What To Expect In 2020: Five Major Retail Predictions For The New Year
Imagine a world without 2-day Amazon Prime shipping. Weird, right? The changes in how consumers buy goods and services over the last decade are mind-boggling. While some industry analysts prematurely predicted a “Retail Apocalypse” that never really came to fruition, what actually happened was more of a “Retail Renaissance” – a reckoning with how consumers navigate the purchase journey in a world of ever-increasing choices. Inevitably, some companies smoothly adapted, while others were left in the proverbial dust.
In this blog, we’ll explore five of the most compelling retail predictions to consider in 2020 – predictions that both companies and consumers should take note of in the months to come. By paying attention to trends and adapting accordingly, consumers can make smarter purchase decisions and retailers can learn how to develop and execute future-thinking retail strategies. Here are the top five trends to watch for in retail this year.
1. Concept and Pop-Up Stores Are The Future
According to EDITED data analyst Kayla Marci, “The efficiency of online shopping forced brick-and-mortar businesses to be fresh and innovative to survive in today’s challenging climate. The pop-up model then emerged as the store of the future, and it’s not going anywhere in 2020.”
Experiential store formats are growing in popularity – customers can buy nearly any product online, but they are still unable to fully experience most products from behind their computer screen. To become fully immersed in the product’s offerings, experiential stores create the opportunity for customers to come in, hold the product in their hands, and absorb information about the brand and the company’s other merchandise while they’re in the store.
Concept and pop-up stores are also a great opportunity for employees to have face-to-face interactions with potential customers and further educate them on the products offered. As Erin Mills, VP of Experiential & COO of MAG said, in 2020 it will be essential to “connect viscerally with consumers. It’s an election year, a lot is at stake. Emotions will be powering many decisions, so companies need to make that human connection.” By fostering in-person interactions, brands can ideally develop long-lasting relationships with their customers.
A company that has seen a lot of success with pop-up stores is Glossier, a New York City-based skincare and makeup company that originally sold their products online, but now opens visually stimulating experiential and temporary locations in cities around the world. People line up around the block to check out these pop-ups just for the experience of going, as all of their merchandise is also available for purchase in their online store.
2. Differentiation Is The Key To Growth
The past decade’s buzz words have included terms such as “integrated,” “holistic,” and “experience” – so what will the first buzzword of this decade be? According to Eric Wartman, VP of Client Service at BDSmktg, “retailers should focus on three ideas: differentiate, educate, and tell a story.”
Consumers have infinite purchasing options at any given time and are able to make decisions with a couple taps on their smartphone. That’s where the importance of differentiation comes in. Why should consumers buy YOUR product above anyone else’s? The more you can differentiate your product from the competition, the better. But to really drive it home to discerning consumers, you’re going to need to educate them on why your product is the best on the market. An easy, memorable way to do that is to tell a story about the product that consumers can remember when they’re ready to make a purchase decision.
Take, for example, the ubiquitous iPhone. Its origin story is just as iconic as the product itself. They even made a movie about it! Steve Jobs began Apple in his parents’ garage in 1975, and the company has since blossomed into an omnipresent, international technology brand with a cult following. Sure, there are plenty of similar products on the market – Samsung and Microsoft, to name a few – but at the end of the day, everyone wants the level of integration and status that comes with owning Apple products. Apple excels at differentiation; their most successful marketing campaign was literally led by the slogan “Think Different.”
Something to consider when strategizing how to differentiate a product: consumers are increasingly perceptive and selective, given the enormous array of options that lay before them. What can give you the competitive advantage you need to attract people to your product? According to Erin Mills, the key is not trying overly hard: “Just be authentic. Today’s audiences know how to sniff out anything else.”
3. Artificial Intelligence Will Improve The Consumer Experience
We are officially in the future – while we don’t have flying cars and can’t yet vacation on the moon, there have been some technologically significant developments that are now becoming mainstream and efficiently enhance the customer experience.
“I expect AI (artificial intelligence) to be big in 2020,” said Jeremy Rodgers, Director of Training Support at BDSmktg. “From self-driving cars to processing data analytics and consumer behaviors to robot security guards, AI has been making a push in the past few years and will continue to be big in 2020.”
Lowes uses robots (a.k.a. Lowebots) to assist customers by locating and monitoring inventory within their cavernous stores. Walgreens uses AI to track which of their locations are filling the most anti-viral prescriptions, which allows them to predict the spread of the flu, therefore allowing them to better stock stores and treat patients in certain areas. Having trouble finding the perfect lipstick? Sephora has you covered with their Color IQ technology – a customer scans their bare face and the AI technology is able to recommend shades of foundation, concealer, and makeup that will be complimentary to that person’s skin tone, which saves time and money and removes shopping guesswork.
