2020 Won? What we can expect this year in Retail.

How 2020 changed retail, what to expect in 2021 and why personalisation is more important than ever.

Author: Amber Cella, Venture Co-Founder

Existing trends accelerated

2020 accelerated existing trends in changing consumer behaviour – a move to online shopping, increased expectations of relevance, value, speed and convenience. Stay at home mandates caused behavioural changes to speed forward years almost overnight.

Bricks and mortar retailers were hardest hit. Those that adapted and improved their e-commerce experience survived and thrived. High-street legacy businesses that were already struggling and those that failed to adopt an e-commerce approach suffered huge losses. Debenhams and Arcadia Group both failed to adapt quickly enough and found their existing problems exacerbated by the pandemic. Takeovers by digital natives Boohoo and ASOS, respectively, tell a clear story about the future for retail – neither want to keep the physical stores.

This year, there is some cause for optimism but consumers are unlikely to return to their old habits in full when some semblance of normality returns. Even with vaccine rollouts bringing hope and the potential for a post-pandemic boom, the fabled ‘second roaring 20s’ as was seen after the 1918 flu pandemic, majority of consumers will still be spending an increased amount of time and money shopping online rather than visiting physical stores.

Destination shopping still has a bright future

The exception to this will be those high street retailers that provide a true shopping destination with complementary experiences. Pop-ups for food or beauty and entertainment will be core drivers to convince consumers to visit stores in person. For the large retailers that means a focus on quality, not quantity, when it comes to store locations. Selfridges, for example, are faring better than John Lewis as a result of their ability to be nimble and provide a 360 customer experience in their small group of sites. With less than a tenth of the stores to focus on, additions like in-store cinemas, Japanese flower markets and art installations are made a reality.

Physical stores must adapt to survive

Retailers with bricks-and-mortar locations are expected to focus this year on adapting and reinventing their business models. John Lewis announced multiple store closures and were even given the green light to convert 45% of their flagship Oxford Street store into office space. Following suit, other retailers with large store networks will have to rethink how they use these. Permanently reopening the doors to the same store that closed for the first time in Spring 2020 just won’t cut it. Store segmentation can help retailers identify which stores should remain open and the ideal product mix they should hold.

E-commerce needs to get personal

For online retailers, the key to success will be providing a personal, relevant and positive shopping experience that drives conversions and customer loyalty. Of course, continuing to provide value, reliability and speed will also be crucial. Some of the biggest ‘winners’ in retail from 2020 are those that had purpose-built systems to do this. Ocado, as a digital native grocer, saw its share price more than double. No surprise given that its challenge was to increase existing capacity rather than reinvent the wheel.

Other digital natives with a strong foundation of technology and data-led customer experience, thrived in 2020 and are likely to continue to do so this year. Amazon’s meteoric rise continued as they expanded operations to keep up with increasing demand. But the message to retailers wanting to future-proof themselves this year is not that you need Bezos’ budget to do so. Though it would certainly help. 

Streamlined online shopping = success

Instead, all businesses can take a leaf out of the digital natives’ books. The key takeaway has to be that providing a positive and personal experience for online shoppers is the way forward. The more streamlined and simple it becomes for a customer to find the products they want from an online shop, the more likely they’ll be to buy them. That’s why the most successful players within e-commerce provide relevant recommendations and targeted offers to drive loyalty and customer lifetime value.

For retailers who saw a huge increase in customer numbers as a result of the lockdowns, finding ways to communicate with those customers and maintain relevance as the retail climate changes this year will be key to retention. For those who suffered losses, driving customer loyalty and increasing conversion rates and lifetime values is just as crucial, if not more so.

Take action now

For retailers looking to boost their e-commerce customer experience, using a tool that enables multi-touch personalisation is a great start. More generally, there are a few steps that can be taken to start the journey:

• Focus on the data – Ensuring that you have a robust process for recording and utilising customer data is crucial. Clean transactional data and a strong CRM can power advanced predictive analytics to give your business an edge. Implementing AI+ML can help you create a personal shopping experience for every customer, but it’s only possible with a foundation of good, clean data. If your data isn’t in the best shape to start with, you might benefit from a single customer view or data migration work to help you get the most out of it.

• Monitor performance closely – The metrics for success when it comes to in-store shopping are obvious. Takings at the till, customer numbers and feedback. Online shopping provides a wealth of additional information if you know how to record it and act upon it. Understanding what your customers are buying, why they’re buying it and how they reached your online store is paramount to success. In an ever-changing and still largely unpredictable climate, a test and learn approach is advisable. Measure performance, forecast where possible and be agile and adaptable.

• Customer service is key – Right now, customer service is crucial. Customers are much less forgiving when shopping online. In-store, they’ve committed their time to travel and browse and for most people that makes them more likely to purchase. Online, if a customer can’t find exactly what they want, at the right price, they will simply lose interest and go elsewhere. Providing a positive customer experience with relevant products, helpful assistance and an easy to navigate website is core to success.

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