Last updated on February 28th, 2020 at 04:47 pm
The last decade has been an interesting one for retail. Up until recent years, the industry wasn’t terribly progressive. But it has been forced to evolve at an astounding rate, in large part due to the rise of Amazon and the ubiquity of mobile technology.
We have several more years of transition and transformation ahead of us, that’s for sure. So, we asked our subject matter experts at NewStore what trends they think will take hold in retail in 2020. Here are some of their predictions about the future of the industry.
A reinvention of the “typical mall”
The mall shopping center – a thing of the past. Or that’s how it feels at least. Countless brands you used to find in the typical mall have gone dark. Their shoppers have shifted their buying to online, resulting in the malls themselves changing or closing. And further change is coming.
As stores are no longer solely for selling inventory, mall owners will need to figure out a new measure of success other than sales per square foot to stay afloat. The ability to sell from other locations, warehouses, and channels while tracking sales back to the original demand location will be critical. Mall owners will look to entertainment venues as their anchors rather than big department stores. And, they will look to build modern service centers for consumers for things like convenient returns and purchase pickup. They have to keep it interesting or else consumers will shop online.
More of a focus on niche commodities
New and emerging direct-to-consumer (DTC) brands will lean into niche commodities. Meaning, retail brands will create the “best” product for consumers but only within their own lane. Customers no longer need or want a one-stop-shop for everything just because it is the most convenient option. They now are fine with getting the “best” socks from Bombas, the “best” hoodie from American Giant, the “best” jeans from AYR, and so on – all delivered right to their home.
These brands benefit from offering high-quality products with a great story while providing a convenient, exceptional shopping experience. They may primarily start online, but brick-and-mortar is a huge opportunity area. Despite being known for having the “best” of a certain item, the retail experience for them will be centered around their brand story, and not just their product offering.
Gradation of store formats for a single brand
Physical retail is not one-size-fits-all. In the next year, we’ll see that come to life in the industry as well as for single brands. Lululemon is one brand blazing the trail with “store gradation,” or what it calls “agile” store formats. It now has four different store formats in its fleet: a pop-up, a 3,000-square-foot store, a 5,500-square-foot store, and a 25,000-square-foot experiential center.
It starts with experimentation and understanding what your shoppers need and from where. Eventually, every brand will have a store portfolio that they can pull from as they scale based on city, community, local sales, and more. Regardless of store size though, every retailer needs a space that can entertain like Disney, transact like Apple, and fulfill like Amazon.
The rise of the “pop-in”
Brands use pop-ups for many reasons, from testing the potential of physical retail to engaging customers through immersive and interesting events. More than anything though, the root of the strategy is creating a lasting impression with customers. So, why not use the pop-up mindset and bring it in to the store with a “pop-in”?
It’s not quite the store-within-a-store concept. Rather, it focuses on the same thing a pop-up does. A seasonally-relevant, Instagram-worthy brand activation – maybe it’s a speaker or an activity – that gives shoppers a reason to come to the store for the novelty of the experience. Stores are where the majority of transactions are made, so it’s important brands find ways to keep people coming back for more.
Blockchain to come into view
The consignment and resale market has grown in popularity in recent years with the rise of The Real Real, Rebag and more, as well as digital resellers like ThredUP and Poshmark. The growth is fueled by millennial and Gen Z shoppers and their increasing interest in sustainability and brands that share their beliefs. As such, the secondhand market is expected to more than double over the next five years.
With the proliferation of secondhand comes the inevitable issue of counterfeit goods. This can be really damaging to a brand’s perception and a customer’s trust, so more retailers will be looking to protect consumers and their brands against counterfeit with blockchain technology, specifically through supply chain security and creating a 360-degree view of a product’s lifecycle.
Inventory accuracy becomes an imperative
According to Coresight Research, apparel retailers had a 60% full-price sell-through rate in 2018, a result of poor inventory management. Our Director of Omnichannel said in a previous article that inventory accuracy and data integrity are the backbones of omnichannel success. This is why in 2020 more so than ever, this topic is one that retailers will look to tackle head-on.
For many brands today, inventory management is done with systems that haven’t evolved for modern retail. RFID is the exception. Its cost has come down as its adoption has grown, and it is much more attainable than in the past. Accenture found RFID can increase inventory accuracy from 70% to over 95%. We’ll see retail brands setting this growth as their goal to kick off the new decade.
What trends, technologies, and innovations do you think will shape the future of retail? We’d love to meet you at NRF 2020: Retail’s Big Show to hear what you think. Connect with us there!