Since online shopping became a reality, retail has become increasingly digital and internet-driven. Bricks and mortar stores have adopted elements of the online experience to encourage us to continue visiting them, and also played to the strengths that in-person experiences can offer, such as more personal levels of service.
But the coronavirus pandemic has affected the way every trend will play out in 2021, and offline retail has been hit particularly hard. This has led to widespread job losses and famous names disappearing from shopping centers around the world. At the same time, online retail has boomed more quickly than ever before as consumers choose to remain safely indoors, and home delivery infrastructure becomes increasingly sophisticated.
Here are my predictions on how the world of retail will continue to change over the course of 2021 as the pandemic and other factors continue to influence our habits.
Omnichannel – Offline is online, online is offline
This is a big one, that actually involves the coming together of several different trends, including AI, robotics, IoT, and extended reality (XR) – which includes virtual and augmented reality (VR/AR).
Connecting these technologies is enabling retailers to bring the convenience of online shopping to offline shops and stores, and the richly interactive environment of offline shopping to the world of e-commerce. While the general trend has seen offline retailers moving into online by establishing e-commerce divisions of their businesses, more lately, we have seen online retailers developing a bricks ‘n’ mortar presence. At their most sophisticated, this trend includes initiatives such as Amazon’s famous cashier-less stores opening in the US, as well as Walmart’s experiments with allowing customers to order and pay in-store and have goods delivered to their homes. At the other end of the spectrum is the trend of smaller start-ups and cottage enterprises opening pop-ups, concessions, and collaborations with bigger brands.
VR environments will increasingly be used by online retailers to provide immersive, feature-rich shopping experiences. At the same time, AR will be deployed by offline retailers to allow customers to access information about products they find on the shelves. While this pandemic continues, retailers are using tech-driven solutions to allow customers to virtually try out clothing and makeup, reducing contact between shoppers and in-store items.
This convergence means offline and online retail both benefit from advances in technology and changing patterns of behavior.
AI increasingly customer-facing across the retail industry
AI-driven big data retailing has been maturing for some years now, with major retailers relying on advanced analytics to understand what should be stocked in their stores and drive efficiencies in logistics. Newer developments have seen this technology moving from back-of-house to front-of-house, with customer-facing initiatives such as chatbots and virtual assistants. Likewise, while robots have been hanging out in warehouses and stock rooms for a while, assisting with inventory management, in 2021, we can expect to see them taking to the shop floor too.
With so many of us stuck at home and retailers unable to find new customers by enticing us to walk into their stores, more resources will be focused on growing customer numbers with AI marketing outreach. This is used to work out whether their best customers are likely to be spending their time on Facebook, Netflix, or taking part in Zoom calls, and assigning advertising budgets accordingly.
AI-powered voice recognition technology has improved to the point where it can truly be used to add value both in-store and via e-commerce apps. Just as it is becoming increasingly common to use our voices to control our devices or search the internet, we will increasingly use them to get information and make purchases, and retailers will adapt their infrastructure to fit these changing habits.
Autonomous Deliveries and Fulfilment
This one’s been on the horizon for a while, but with the pandemic-driven changes, we’re making to our behavior this year, we’re likely to see ideas such as self-driving delivery vehicles and drone delivery really coming to life. Though switching to online ordering and deliveries reduces the likelihood of coming into contact with people carrying viruses, there’s still a fear of contamination caused by poor hygiene at order fulfillment centers or delivery networks. Autonomous fulfillment and delivery reduce risks around this, which is a factor likely to lead to accelerated acceptance and adoption of these new technologies.
Over the next year, autonomous delivery initiatives are likely to remain focused on “last mile” solutions, employing self-driving vehicles and airborne drones for trips between fulfillment centers and consumers’ homes.
Again, several trends will be involved here, including AI, to manage logistics and routing. Others will also most likely include blockchain, to ensure security and transparency along supply chains, and digital twinning, allowing sophisticated models of logistics and fulfillment operations to be built, driving efficiency.
See it, like it, buy it!
Forget shop both online and offline – purchases directly from manufacturers through influencers, advertising and even TV shows is likely to become an increasingly prominent part of the retail landscape throughout 2021.
Retailers have long encouraged bloggers and influencers to earn money by sharing affiliate links, and advertise via product placement. Increasingly, brands are able to cut out the middle man and sell directly to the consumers who follow and engage with these online taste-makers. The trend started with megastars like Kim Kardashian but has increasingly trickled down into niche markets served by micro-influencers. This has largely been enabled by tech-driven supply chain innovation, making “drop-shipping” possible– direct delivery from manufacturers to customers via a sales agent, such an influencer or popular website, that can run a retail business without the hassle of buying stock or fulfilling orders. Brands, including Body Shop, have successfully co-opted the direct sales model pioneered by the likes of Avon, creating networks of micro-influencers often selling to friends and family.
Another exercise in cutting out the middle man of the traditional retailer is seen in experiments with shoppable TV. NBC rolled out technology that allows app users to be notified when products they see on screen are available for direct purchase. This actionable product placement means customers can interact and make purchases directly from TV advertising, but we can also expect to see it rolled out through sports coverage and entertainment TV, as brands look for new ways to engage with their digital audience.
Personal shopping at scale
Well-heeled shoppers are used to receiving personal attention when shopping at high-end stores, and personalizing their high-value purchases such as cars, bespoke clothing, and jewelry. However, technology is now ushering in a new age of mass-personalization, allowing this to be carried out at scale across a growing range of goods and services.
Recommendation engines are used in e-commerce to point us towards products we’re most likely to want or need. The same technology is now being rolled out in retail outlets, arming shop assistants (or possibly robotic ones, see above) with information on who we are, and our past purchases. Beauty product retailer Sephora collects information on customer preferences via an app as they explore and rate products online, and makes them available to sales staff when they visit a store in person. According to analysts at McKinsey, initiatives like this typically reduce marketing costs by around 20%.