital platforms to identify cash-paying customers and create sophisticated engagement tools.
Retail Expert #5: George Mirotsos, CEO, ContactPigeon
“Omnichannel shopping and marketing are becoming the new norm, representing 1 out of 3 shoppers according to a recent McKinsey survey.”
In 2020, we have seen an unprecedented shift towards retail digitization and eCommerce as a result of the pandemic. Yet, for many retail verticals, such as apparel fashion, brick-and-mortal remains an essential part of the shopping experience. In 2021 and beyond, we will see more consumers use a combination of offline and online channels as they shop.
Omnichannel shopping and marketing are becoming the new norm, representing 1 out of 3 shoppers according to a recent McKinsey survey. Technology is a core enabler for an omnichannel experience. It’s no longer about having an eCommerce presence. The ability to deliver cross-channel personalization, location-targeting, and unified customer insights will dictate which retailers can differentiate from competitors and capture the heart of the customers.
Retail Expert #6: Mohammed Ali, Founder & CEO, Primaseller
Founder & CEO, Primaseller
“Contactless and omnichannel retail will continue to see increased adoption by retailers”
Social commerce will see strong growth in 2021, driven on the back of the still looming pandemic and the reach of social media. Brands that took to social commerce, especially in 2020, have seen a massive return on investment in terms of sales. People will continue to be wary of in-store shopping and social commerce will make shopping online even more convenient.
Contactless and omnichannel retail will continue to see increased adoption by retailers. While the pandemic has given them a boost, they were already common practices were many retailers. This will continue to be so in 2021 as well. Many retailers will turn to become fulfillment hubs, which has been a saving practice during and after the lockdown. These will function as last-mile delivery stations that can cut down on delivery times and fulfillment costs.
Retail Expert #7: Clay Parnell, Managing Partner, The Parker Avery Group
Managing Partner, The Parker Avery Group
“The hottest trend for retailers to succeed in 2021 should be the strategic infusion of advanced analytics into their overall business models”
The hottest trend for retailers to succeed in 2021 and beyond without a doubt should be the strategic infusion of advanced analytics into their overall business models. As the 2020 pandemic thrust retailers into stretching their omnichannel capabilities beyond traditional limits to address the resulting global social disruptive issues, many quickly realized their existing data and analytics capabilities would not support continued viability.
The ability to holistically and deeply understand customers who may be hesitant to shop in a physical environment and who are increasingly more comfortable shopping at home extends way beyond providing a new user interface and attributing a shopper’s geographic location.
Analytics provides the means to get an intimate understanding of changed consumer behaviors, wants, needs and shopping patterns—including impacts of social, geographic, economic, and political factors—and this extends deep into the planning, demand forecasting, merchandising, and supply chain areas of any retailer. Retailers were traditionally hesitant to embrace newer technologies—particularly those “behind the scenes” in the corporate halls, but with new cloud-based, software-as-a-service models, advanced analytics is a realistic option that can be very quickly implemented and deliver results in just weeks—and at price points much lower than traditional system implementations.
Retail Expert #8: Paolo Sartori, Managing Director, TWC
Managing Director, TWC IT Solutions
“We expect the majority of businesses will be better prepared for these difficult conditions through 2021 and, in-line with this, we predict an increase in network and systems optimisation”
In 2020 we have witnessed several retailers’ networks being unable to cope with the demands placed upon them. This, in conjunction with an increase in Cyber Security incidents, potential server failures, and power outages means many businesses failed to meet their customers’ expectations, subsequently missing out on significant revenue opportunities.
With this in mind, we expect the majority of businesses will be better prepared for these difficult conditions through 2021, and in-line with this, we predict an increase in network and systems optimisation. This magnifies the importance of Systems Integrations, Unified Communications, Disaster Recovery, and Cyber Security and means these areas become integral components of the business continuity planning process. This will enable firms to efficiently process their customer data, avoid breakdowns and ensure operational effectiveness turning the revenue opportunities into real income moving forward.
Retail Expert #9: Kateryna Reshetilo, Head of Marketing, Greenice
Head of Marketing, Greenice
“Retailers who will be able to provide a seamless flow from different channels and empower consumers to choose their own path to conversion will win.”
Product Visualization. Now consumers have little to no opportunity to see, touch, and try on things in person, which leads to a greater need for better visualization of products online. Therefore, in 2021 even more online retailers will invest in 360 photos, AR/VR, visual search, etc.
More AI. Retailers will continue to unfold and harness the power of AI for their businesses. We will see even better personalization, safety, and dynamic pricing, all thanks to the developments in AI.
