With 2020 in full swing, we can begin to look at how much the retail landscape has changed over the last decade. The financial crisis of 2008 kicked off an era of frugality that has affected every aspect of retail. From the bargain hunters to the daily closures of brick and mortar stores, many have coined this as the “retail apocalypse.” Large online stores like Amazon and discount stores across the US continue to drive deep discounts through Prime 2-day shipping programs. Couple that with a changing, ever more tech-savvy consumer base who expect convenience and interchangeable service between in-store and online shopping, the omnichannel experience has become more in demand than ever.
The only thing that we know from this shift in consumers is that traditional models no longer work. Supply chains are too slow, options aren’t diverse enough, and the GenZ consumers are focused as much on sustainability as they are style. This last decade may have seen the demise of malls as anchor stores like Sears, Kmart, Barneys and Walgreens all announced massive store closures and bankruptcies, however it would seem that those that have survived thus far are beginning to understand the new retail environment.
But enough with the doom and gloom, BrandedOnline is here to help you shift direction and succeed in this new omnichannel world. Here are 4 key points of view on what the retail industry should expect in 2020.
1. Privacy Regulation Will Reshape Personalization. Coming on the heels of several high-profile data breaches in 2018, in which 20 or so major retailers’ consumer data was hacked and had personal information stolen, many states are working to enact sweeping consumer privacy legislation.
Leading the charge, the much-touted California Consumer Privacy Act of 2018 (CCPA) has just been put into effect as of January 1st, 2020. Similar to GDPR, it mandates that companies secure consent from their consumer base when it comes to collecting and using data.
This recent piece in Fortune explains its impact on retail pretty clearly: “The [CCPA], could play havoc with the online economy, since so many companies—from tech giants to ordinary retailers—rely on targeted ads. “…while most consumers in the United States would welcome personal data protection rights similar to GDPR, research found that on average, 71% of consumers express some level of frustration when their experience is impersonal.”
Many retailers are stuck in the middle, unprepared for this drastic data collection change. Major retailers like Walmart, Kroger and Target are exploring if, like Amazon, they too could utilize their own customer data to build an advertising business in order to increase cart value and utilize ads to mitigate revenue losses, without relying on third party systems. The bottom line is to make sure you have a good technology partner or risk opening pandoras box of privacy litigation.
2. Online Shopping Will Accelerate Even More. Surprisingly enough, e-Commerce growth spurs in-store retail. A long-standing fear has been that online only brands would poach in-store sales. However, studies have shown that more than 55% of shoppers still prefer to shop in-store than online, which is up from 47% just a year ago. A key factor in this shift seems to be convenience. Many consumers claim that allowing them to buy items online while still being able to pick them up in-store, is often faster and easier than waiting for an Amazon delivery. As more brick-and-mortar stores adopt this omnichannel marketplace, enabling consumers to buy online and pick up in store or enjoy curbside pickup, these ecommerce sales extensions will fuel growth in physical stores.
According to statista, global ecommerce sales are expected to top $4.8T by 2021, with the latest ecommerce growth forecast suggesting that ecommerce sales in the US alone are projected to be around $600B by 2024. As brands start to realize this partnership between their online efforts along with their physical footprints, it’s going to look less and less like online retail is cannibalizing in-store sales, and more like a symbiotic relationship.
3. Sustainability is no longer just a marketing buzzword. No longer is sustainability just a nice-to-have addition targeting conscientious shoppers. Generation Z shoppers have fast become the target audience for brands and retailers, and according to eMarketer, 68% of Gen-Z shoppers are increasingly considering sustainability when making purchases.
In order to meet these consumer’s expectations, retailers and brands are forced to focus on more sustainable business practices. From waste reduction to the eliminating physical samples, the key will be tapping into highly tailored customer profile technologies in order to anticipate consumer demand. AI machine learning personas will help to address this more consumer conscious market.
4. Gen Z’s are now IN. Speaking of Gen-Z, they have officially replaced the millennial as the most sought-after demographic. Colossal changes in retail happened over the last decade of the millennial generation. As millennials flock to e-commerce sites and fast-fashion brands like H&M and Zara, department stores such as Macy’s and Sears have suffered, closing hundreds of stores across the US. Part of the reason is when millennials do spend money, they are spending more on experiences like restaurants and travelling. Millennials were less drawn to aspirational, designer brands and they are perfectly happy saving money by buying private-label lines, which further hurts traditional department stores. The fall-out has been swift as Millennials are being blamed for the bankruptcies of staple brick and mortar stores like Toys-R-Us.
As marketers look forward to this new decade, opportunities will be abundant for retailers and brands to meet these omnichannel needs of the new consumer. Amidst economic uncertainty, those brands that can meet their consumers on their own terms with sustainability and convenience will have the greatest opportunity to capture market share while minimizing costs. With the right data platforms and AI integrations retail is still looking up. Here’s to the next decade!