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2020 retail industry outlook
Retail consumer trends: Insights for action
Convenience matters—now more than ever. And forward-thinking retailers are setting high expectations for rest of the industry. In the 2020 retail trends outlook, we explore convenience, what it means today, and how retailers can position themselves to take on the challenge in the year ahead.
- Sizing up retail industry trends in 2020
- Understanding expectations to navigate uncertainty
- Economic outlook: How should the retail industry prepare for uncertainty?
- Read more
- Digital retail trends takeaways
Sizing up retail industry trends in 2020
Predictably, 2019 was a year in transition. There was stability in the positioning of the top five retailers and a few notable bankruptcies. The emphasis on understanding what consumers really want continued to expand the gap between the leaders and everyone else who followed. For retailers, understanding how consumer expectations are evolving has never been more important, especially with the convergence of supply chain, digital technologies, and other innovations.
But when it comes to how the next 12 months will play out, uncertainty is the name of the game. With a possible recession and potential fallout from tariff tensions looming, retailers should have a strategic plan that can handle adjustments when and as needed. While the overall economy might be losing its shine in 2020, it presents retailers an opportunity to review their playbook for riding out a downturn.
To strengthen their preparedness, retailers should focus on four factors critical to success:
- Determine why they matter
- Build a war chest to invest in growth
- Embrace technology and automation to better leverage growth
- Look outside their four walls to embrace partnerships
Download our full report to learn more about the trends facing the industry in 2020 and the challenges and opportunities they present.
Understanding expectations to navigate uncertainty
The shift in consumer expectations
Given the rapid pace of technological advances and social transformation, expectations for outstanding customer service and experience are now being set by those outside the business. Consumer expectations are going global, while age-old national and industrial divides are shrinking.
To remain ahead, many retailers must make a difficult choice on what to offer and how to make sense of it, profitability-wise. This means there’s a necessary conversation around tough tradeoffs—what really matters to the consumers, and what must companies have internally before going after the shiny new object?
At its very core, convenience is a human-centered experience that provides customers with a feeling of ease. While perception of convenience can range from “saves me time” to “meets all my needs in one place,” what many people are looking for is something that simplifies life while delivering a positive experience. People want to “outsource” the work of getting products. Instead of focusing on the act of purchasing products, they want to focus on the act of using them. That’s what appears to really matter.
Economic outlook: How should the retail industry prepare?
Growth may continue to slow
The retail industry should be prepared for changing economic conditions in the coming year. The economy slowed last year, with real GDP growth declining to 1.9 percent in Q3 from 3.1 percent in Q1. With the outlook for global growth dimming and the uncertainty of trade tariffs unlikely to go away soon, we expect real GDP growth to slow to 1.6 percent this year from 2.3 percent in 2019.
Consumer spending outlook
Consumer spending is the lifeblood of the retail industry. Overall, we expect real consumer spending growth to slow to 2.2 percent in 2020 from 2.5 percent in 2019. Going into 2020, consumers face three key challenges:
- Gains in the labor market haven’t translated to strong wage growth.
- As the impact of the 2017 tax cuts fizzles out, disposable income is likely to slow.
- Escalation of trade tensions could dent growth and employment.
Retailers will likely have to be more judicious with investments and flexible with their plans–ready to adapt to both foreseen and unforeseen scenarios. It seems that for the year ahead, those retailers who prepare for the worst will likely fare the best. But where should retailers focus their strategies in 2020 to help move to the right side of the tipping point?
Digital retail trends takeaways
A myriad of new and more convenient options are coming our way in 2020. Here are a few considerations to help move towards an enhanced retail experience:
- Understand that convenience is related to an overall consumer experience that eases the shopper journey while providing additional services.
- Take stock of your organization―is convenience a common thread?
- Realize convenience is the new normal. Invest in convenience in the areas most aligned to your brand promise.
- Determine your shoppers’ willingness to pay for convenience and your organization’s willingness to invest.
By focusing efforts across your organization and into your supply chain, new retail business models can evolve. Winners and losers will likely be decided on who can execute these new ventures best. And they will ultimately shape the future of retail.
Looking for more perspective?
In today’s rapidly evolving marketplace, key business issues are converging with impacts felt across multiple industry sectors. What other trends, challenges, and opportunities might affect your business and influence your strategy? Look for more perspectives and insights from some of Deloitte’s forward-thinkers.