Omnichannel retailing. As most of the shopping goes on online now, consumers expect an even better omnichannel experience. Retailers who will be able to provide a seamless flow from different channels and empower consumers to choose their own path to conversion will win.
Retail Expert #10: Dylan Max, Head of Growth Marketing, Netomi
Head of Growth Marketing, Netomi
“eCommerce chatbots are going to dominate the retail space in 2021.”
eCommerce chatbots are going to dominate the retail space in 2021.
2020 was an exceptionally brutal year for traditional retailers who were forced to pivot to a much heavier digital-first strategy due to numerous lockdowns caused by COVID-19. Pier1, for example, closed its brick-and-mortar stores earlier this year as part of its bankruptcy plan and is now relaunching entirely as an online shop.
Now that attention has shifted to digital, eCommerce chatbots will emerge as a go-to technology to increase sales and customer satisfaction. In one study, Netomi found that this powerful AI chatbot technology can resolve up to 87% of all incoming support questions. Just imagine how much more efficient eCommerce brands could be if they choose to adopt a chatbot that engages in self-learning (i.e. getting more accurate over time), already integrates with a retailer’s existing tech stack (like Shopify, Magento, Salesforce, and Zendesk).
The ultimate reason why AI chatbots will be the trend of 2021 is because customers want answers and information at lightning speed and the only way to provide that scalably is with technology like a chatbot. Last year, chatbots were seen as a commodity. This year, chatbots for eCommerce will be viewed as a necessity.
Retail Expert #11: Carlos Castelán, Managing Director, The Navio Group
Managing Director, The Navio Group
“With the rise of more flexible fulfilment options during the pandemic retailers will focus on expanding those programs to as many stores as possible in 2021.”
One trend we expect to continue in retail in 2021 is continued investment and upgrade in the supply chain to provide a better customer experience via flexible fulfillment options.
With the rise of more flexible fulfillment options during the pandemic – such as click and collect as well as the curbside pickup – retailers will focus on expanding those programs to as many stores as possible or figuring out ways to improve those offerings for customers. The more retailers improve customer experience, the more likely they will benefit financially.
Features such as geofencing allow the store to be notified when a customer is nearby or en route to proactively come outside or even just working with a mall to have a centralized curbside pickup location for all stores simplify and improve the customer’s experience with these services.
Also, another trend, the continued investments to reduce the costs to fulfill orders or make more efficient use of inventory. Potentially reducing markdowns are helpful to the bottom line and, more importantly, customer experience. Helping customers more easily buy the product they want with the fulfillment method they find most resonant ultimately will help drive repeat purchases and customer retention.
Retail Expert #12: Cas Paton, Founder, OnBuy
“Since the pandemic, retail companies have turned to state-of-the-art technology to create a safer and more enhanced virtual shopping experience.”
Using Virtual Reality (VR) technology is a great way of enticing shoppers back into the store itself, providing a compelling in-store experience. VR is also being used in online retail to enhance product experience and to reduce returns.
Augmented Reality (AR) has allowed retail companies to provide a more ‘physical’ shopping experience, without the need for entering a store. An example of one retailer that has been using this technology to their advantage is L’Oreal, which offers a ‘Virtual Try On’ for customers to test out different products before committing to a purchase.
Also, retail companies can use AI systems to deliver customized recommendations to the shopper while they’re on the site and laser-targeted remarketing (based on the shopper’s behavior) when they’re off the site. This essentially means that companies are hitting the people with the correct message at the right time and place, in attempt to encourage a greater sales potential. This crossover between AI, remarketing and customisation is a huge emerging trend, and something which we predict you’ll be seeing far more of in 2021.
Retail Expert #13: Jonathan Frey, CMO, Urban Bikes Direct
CMO, Urban Bikes Direct
“Tons of businesses will prioritize customer personalization and AI-driven self-service solutions in 2021.”
Rather than relying on a support specialist’s availability, most customers say they prefer to have access to tools and resources that allow them to resolve an issue themselves. The recent pandemic-induced limitations of traditional customer support systems have only exacerbated this sentiment.
In 2021 and beyond, there will be a major focus on utilizing artificial intelligence, advanced knowledge bases, and increasingly sophisticated virtual assistants to put the power of support and resolution directly into customers’ hands. As multi-channel and omnichannel strategies become more popular, these same technologies will also be used in tandem with market segmentation to create seamless, ultra-personalized customer experiences.
Retail Expert #14: Anna Brettle, Founder, Stellar
“The pop-up shop concept will grow in prevalence where retailers build intimate branded experiences where consumers can shop and have items shipped to their homes.”
