By Philip Hall, Managing Director Europe, CommerceHub.
2019 has been another challenging year for retail. With GFK’s most recent Customer Confidence Survey showing that the confidence index decreased to -14 in October, and with Brexit delayed again, we can expect uncertainty to continue to have an impact on the retail industry.
However, retailers and brands that have turned their attention and investment to providing exceptional customer experiences will be at an advantage. With buying habits ever-evolving and customers looking for more value and personalised experiences, retailers and brands will want to take note of these five trends set to shape the retail industry in 2020.
1. The conscious consumer
The ‘Blue Planet’ effect has extended far beyond plastic bags, bottles and coffee cups; retail is now under huge pressure to show how it is reducing its carbon footprint. With global movements such as Extinction Rebellion highlighting the impact of fast-fashion and single-use plastics, retailers and brands can no longer afford to ignore their contribution to climate change as they risk losing customers and damaging their reputations.
Consumers are demanding more transparency into where products come from, more sustainably sourced materials, a reduction in single-use products and a focus on ethically made goods. It’s clear that sustainability has been a high priority for many retailers this year, with brands such as Zara and New Look announcing plans to move towards more sustainable sourcing and production. In 2020, we can expect to see more brands and retailers take steps to reduce their environmental impact and perhaps more stringent regulations from governments to help create an eco-friendly supply chain. In addition, CommerceHub research showed that 83% of 2019 holiday shoppers believed it was important for retailers to offer environmentally conscious shipping and delivery options.
2. Highly specialised vs marketplace approach
2020 will see a further polarisation between retailers that are design-led (i.e., heavily curated), compared with those that take a more expansive marketplace approach. For example, Kingfisher offers consumers a product range defined around a set of particular projects for the home, whereas Next has made the move from being a mono-brand business to a multi-brand aggregator. Kingfisher argues that their customers need greater guidance to ease the stress of DIY projects. On the other hand, Next takes the view that its customers will benefit from greater choice, represented in the success of its Labels business. When a retailer can offer a ‘one-stop shop’ model, this can be very successful; not only is it incredibly convenient for consumers, it also allows retailers to broaden their solutions and product range to attract more customers.
3. Providing more value to customers
Kingfisher is focused on providing their customers with complete solutions, with their website purposefully designed to allow customers to browse by rooms and projects, as opposed to searching for a single item. Similarly, in the food sector, Hello Fresh is delivering complete meals straight to its customers’ doors, offering convenience, reducing waste and promoting a healthier lifestyle. M&S is another great example of a retailer providing more value to the customer with pre-packed recipe kits featuring a recipe card and M&S products, making it more convenient for customers and giving them control over what they buy. In the next 12 months, we can expect to see more retailers adopting this way of selling, promoting bundled solutions that are both convenient and valuable as opposed to single products.
4. Profitable personalisation
Most retailers offer personalisation to some degree, be it personalised email offers or product recommendations related to purchases. But are they currently utilising personalisation in the best way to drive profitability? In 2020, retailers will have a renewed focus on ensuring that they are offering customers a personalised experience. A great example of a retail platform already doing this is eBay, which sends targeted and well-timed incentives to convert consumers who are on the brink of purchasing items on their ‘watchlist.’ We can expect more retailers to follow the pursuit of profitable personalisation in 2020.
5. Investment in robotics
Whereas retailers might be unsure of precisely how AI-powered technology will help them, they certainly aren’t holding back on investing in robotics to increase efficiency in the supply chain. From picking to moving goods around the warehouse, robots have the ability to create an efficient warehouse operation that strengthens the supply chain, especially where larger product ranges are involved.
As pressure mounts to deliver a fast, streamlined experience in line with customer expectations, we can expect more retailers will choose to implement robots in their warehouse in 2020 to handle the precise task of packing. Boots, for example, recently deployed more than 100 robots to help its warehouse staff keep up with the intense holiday season demand, and Zalando trialled robots to pick shoe orders in one of its fulfilment centres.