Strategy

Why the most important retail trend of 2021 isn’t what you’d expect

Never has the change of year been so anticipated as the arrival of 2021.

Yet for many these first weeks have felt exactly like an extension of 2020.

Of course, to expect anything else was wishful thinking.

The global pandemic, and associated impacts, weren’t going to disappear at the stroke of midnight.

This leaves retail in a difficult position when it comes to forecasting what comes next.

The reality is that it’s retail’s need to get comfortable with change that is the most important trend of 2021.

2021 is a year of adjustment

One of the reasons forecasting for the year ahead is so hard, and with it identifying specific retail trends, is that 2021 is going to be a year of adjustment.

Presuming that no other curveballs come along, we can expect that the first half of the year will be focused on vaccination rollouts across the world, monitoring the impact of those and the easing of ongoing restrictions.

If Covid-19 infection levels stay under control, then the second half of 2021 could have a more positive outlook akin to countries like Taiwan, Singapore, Australia and New Zealand where life is more like it was before the pandemic began.

This means that retail in the first part of the year may look quite different to the second.

However, it’s important to understand that the other side of the coronavirus pandemic isn’t going to be an exact facsimile of life before 2020.

The world has changed. The customer has changed. Covid-19 will leave its impact in the same way that the beach is always changed after the waves recede.

It’s only by engraining resilience and flexibility into your retail business that you can ride these changes.

Retail isn’t built to cope with change, but it needs to be

It’s interesting that for all their talk about the future retail businesses are oddly hesitant to invest in it.

The sales you made yesterday mean nothing if you can’t make more in the future. And you can’t keep making sales if you don’t change along with your customers.

Many legacy department store chains are proof that you can’t live off past glories. You have to change to remain relevant.

Fashion retailer Topshop is another example of why you can’t get stuck appealing to one customer base. You also have to appeal to the newer customers who are taking their place. Nostalgia is a powerful thing, but it doesn’t guarantee you’ll stay in business, only that people will mourn you when you’re gone.

While the coronavirus pandemic wasn’t entirely these retail businesses downfall, it did keenly highlight that retail isn’t built to cope with change – whether rapid or not.

Fast fashion leader Primark is another example of a retailer that is struggling with change. As a retailer who only sells through brick and mortar stores, its sales have been heavily hit by the Covid-19 lockdowns and restrictions on shop openings.

However, the brand hasn’t opted to move into online selling, choosing instead to wait out the pandemic.

While this could prove to be the best option for Primark – the queues outside its stores during brief reopening periods suggest that customers have a pent up desire to shop with it – you wonder whether different choices would have been made if the brand had known how long we’d be living with the virus.

Primark is waiting for the world to change around it rather than changing with the world. That’s a potentially risky approach given that there are no guarantees that a changed world has the same needs as before.

This is why retail needs to restructure itself with resilience and flexibility in mind in order to adapt to whatever comes next.

Disruption of the norm only seems to be speeding up as the world become more connected whether it’s in the form of new innovations, lifestyle changes, new thinking or Black Swan events like Covid-19.

It’s not a case of will something happen, but when.

While investing in the future comes with risk, the cost of preparing your business to weather disruption is far less than the cost of dealing with the fallout because you didn’t have the tools in place to succeed.

What are the big retail trends for 2021 then?

The biggest thing retailers should be concerning themselves with in 2021 is making sure their businesses are as flexible as they can be.

Resilience is another important factor.

It’s from resilience and flexibility that all of the other retail trends making an impact this year are born.

For example, the ongoing evolution of ecommerce to deliver more physical retail-like discovery and inspiration is an example of a more flexible approach to retailing.

The growth in livestreaming commerce is one of the most impactful trends for the months ahead. It was born out of retailer resilience in response to the pandemic, but it also has great applications in post-Covid retailing due to its flexible nature.

The resale sector is another major growth area for 2021 with second-hand sales shifting from marketplace apps and consumer-to-consumer selling to retailer-owned operations.

Again, those retailers that are embracing the consumer desire for resale and finding ways to incorporate it into their businesses are demonstrating resilience in the face of change.

Meanwhile, the coronavirus pandemic highlighted that those retailers with developed omnichannel operations were more resilient than those without. Those who had the flexibility to expand this into new areas like curbside collection have also come through the pandemic in a better position.

While post-pandemic retail will have an experiential edge, we see experiential retail thriving most this year in the form of the resilient developments of 2020 such as virtual queuing apps and bookable shopping appointments.

Change is the one given in 2021

Ultimately the one thing we know about 2021 is that there’ll be a lot of change. And not all of it will be predictable.

It’s this unpredictability that means retailers need to focus on putting in place processes that allow for multiple outcomes and to quickly pivot operations when needed.

Too many retail companies maintain a fixed mindset. They can only imagine one way of doing business, one set of customer needs, one way of living.

But a retailer that is comfortable with change, that expects it, is designed to deal with it. It’s these retailers who continue to succeed – not because of a specific set of favourable circumstances but because of what they do.

If this isn’t your retail business, then 2021 is the year that it needs to be. It’s may not be the retail trend the industry expected but it’s the most important one by far.

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