2021 will look to repurpose store space as sales move online
In 2021, retailers will be looking at how to repurpose excess store space as in-store sales reduce. Some of this will be a move to ‘dark’ stores or creating additional backroom space as retailers look for new ways to cater for rising online demand. We’ve already started to see major retailers turn shop floor space into local distribution or fulfilment centres where orders can be packed up for delivery or for curb side collection. This is the start of a major trend, which could play a key role in helping those retailers that have been hit hard by pandemic, such as department stores, to stay afloat. It’s likely we’ll also see retailers collaborating with each other more by sharing the floor space that has suddenly opened up – this will be key to saving costs at a time when many are struggling. Retailers should also be looking at their click and collect operations to provide a separate easy process for store pick up, or even curbside collection.
Retailers will need to re-think how they manage stock – short term fixes simply won’t do it
In response to lockdown regulations, many retailers have looked to sell their store stock to clear excess inventory or as a way of alleviating pressure from their online warehouses. But in 2021 they need to move away from just thinking about clearing a short-term problem and take a more strategic approach. This means everything from forecasting demand by fulfilment method, to ensuring inventory is in the correct location to meet the omnichannel demand. Ensuring the right level of inventory is in the right position to enable the omni-channel shopper to buy conveniently whilst minimising costs and risk to the retailer. The impact of COVID-19 is likely to continue for much of 2021, so the pressure on online delivery and multi-fulfilment options will remain. Flexibility will be crucial in order to manage stock and keep up with changing consumer expectations.
Retailers will offer more subscription services
From craft beer to make-up, 2021 will see subscription services continue to develop as consumers look for the convenience and dependability that comes from having products and services arrive at their door on a recurring basis, especially when this is enabled a price reduction or free delivery Subscription-based services will provide retailers with more supply chain and revenue predictability, but also the opportunity to upsell and build customer loyalty over the longer term.
Online retail will start to become more sustainable
Despite COVID-19 initially derailing many initiatives – such as the removal of plastic packaging – sustainability will remain a priority in 2021. Consumers will increasingly be thinking about how sustainable their shopping habits are now that the pandemic is tipping the scales in the direction of online purchases more than ever.
This will force retailers to start offering more sustainable delivery choices, both for the sake of the planet and to keep customers happy. This could include greater collaboration to reduce the number of deliveries across multiple retailers, or providing smarter delivery options, such as only receiving delivery when someone else nearby is receiving something too. There are often four deciding factors with online delivery – cost, convenience, speed and sustainability. With many of us now working from home, convenience becomes less of an issue as the issues around hanging around waiting for a delivery diminish.
The recycling market will also continue to develop as customers both look to make their own impact on avoiding landfill as well as looking to generate extra income. Whether through apps or marketplaces, or through channels being offered by many retailers, this new market will also have an impact on new sales as well as the expectations customers have of their retailers.
AI will help retailers make smart decisions in the face of unpredictability
A lack of automation has slowed retailers down during the pandemic, with nearly 80% having to increase manual intervention in response to fluctuating demand and supply. In 2021, retailers will need to adopt AI to help keep up with these unpredictable swings in demand. Understanding the on-going changes in consumer behaviour or how daily life changes as a vaccine rolls out, retailers will need supply chains flexible enough to keep up. AI can be used for smart decisions on everything from sourcing items at short notice to figuring out new logistical plans. However, they must think strategically when investing in AI. Thinking carefully about exactly where they want to make changes and ensure it helps meet business goals, rather than just serving a limited purpose.
Role of the store will continue to evolve
COVID-19 may well encourage a reappraisal of the role of the store. One example is location: shoppers are looking to buy locally to avoid travel and crowds. Whilst there has been an irreversible expansion of online retail, the pandemic has also shown the importance of the physical space. Online growth has in no way made up for the loss of instore sales. The store remains a necessity in the retail landscape.
Retailers will need to work harder encourage customers to visit stores, and strike the right balance convenience and an immersive experience. Immediacy of purchase will become a key distinction, placing even greater emphasis on availability and collection facilities. Stores need to be a place to browse, whether for purchase now or later, and feel like an integrated part of the online experience. Customer service must be a differentiator, including returns management. Many customers prefer the immediate exchange or selection of alterative products when returning to a store. In the past, online was the place to search for a bargain, but many stores will look to offer promotions and events to drive footfall. Cost management will be imperative, so efficient utilisation of a motivated workforce, as well as control on rents, will be key. The economics and purpose will need to adapt, but the store will remain a crucial part of the retail landscape.