2020 proved to be a tough year for the retail sector and while we look forward to a better year, a second wave of the COVID-19 virus has pushed back the prospect of a consumer-led recovery to the second half of the year.
Retail sales proved resilient in 2020. Consumers shopped online in ever larger numbers, an acceleration of a pre-existing trend. But the scale of change is startling: the first half of 2020 saw five years of growth in online market share in a matter of weeks. Even when non-essential stores reopened, footfall was significantly down on 2019 - an early indicator that some changes in consumer behaviour were sticking.
We have a new baseline for e-commerce sales which will grow through 2021 and beyond, bolstered by increasing investments in online and more and more consumers feeling the benefits of online shopping.
This has naturally impacted the high street, already under intense pressure from rising costs and enduring store closures and lower footfall. The pace of change has been too much for some to bear and we have seen a number of high profile administrations and record numbers of store closures and job losses. The reinvention of the high street will continue well into 2021 and beyond, particularly as government support measures are withdrawn.
Consumer behaviour
We believe the 2020 shift to online is now consolidating – data from Deloitte’s Global Consumer Tracker shows that 1 in 10 consumers across Europe now shop online for food (close to 30% in the UK). Similarly in non-food, with stores shut, consumers have quickly adapted to shopping online. Another factor behind this growth is concern about the safety of shopping in store - fewer than half of UK consumers state that they would feel safe shopping in a store.
Moreover, the lines between home and office have blurred, with the home becoming an office, a classroom and a gym. Consumption patterns have changed with more calories consumed in the home and growth in spending on furniture, garden products and home gym equipment. As part of a broader focus on health and wellness, we have also seen growth of flexitarian diets, in particular vegan foods.
And finally, consumers have shopped more locally, feeling safer not to travel and choosing to support local businesses and producers.
1. Net Zero Retail…now!
Moving from aspiration to implementation across the whole value chain.
4. Re-localisation
The polarisation between real destinations and hyper local shopping.
5. Health becomes the new battleground
Competition in the $4.5trn global wellness industry is heating up.
Amidst all the doom and gloom of 2020, there was still creativity and innovation taking place across the retail industry, which we thought deserved to be celebrated. In this video we share some of the most inspirational moments of the year that you might have missed.
Net Zero Retail…now!
Now that the big public commitments on climate have been made and with COP26 in Glasgow on the horizon, we believe that it is the time for retailers to act. In the coming year retailers need to consider how they can begin to transition to Net Zero Retail and accelerate their efforts to decarbonise operations, products and their supply chain.
Do you know the carbon impact of your business? Get in touch with us to find out why and how to transition to Net Zero Retail.
Digital by design
2020 proved to be a transformational year for retail – offering a compelling case for a digital first approach as stores closed due to COVID-19 restrictions and consumers were told to shop from home. To reach locked-down consumers, retailers had to take advantage of the only channel available, scaling their online capability. This has led more and more retailers to adopt a digital first approach.
Are your customers finding you online? Find out how you can enhance your digital presence.
Thoughtful Experiential
The growth of online has forced retailers to reassess the true value and role of their stores. In 2020, experience-based retailers struggled with a lack of footfall and opportunity to engage consumers. We believe experience remains essential to the future of the store – but it needs to be more thoughtful. The cost pressures remain and investments in experience need to ensure that they make sense from a brand perspective, add value to consumers, and deliver a commercial return. It cannot just be experience for experience’s sake.
With many of us now used to shopping from home, how can you create meaningful customer experiences? Our CX team is on hand to help.
Re-localisation
Lockdown and the growing number of people working from home has led to a return to local shopping, which we believe will continue beyond the pandemic. However, we think the market will polarise between real destination stores that will continue to attract consumers and "hyper local shopping", which bodes well for the future of the high street.
Find out how the retail destinations of tomorrow could look a little different.
Health becomes the new battleground
One of the most notable changes in consumer behaviour last year was the increased focus on health and wellness. This has created increased demand for wearables and data-services to provide personalised programmes. Consumers have dedicated more time and more money to looking after themselves and this has created a big opportunity for retailers.
With an increased focus on wellbeing comes a healthy new world of opportunity.
Lead with purpose
Last year we said that we believed that purpose was the new digital. By that we meant that we expected purpose to be as disruptive in the next ten years as digital has been in the last ten. In 2021, it will be more important than ever before to lead with purpose and create a culture of inclusion. Just as with digital, we believe retail leaders need to ask themselves: how do we embed this into our business?
Do you know the story behind the products you sell? Find out how making your products more sustainable can boost margins and improve customer loyalty.
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