Retail Trends 2021

Following a year like no other

After publishing our 2021 Retail Trends, the year got off to a stuttering start as rising COVID-19 cases and the emergence of new variants dampened hopes of a swift reopening of the economy. However, the publication of the government’s roadmap for unlocking restrictions and the successful roll-out of the vaccination programme has driven business and consumer confidence up.


The high street re-opens
The retail sector was buoyed by the reopening of non-essential stores, and the loosening of some restrictions on the hospitality sector also helped entice shoppers back to key retail locations.


Retail sales and consumer appetite have remained robust. It is clear there is considerable pent up demand for big ticket and discretionary items, and consumer wallets are stuffed with additional savings accrued during lockdown – our analysis suggests that consumers across Europe are sitting on €450bn+ of savings. Conditions seem perfect for a strong consumer-led recovery in the second half of 2021 and into 2022.


Some consumer behaviour changes are here to stay
In 2020, we witnessed unprecedented growth in online sales as the pandemic and lockdowns accelerated the shift to online. In 2021, data from our Deloitte State of the Global Consumer Survey shows that while the vaccine roll-out is gaining momentum, consumer confidence to engage with person-to-person services and shop in-store remains cautious.


The emergence of the at home economy
Another significant consumer trend from 2020 that looks set to continue into 2021 and beyond is the growth of the “at home economy”. Our research* on how consumers plan to spend their money post-pandemic shows that, relative to pre-COVID norms, consumers will continue to prioritise spending on cooking from scratch, eating at home, shopping online and consuming digital services. The real test may be upon us with the change in government advice to work from home. However, we expect that the legacy of the pandemic will be higher levels of home working in the future, which will have an impact on city centre retail and leisure centres.


The shift to digital consolidates
The shift to digital is consolidating. Footfall at the end of May 2021 remained down on 2019 levels and while it is increasing, online sales are proving remarkably robust in light of the opening up of non-essential retail. We expect online sales to continue to grow at above market rates for the foreseeable future, driven by both consumer demand and retailer investments in increasing capacity and capability as the transformation of retail continues.



*Unpublished research from the Global State of the Consumer Tracker.

1. Net Zero Retail…now!

Moving from aspiration to implementation across the whole value chain.

> Explore the theme

2. Digital by design

A digital first approach is rapidly transforming retail.

> Explore the theme

3. Thoughtful Experiential

The re-birth of the store.

> Explore the theme

4. Re-localisation

The polarisation between real destinations and hyper local shopping.

> Explore the theme

5. Health becomes the new battleground

Competition in the $4.5trn global wellness industry is heating up.

> Explore the theme

6. Lead with purpose…

…and create a culture of inclusion.

> Explore the theme

1.

Net Zero Retail…now!

Net zero retail remains a key focus as more and more retailers are moving to accelerate the transition to respond to the changing expectations of both their customers and their employees. We expect this to continue through 2021 as we build toward COP26 and, 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.

2.

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. As we have seen the shift to digital accelerate and more of their business move online, retailers have invested in developing a more digital first approach, both in terms of the need to be digital by design and being more thoughtful about the customer experience in particular, as they re-evaluate the role of the store in the modern retail platform.

Are your customers finding you online? Find out how you can enhance your digital presence.

3.

Thoughtful Experiential

The growth of online has forced retailers to reassess the true value and role of their stores. During the pandemic, 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.

4.

Re-localisation

Lockdown and working from home led to a return to local shopping. Now, as we see the end of lockdown and the opening up of the economy it inevitably leads to increased mobility and a slow drift back to previous shopping habits for some consumers. 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.

5.

Health becomes the new battleground

One of the most notable changes in consumer behaviour during the pandemic was the increased focus on health and wellness as consumers dedicated more time and money to looking after themselves. We believe this represents a big opportunity for retailers, however, this area has seen less development in the first half of 2021 than the other trends, with the notable exceptions of sales of vegan and plant based foods and sales of “athleisure” clothing that has become everyday attire in the “at home economy”.

With an increased focus on wellbeing comes a healthy new world of opportunity.

6.

Lead with purpose

In 2020, 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, through all of this change and disruption at both the industry and national level, retailers have retained a strong focus on leading with purpose and creating 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.

Contacts

Ian Geddes

NSE Consumer Lead Partner

+44 (0)20 7303 6519

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Oliver Vernon-Harcourt

UK Retail Lead Partner

+44 020 7007 1628

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Ben Perkins

Head of Consumer Business Research

+44 (0)20 7007 2207

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