Inside Logistics

Retail trends in 2020


December 31, 2019
by Beth VanStory

While 2019 was a year of big changes in retail, 2020 will bring even more exciting innovation. Retailers who embrace new technology, deeply explore, understand and leverage consumer behavior, and test new concepts will win. So, what’s in store?

Physical shifts in stores continue

Well, first, we’ll see more closings of well-known stores. Brands that have failed to innovate won’t survive. One of the most recent to succumb is craft retailer A.C. Moore.

Other brands will be reborn. Take Lord and Taylor, for example. Under new ownership, the renowned department store, which closed its large store in NYC early in 2019 is opening a small-format, pop-up store.

In other pop-up news, Glossier has partnered with Nordstrom to open store-within-a-store mini-boutiques. Expect to see more pop-up stores as both established physical retailers as well as online retailers test the waters and leverage the scarcity principle to drive purchases.

Time Matters

Amazon has set the bar high for delivery. A recent study by Forbes showed that 88 percent of consumers are willing to pay for same-day (or faster) shipping. Smaller retailers who don’t have the logistics infrastructure will need to partner with delivery experts to satisfy consumers’ demands for instant gratification. To that end, even large apparel retailer, Old Navy recently partnered with Postmates to offer same-day delivery.

Data geeks required

The amount of data from IoT devices, social media, customer transactions, web browsing, store visits and more can quickly overwhelm retailers who lack the right analytics. Retailers with sharp data scientists will improve product development, better manage inventory levels locally, and optimize the customer experience seamlessly across channels.

If you don’t have cracker-jack quant jocks and IT geeks, the time to get them is now. They will be critical to driving revenue, reducing costs, and delighting customers.

Alternate realities will enhance customer experience

As the online experience continues to improve through the use of things like Virtual Reality (VR), offline will benefit from technologies such as facial recognition and Augmented Reality (AR). Customers can “try on” outfits or makeup or even see how furniture will look in a room. IKEA’s Place App uses AR to let you view its furniture in full-scale in your home – a big time saver and fun at the same time.

AR is the critical technology behind visual search. Look for voice and video search to soar in 2020. Voice search already comprises 20 percent of Google searches. Retailers must implement schema on their site to make them voice searchable. Gartner estimates that in 2020, 30 percent of the searches will not use a screen. As for image search, Pinterest Lens is leading the way.

In addition to driving more sales, these technologies could ultimately reduce returns – a critical challenge with online customers for many retailers. according to Paazl. While returns rates to stores are around eight percent, this jumps to around 25 percent for items bought online. By enabling try-before-you-buy experiences, customers will likely feel more confident in what they buy and not feel the need to order three sizes of the same dress.

The lines between online and offline don’t just blur, they blend

Research firm JRNI found that 75 percent of consumers research products online and then purchase in-store. And 54 percent click and collect. That is, they order online and pick up in-store, affording the retailer an opportunity to upsell and cross sell additional items or services. Other consumers operate in reverse – shopping in-store and then purchasing online.

To best capitalize on shoppers entering their stores, sharp retailers will arm their store personnel with rich customer data. Using facial recognition to identify customers entering the store and then referencing customer purchase histories – including sizes, and employing recommendation engines, in-store personnel can provide a more personalized and meaningful experience to the consumer.

Customer-first retailers will also arm their customers with useful tools to use in-store. Take beauty brand, Sephora, for example. While in their stores, customers can use the Sephora app to look for special loyalty program discounts or order items that are out of stock in the store. Outside of the store, they can test product colours and put them in their cart for in-store pick up.

Localization and personalization take centre stage

As the saying goes, all business is local. Tastes vary locally. Developing and stocking products that most appeal to a local market will provide an advantage to retailers. Take Adidas, which is developing, producing, and offering for sale running shoes specific to local terrain and weather.

On the personalization front, Levi’s offers custom embroidery centres for creating your own unique look – right in their store. Knowing your local audience and offering one-of-a-kind products turns retail into me-tail.

Social shopping explodes

According to GlobalWebIndex, 28 percent percent of Internet users search for products in social media. In 2020, social channels will make it easier to purchase in-app. With Shoppable Links and posts and IGTV, Instagram is making inroads. The company is already experimenting with a native payment system.

And Pinterest Shop features 17 U.S. small businesses offering products from jewelry to apparel. In 2020, TikTok is a channel to watch. Walmart recruited TikTok influencers to post videos of them dancing, showing off their great savings and encouraging others to take up the challenge, tagged the #SavingsShuffle. By late September, 26 videos tagged with the #SavingsShuffle together had racked up 450 million views. Now is the time to test social shopping. Retailers who embrace it will likely find success.

If 2019 was the year that retailers woke up from retail-apocalypse, 2020 is shaping up to be the year of the customer experience. What do you think will impact retail the most in 2020?

Beth VanStory is a partner with Chief Outsiders where she serves as a fractional CMO for clients. Her retail experience includes launching and leading OfficeDepot.com and serving as a board member of Michael’s Stores.