Retail In 2020: Here Are 7 Trends You Can Expect

Retail In 2020: Here Are 7 Trends You Can Expect

When you think about the wayconsumers shopped just five years ago versus today, the changeshave been dramatic. Looking to theyear ahead, expect the evolution to continue—with an opportunity for incrediblegrowth for savvy companies.

CMO by Adobe talked to CMOs and commerce executives about the biggest trends anticipated in 2020.

Last-Mile Becomes A Competitive Differentiator

When consumers place an order today, “they assume they’re going to get it and get it quickly,” said Gary Specter, vice president and head of global commercial business at Adobe. Whether it’s buy-online-pickup-in-store (BOPUS), micro-fulfillment centers, in-store lockers, or new distribution partnerships, looking ahead companies will create more decentralized models, experts said.

“This started as a problem most acute for grocers that is quickly gaining mindshare as retailers across markets like general merchandise and apparel realize the massive potential for broad application,” said Mark Diehl, market development director and retail expert at Dematic, which provides logistics solutions. “We predict remote, rural distribution cent ers will become an increasingly outdated model, with a new focus on solving e-commerce pain points with solutions near the end consumer.”

BOPUS was cited as the most valuable aspect of the retail shopping experience for more than 40% of consumers surveyed for a February 2019 report from iVend Retail. Some brands are also partnering with retailers to drop-ship items ordered online or in stores directly to customers—a trend Lydia Park Luis, CEO of Jack Rogers, said she’s eyeing.

“Drop-ship in wholesale is growing with ‘mono-brand’ stores like J. Crew and Anthropologie opening marketplaces on their sites,” Park said.

Recent investments in better inventory management systems and processes also will make this transition easier, said Vic Drabicky, founder and CEO of New York-based agency January Digital. Still, it may require some brick-and-mortar makeovers.

“Companies [will] need to think of stores as distribution centers and warehouses—even going as far as to equip locations with pick-and-fulfillment functionality—while maintaining the appearance of having adequately stocked shelves,” said Toni Thompson, president of RRD Retail Solutions. “Additionally, we’ll see retailers shift floor plans so that pickup and return areas are upfront or even follow a drive-through model, eliminating the need for a customer to have to walk through the full store just to return an item.”

Reverse Logistics Gets Real

Speaking of returns, many companies are struggling with the volume of products consumers are sending back.

“If you’re trying to grow your company, this is a big cost center,” Adobe’s Specter said. “Companies will have to get creative about how to handle it.”

Amazon and Kohl’s, for example, have partnered up to create mini return centers to address this growing problem.

“There are millions of variables and problems that come with reverse logistics, but most of them come down to knowing what to do once items are returned,” Dematic’s Diehl said. “Some products could be returned to a finished goods warehouse, whereas defective merchandise could go to a location to be refurbished or recycled. Ideally, retailers want a way to process goods back into their supply chain quickly and as close to full price as possible.”

Some innovative solutions are emerging to help retailers with moving, testing, repairing, restocking, or disposing of products.

“In 2020, retailers who invest in technology to optimize this process will see increased revenue and, perhaps most importantly, an improved customer experience,” Diehl said.

Many retailers, including Macy’s, Warby Parker, and Ikea, have rolled out augmented reality tools to give customers a better sense of a product before they hit “buy” online. “AR can help shoppers make more informed purchase decisions and help retailers rein in the product return phenomenon,” Specter said.

Customers Will Vote With Their Values

According to Forrester analysts in the firm’s Predictions 2020: Retail report, customers actively research and buy products with corporate values in mind, from choosing products that are environmentally friendly and locally made to understanding corporate values around what they do and don’t produce and sell. The question is whether brands will invest enough to digitize their supply chain to balance cost, lead times, and sustainable production practices.”

That’s top of mind for cosmetic brand CoverFX CEO Emily Culp.

“We are proactively sharing with consumers where we source our ingredients, making sure that they know that we are cruelty free, vegan, and—most importantly—high-performance, too,” Culp said.

Customers want to align their values with a brand’s purpose, added Mousumi Behari, strategy practice lead atAvionos.

“And if they can help someone else in the process, even better,” Behari said. “Bucketfeet, for example, has artists design the shoes and gives back to the artist community. Reformation creates sustainable clothing that reduces waste for the environment, setting itself apart from other apparel retailers.”

