Five Trends Shaping Retail In 2020
Philip Hall, Managing Director Europe, CommerceHub
From high street closures to general economic uncertainty, 2019 has not been an easy year for retail. It has pushed retail to its limits and with no sign of the pressures easing in the near future, it’s going to be interesting to see how the industry fares over the next twelve months. For many, it could be a case of survival of the fittest. However, Retail can be a resilient sector and those who invest in themselves for when the going gets tough often manage to keep afloat, despite the volatile environment. From changing buying habits to personalisation, low confidence to fatigue around AI, here are five trends set to shape the retail industry in 2020.
Curated Selling
2020 will see a shift in buying habits. Consumers appreciate guidance and help when it comes to their shopping experiences, so when a retailer can offer a ‘one stop shop’ model, this can be very successful. Not only is it incredibly convenient for a time poor shopper, but it allows retailers to broaden their solutions and product range, therefore attracting more customers.
B&Q has become more design led in its approach. By merchandising their website in such a way that allows customers to browse by rooms and projects, as opposed to searching for a single item. M&S is another great example of a retailer tapping into this way of purchasing by selling pre-packed recipe kits featuring a recipe card and M&S products. Both retailers have curated their channels, meaning they have more control over what the customer buys. And customers buy into it because of the convenience. In the next 12 months, we can expect to see more retailers adopting this way of selling, promoting solutions as opposed to single products.
Profitable Personalisation
Most retailers offer personalisation to some degree, be it personalised email offers or product recommendations related to purchases. But are they actually utilising it in the best way to drive profitability? In 2020, retailers will have a renewed focus on ensuring they are offering a personalised experience for the customer. A great example of a retail platform already doing this is eBay, who utilise customer ‘watchlists’ to send targeted offers, driving conversion and pushing customers to make a purchase based on the offers they are actually interested in.
This new era of personalisation will see retailers go back to basics and use technology to recreate a corner shop model whereby each interaction with a brand feels unique and specifically curated to every consumer.
AI Fatigue
Artificial Intelligence (AI) has been one of the biggest buzzwords of the past few years, dominating conversations around retail technology. And despite predictions that AI will be used by at least 60% of organisations for digital commerce in 2020, retailers are beginning to realise that AI is not the answer to everything. It delivers value, but it hasn’t met expectations.
Over the next year, retailers will be more wary of how they adopt AI – if at all – and make careful considerations as to whether it presents a viable business case. In the rush to embrace innovation, it is crucial that retailers don’t move away from their bottom-line objectives and forget to consider AI’s overall impact on the business.
Investment in Robotics
Where retailers might be hesitant to adopt AI powered technology, they certainly aren’t holding back on investing in robotics to increase efficiency in the supply chain. Robotics have been around for years, however, they still present a very clear ROI which is compelling to retailers. So as pressure mounts to deliver on a fast, streamlined customer experience, we could see an increase in retailers choosing to implement robots in their warehouse rather than investing in people. Not to mention, the option to rent a robot gives retailers the ability to scale up operations during busy periods.
From picking to moving goods around the warehouse, robots have the ability to take mundane tasks away from humans, creating an efficient warehouse that underpins the supply chain.
Low Customer Confidence
With so much uncertainty surrounding the future of retail throughout the duration of 2019, it is unsurprising that in GFK’s 2019 Customer Confidence Survey, the confidence index had decreased to -14 in August. All five measures decreased, including the major purchase index which had decreased by five points from 2018. This shows that economic and political pressures aren’t just impacting retailers, it’s impacting customer confidence too. With Brexit being pushed back even further, we can expect to see this low confidence continue into 2020.
The Conscious Consumer
The “Blue Planet” effect has extended far beyond plastic bags, bottles and coffee cups. Retail is now under huge pressure to show how it is reducing its carbon footprint. With global movements such as Extinction Rebellion highlighting the impact of fast fashion and single use plastics, retailers and brands can no longer afford to ignore their contribution to climate change, else they risk losing customers and leaving behind a tarred reputation.
Consumers are demanding more transparency into where products come from, more sustainably sourced materials, a reduction in single use products and a focus on ethically made goods. It’s clear that sustainability has been a high priority for many retailers this year, with brands such as Zara and New Look announcing plans to move towards more sustainable sourcing and production. In 2020 we can expect to see more brands and retailers taking steps to reduce their environmental impact and perhaps more stringent regulation from governments to help create a more eco-friendly supply chain.