4. Blurred Lines Between Online And In-Store Shopping
“Buy online, pick up in store” wasn’t a widely available option 10 years ago, but now it’s a common phrase among consumers. Whether you’re ordering a burrito from Chipotle to have waiting for you on your lunch break, or claiming a cute pair of shoes you saw on Nordstrom’s website and picking them up in store later that day, many companies are adopting the “buy online, pick up in store” strategy. Why?
“A hybrid form of commerce where shoppers can move seamlessly between physical and digital worlds of retail as they research products and make purchases is on the rise,” said Charudatta Ganpule, head of retail research at Tata Consultancy Services. “This trend is driving traditional brick-and-mortar retailers like Walmart, Target, and Best Buy to enhance their online functionality and offerings, while also pushing e-commerce retailers from Bonobos to Amazon to open brick-and-mortar stores.”
Allowing consumers to shop this way gives them the best of both worlds – shopping from the comfort of their couch, then going to the store knowing their order will be waiting for them. It also benefits retailers because this method of purchase gets customers in their retail locations, increasing the chances that they will see something else to consider buying while there to pick up something they’ve already purchased. Additionally, this method ensures an opportunity for interaction between customer and salesperson, giving the company another chance to strengthen the personal relationship between the consumer and the brand.
Indeed, companies that blur online with in-store shopping by offering generous return policies, exemplary customer support, and easy exchanges through the mail continue to thrive. A great example of this model is the bra company ThirdLove. Bra shopping is not easy, so company founders Heidi Zak and Ra’el Cohen teamed up in 2013 to design a new kind of buying experience, and the company has since exploded in popularity. Its revolutionary policy is that you have 60 days to try out a bra, and if you’re not happy, return it for a full refund or exchange. The returned bras are then washed and donated to organizations that empower women. This ensures no product is wasted, the company’s existence positively affects society, and customers end up with their perfect fit, every time.
5. Sustainability, Sustainability, Sustainability!
Not being environmentally conscious is so 2010s. In this new decade, consumers are adding another important layer of consideration to the items they purchase: is it sustainable? Fortunately, vintage is on trend and perfectly supports the idea of a circular economy – where resources are reused and repurposed, extending the product’s lifespan and not creating any new waste.
Many companies have adopted this idea and new companies are springing up with resale as the foundation of their business. TheRealReal is an authenticated luxury consignment company that filed for an IPO in 2019, and offers two big draws: mint condition resale luxury fashion items for sale at a fraction of their original price, plus the option to consign your own luxury items to TheRealReal for up to 80% back of what you originally paid.
Another similarly-structured (but less expensive) company is called ThredUP, and it partners with more than 100 existing clothing lines to connect with potential customers and donors – you order a “Clean Out Kit” and send ThredUP your gently used items you no longer wear. In return, ThredUp rewards you with cash, a shopping credit, or a donation to a charity of your choice, and they also resell your clothes. Sounds like a win-win, right?
Sustainability doesn’t necessarily only mean buying secondhand, but it does mean being intentional about the purchases you make. Green Strategy has listed several ways to be sustainable in your buying decisions, including renting, leasing and swapping, purchasing items with a timeless design, making sure your purchases are fair and ethical, and finally, repair, redesign, and upcycle old materials. Incorporating even one of these elements into your purchasing decisions will have a big environmental impact.
How Can Brands Make Sure They Are On Track For Success In The New Decade Of Retail?
Unfortunately, we can’t look into a crystal ball and know exactly what the future will bring, but we can look back on past data trends and draw educated conjectures about the bright outlook on retail. While shopping methods will continue to evolve, the constant is that consumers will always want to purchase products. As long as retailers are flexible and develop along with the demand of their consumers, they should be able to find success in this new decade.
“The next ten years for retailers will be exhilarating and fiercely competitive,” Erin Mills said. “No one could have predicted the impact that social media and cord-cutting would have over the past decade. Certainly, the next 10 years will be mind-blowing. I expect to see data driven, channel agnostic marketing campaigns.”
Are you ready to start 2020 off on the right foot? BDSmktg is your marketing and sales agency, specializing in retail, digital, and experiential marketing. We equip brands with strategies that adapt and grow with the changing needs of their customers so that your brand can be everywhere. Contact us or call us at 800.234.4237 to get started.