2021 Retail Trends: What the Experts are Predicting

| December 14, 2020

It’s been a wild year in terms of retail trends. Nearly everything changed in 2020, as consumers and retailers adapted to the restrictions of the pandemic. Overall retail sales declined 3.9% in the second quarter, but the good news story is that e-commerce sales rose a staggering 30% during that same period, as consumers switched to online shopping when faced with closed brick-and-mortar stores. In fact, 40% of consumers now say they have “increased or significantly increased” their online shopping in the pandemic, according to research firm Kantar.

McKinsey says that “the pandemic is transforming the retail experience, strengthening the case for deeper ties between consumers and retailers.” McKinsey research found that more than 75% of consumers tried new brands from new places or otherwise changed how they shop as a result of the crisis. Can we expect this trend to continue? And what other trends may have accelerated in 2020 that will carry over into 2021?

We researched what retail experts like Forrester, Gartner, and more are predicting for the new year and identified four retail trends that marketers should keep front-of-mind heading into 2021. Here's what we found.

#1: Online shopping continues its upward trend

How much higher can e-commerce go? The answer looks to be sky-high, as an increasing number of retailers continue to move online and establish e-commerce divisions, and those with long-established e-commerce channels will reap the benefits of significant investments made throughout 2020 to increase and prioritize delivery and store pickup options.

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One thing likely to become increasingly widespread is drop-shipping, which allows consumers who order from their favorite online store to get products shipped directly from the manufacturer. Drop-shipping benefits both consumers and retailers, as products are delivered more quickly and supply chain obstacles – which cropped up during 2020 because of the pandemic – are alleviated.

#2: Touch-free technology and contactless payments become the norm

The need to reduce the frequency of touch in the buying process during the pandemic created innovative solutions, like in-store app ordering, curbside pickup, increased use of mobile payments like Venmo, virtual payments terminals, and even virtual fitting rooms and delivery drones. These trends will stick in 2021, with the National Retail Federation noting that “shoppers are embracing this trend with gusto.”

#3: AI-driven big data will accelerate efficiencies in marketing

While AI has been used in retail for a while now, it will become even more ubiquitous in 2021 as retailers use it to find where their best customers are spending their time, be it on Facebook, Netflix, or on Zoom calls, and then assign advertising budgets accordingly. AI will be used to better predict demand patterns and ensure consumers have what they want, when and where they want it. Forrester predicts that smart retailers will harness AI-based retail planning to remaster their supply chains and revamp their distribution partner networks.

#4: Consumers will shop with brands that engage in civic dialogue and engagement

Social justice movements were an important part of 2020, and Gartner predicts that marketers will need to review and realign communication strategies in 2021 to leverage consumers’ renewed focus on values like inclusion and justice. Brands need to pay more than just lip-service to these values; they’ll need a deeper understanding of their customers’ values as they chart their social responsibility course. They’ll need to demonstrate real impact over time.

Millennials are typically more focused on social issues than older consumer segments, and with millennials now representing over 30% of all retail sales according to research from Accenture, this is a trend that can’t be ignored.

COVID-19 changed retail in 2020...and possibly forever

It looks like COVID-19 will dominate at least the first part of 2021, but with vaccines beginning to roll out a return to "normal" is finally on the horizon. While the pandemic has presented a number of challenges for retailers, it has also generated innovations and new opportunities that will usher in a new era of retail and last long past 2021.

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