Predicting Consumer Trends In 2021? Good Luck With That
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We have engaged with many client conversations about what 2021 will bring for retailers in the US and around the world. We’ve talked about what will happen when a substantial portion of the US population gets vaccinated, the resurgence of retail in China, and how many of pandemic-era practices will stick.
Here we are sliding into February and I’m going to make some bold and not so bold predictions.
The easy call: Contactless selling Is here to stay: Partner Brian Kilcourse is fond of saying that the pandemic simply accelerated shopping behaviors that were already in flight. Grocers have been struggling to provide in-home delivery since the late 1990’s, when Streamline literally put refrigerators in shoppers’ garages. Long consigned to the dustbin of history, Streamline certainly answered a need, and now, two decades later, Walmart is contemplating the same thing. The company called them “temperature controlled smart boxes” but if it looks like a refrigerator….well, you know.
Once you’ve gotten into grocery delivery (as I have), it’s very hard to go back to strolling the aisles. There’s honestly not a lot of “experience” to be had in a supermarket beyond tasting stations, really. It feels like a waste of time.
The hard call: People will return to stores and malls as the vaccine becomes more ubiquitous. Now, the fact of them returning to stores at all is an easy call. But the real question is, will retailers offer an interesting enough experience to keep them returning once the “novelty” of crowds has worn off? Certainly, before the pandemic began, mall operators were investing in experiential retail, creating an actual experience of rides, local art, higher end food emporiums like Mario Batali’s Eataly replacing or supplementing food courts, and generally making the malls themselves more “sticky.”
I predict that people will indeed return to stores and malls. I hope that the operators of those stores and malls are preparing for their return. Stores matter. In fact, Saks CEO, Marc Metrick spoke at this year’s virtual NRF Chapter 1 and said, “Our digital business actually began to fire even more when our stores opened,”
This becomes a tricky problem for retailers and mall operators alike. Once you’ve gone the fundamental A/B test of stores open in a pandemic vs. stores closed during a pandemic, how do you justify keeping stores open that on some level, appear to be underperforming relative to digital sales? Let’s assume everyone does their jobs and creates an exciting store and mall environment, yet sales stay flat. What do you do?
That’s where AI Analytics can help. Comparisons can be drawn between pre- and post-pandemic traffic (which becomes more important than sales if Mr. Metrick is right) and help retailers make decisions about which stores should remain open, which stores should close, and which ones require rent re-negotiations.
Nordstrom unilaterally told its landlords in July that it would only pay half its rent for the remainder of 2020. I haven’t seen anything about plans for 2021, but the “battle of the metrics” will be interesting when negotiations begin again.
The bold call: Any notion that “dark stores” have a future is a fantasy. First of all, store and distribution center rent structures are very different. Zoning requirements are also different. While dark stores may have worked for the worst, early times of the pandemic, it’s not a brilliant strategy. It’s much smarter to create more regional distribution centers, as Home Depot is doing, or create “pop-up eCommerce fulfillment facilities” inside existing store distribution facilities as Walmart is doing.
I recall the nanosecond when it was contemplated to let Amazon buy JC Penney and use its stores as fulfillment centers, rather than actual stores. Honestly, there were so many reasons it made no sense. I already mentioned zoning, there’s wear and tear on infrastructure, inevitable complaints from neighboring residential areas, and certainly nothing about a fulfillment center that makes for a great customer experience in the rest of the mall. A non-starter from the jump.
Nope. Retailers are going to have to find more ways to be flexible.
As I write this, I have no idea if the vaccine I’ve taken, which is just now taking effect, will give me immunity from new mutated strains of the virus. We have no way of knowing if the Main Street (vs. Wall Street) economy will come back, or if it will languish. What’s to happen in the garment industry, if people continue to work from home, as I think they will. What is the future of “work clothes?” This makes casual Friday seem like a dress-up event. When people are ready to come out of their homes, will the independent retailer make a comeback? I have opinions on all these things, and will likely come back to them, both in future posts and as part of the benchmarks we are doing this year. In fact, we’ve got a bunch teed up that will focus on these issues:
- How Retailers Manage A Newly Distributed Enterprise
- Contactless Retailing: Order Orchestration and Fulfillment
- The Retail Supply Chain – Achieving Agility Without Sacrificing Efficiency
- The Independent Retailer
- An Agile Merchandising Lifecycle In the Age of Disruption
We’ve got a lot covered and are starting to get requests for a report on the state of the store.
This could prove to be a really exciting year for those who can embrace change and uncertainty. We’ll be here to talk about it with you.