The COVID-19 pandemic has put a huge strain on traditional retail and led to the temporary closure of many brick-and-mortar stores, naturally accelerating the shift towards e-commerce purchases. Consumers are adapting their shopping habits to suit a new normal where choices may be more limited — what is in stock, what they can get delivered, and, in many cases, what happens to be open on their local high street.
The pop-up shop concept will grow in prevalence where retailers build intimate branded experiences where consumers can shop and have items shipped to their homes. With the appeal of short-term leases, pop-ups can also provide greater interactivity with consumers than traditional physical stores. Pop-ups will pump more money into digital in-store experiences and reduce their costs on square footage and unproductive inventory.
Retail Expert #15: Alexandra Zelenko, Senior Marketing & Technical Writer, DDI Development
Senior Marketing & Technical Writer, DDI Development
“Having customer-centric solutions will be essential for any retail business in 2021.”
Having customer-centric solutions is essential for any retail business. One of these solutions is to provide omnichannel support that is a basic necessity that many brands should offer.
Omni-channel service enables seamless, integrated services across all channels such as desktops, mobile devices, etc. A customer can switch among channels and communicate with the brand. Omni-channel customer support opens up an opportunity to serve your clients in a variety of ways that are not only convenient and effective but boost your brand’s image and credibility.
Retail Expert #16: Allan Borch, Founder, Dotcom Dollar
Founder, Dotcom Dollar
“Due to the great need for the survival of retail stores, more and more business individuals are opting for tech-driven solutions.”
As the pandemic continues, the needs for brick and mortar businesses need to adapt even better to assure their survival. With this, some businesses are starting to build their e-commerce divisions. And with the emergence of advanced technologies, the VR shopping experience is not impossible anymore.
It will be possible through AI, robotics, IoT, and extended reality, including virtual and augmented reality. The mixture of these technologies would allow shoppers to shop in offline stores without interaction with other individuals. Gradually, this concept is being promoted by Amazon’s cashier-less stores and Walmart’s initiative of allowing customers to order and pay for their purchases and having them delivered at home.
Bottom line: Due to the great need for the survival of retail stores, more and more business individuals are opting for tech-driven solutions that would help them to continuously make sales.
Retail Expert #17: Oliver Baker, Co-founder, Intelivita
“There is a huge increase in the number of retailers that are relying now on advanced analytics to determine the right items that should be stocked in their stores.”
This makes AI truly essential in the inventory management of retail stores. Now, with the challenges being faced by retail store owners in encouraging their customers to visit their homes, it is very likely that they would use AI for their marketing outreach. That said, expect that there would be more advertisements from retail stores that would pop on various platforms such as social media in 2021.
Retail Expert #18: Chris Bolz, CEO, Coara
“Brick and Mortar Retail brands will also be forced to innovate and embrace an omnichannel approach at the same time staying focused on the ease of the customer journey.”
The switch to “online-first” will make retailers double down on their online presence. Businesses will now need to innovate as they stride for consumer attention since the competition will increase as more companies adopt online advertising.
Retailer brands that have physical shops will also be forced to innovate and embrace an omnichannel approach at the same time staying focused on the ease of the customer journey. Take the example of Amazon Go as it uses Object Identification to improve the checkout experience. Even more, people are starting to explore other platforms and were places to spend their time online. And with even more retail brands going online-first this will lead to an increased market saturation on the main social media channels.
As many retailers have similar target audiences, the usual approach to ads won’t be as effective, since it’s going to be harder to stand out from the competition. Retail businesses in marketing efforts will explore also other media platforms and place more focus on organic traffic and SEO marketing in 2021. Making retailers take a step back and look at how they can make their customers come to them, rather than chasing after them with paid ads.
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Retail Expert #19: Adam Stevens, Digital Marketing Manager, Pure Pet Food
Digital Marketing Manager, Pure Pet Food
“80% of shoppers are more likely to buy from a company that offers personalised experiences.”
Personalization is huge in our world of pet food, but we see this trending throughout all retail avenues. Many companies from pet food, to skincare, to vitamins, to even mortgages, are building advanced recommendation and personalization platforms that allow them to fully tailor the customer experience.
A report from Epsilon states that 80% of shoppers are more likely to buy from a company that offers personalized experiences. A Forrester report citing that 77% of consumers have chosen, recommended, or paid more for a brand that provides a personalized service or experience. It’s a massive advantage over your competitors if you can offer a personalized experience.
At the beginning of 2020, we did just that and switched to personalized service for our pet food customers. Since then, we’ve seen a huge improvement in not only acquisition but also retention. It was a decision that has allowed us to now be recognized as one of few fast-growing pet food startups in Europe.