Cross-Border Commerce Drives Growth

The convergence of new payment technologies, the ability to accept foreign currencies, and a robust logistics provider network has opened up a world of opportunity for retailers.

“Since giant marketplaces like Amazon [Business] and AliExpress are expanding their presence in dozens of countries, other retail companies need to understand that their consumer market is the world, not just their country,” said Andre Boaventura, CMO for Brazilian fintech EBANX.“Over the next few years, retail will face logistics, payment, and tax barriers, but those companies who persist and find models to sell globally will get the biggest piece of the pie.”

By 2020, the total addressable market for any retailer should be the globe, he added. Looking further out, cross-border shopping will make up 17% of e-commerce in 2023, according to Forrester.

“Technology now allows companies to branch out,” Adobe’s Specter said. “If I were opening up a commerce store, I would see cross border e-commerce as a great way to grow.”

Having a full experiential environment for customers to engage in, as well as a location that is completely ‘Instagrammable,’ will be a new requirement.

Digital And Physical Continue To Converge

Arpit Jain, vice president of cross-functional delivery and capabilities at digital consultancy Nerdery aims to set the record straight.

“Over the last few years, we have seen some retailers shut down their physical stores, signaling a false premise that brick-and-mortar is dead,” he said. “However, the decline of in-store foot traffic is not a result of customers not wanting to shop in-person, but rather a result of those retailers failing to improve the shopping experience.”

Successful retailers, he said, will bring innovative technology to the in-store experience and drive increased foot traffic in 2020.

Millennials, currently the largest generation of consumers in the U.S., “crave live experiences to foster a connection with others and the world around them,” said Leslie McNamara, CMO and head of workforce development for Citi Retail Services. Visually desirable, fun, and interactive settings (think bots, fitting room technologies, and more) will be a new requirement for many brick-and-mortars.

“One of the major retail trends we will see in 2020 and beyond is the continued increase—and necessity—of experiential retail,” said Ari S. Goldberg, founder and CEO of high-end barbershop and medical grooming spa Barber Surgeons Guild. “Having a full experiential environment for customers to engage in, as well as a location that is completely ‘Instagrammable,’ will be a new requirement.”

Social Media Shopping Goes Viral

Speaking of Instagram, shoppable social may be unstoppable in 2020.

“Customers—inspired by celebrities, influencers, and lifestyle images—want to be able to immediately buy the outfit at the tap of a button,” Avionos’ Behari said. “We are seeing Instagram meet these needs by adding a ’shop now’ button on user stories and posts and creating business analytics for those who utilize the selling features.”

Instagram isn’t the only one. “New social media like TikTok, which aren’t e-commerce platforms, will play a bigger role in online shopping,” says Denney, noting that TikTok partnered with Alibaba’s Taobao store for purchases.

In fact, two-thirds of 424 brands analyzed by research firm Gartner L2 in 2018 had adopted social commerce features, with 41% having adopted shoppable content options from Instagram and 17% using Facebook’s shoppable brand pages.

“Turning content in virtual stores while maintaining nonintrusive content viewership is one of the most exciting recent developments,” said Michael Weinstein, president of digital at Bluewater Media. “Instagram and Pinterest shoppable posts, Google shoppable images, and others now provide a way for the advertiser to offer tags on products that appear more organic, which in turn profits a better experience for the shopper while turning engagement into conversions.”

Data Mastery Tops The Agenda

Successful retailers will have to master data. Only around one-third of retailers are currently using data to get better customer insights in order to differentiate themselves, according to Forrester, but those that do will be best-positioned to thrive amid global economic uncertainties.

Charisse Hughes, CMO for PANDORA Americas, said her organization is thinking more broadly about “omniperson” marketing.

“[Our] mission is to learn more about the variety of customers we connect with every day and what’s important to them,” she said. “Data-inspired decisions are going to be key to success. We’re using our insights to make recommendations for future in-store and online offerings. We are uncovering details about how consumers are shopping our different categories.”

Indeed, data is critical to the personalization that customers demand. Customer data platforms will be key.

“Brands that can figure out how to leverage consumer data faster than the others will have a clear competitive advantage in building a better, more aligned customer relationship,” Adobe’s Specter said. “The trick is, how do you get all that data into place so you can derive insight from it and drive action? That’s the next problem people are trying to solve.”