Six predictions for the future of retail

The coro­n­avirus pan­dem­ic has accel­er­at­ed future retail trends as many busi­ness­es rapid­ly adopt new ser­vices and tech­nolo­gies. Small busi­ness­es have been forced to devel­op dig­i­tal plat­forms, in-store pay­ments have moved away from cash and orders deliv­ered by drones no longer seem worlds away. So what will shop­ping look like in 2021, 2025 and 2030?

By 2021

1. Return of physical stores

“We will expe­ri­ence our own ver­sion of the Roar­ing 20s,” says Natal­ie Berg, retail ana­lyst and founder of NBK Retail. While the coro­n­avirus cri­sis has shut­tered many high street stores and seen retail­ers and con­sumers flock to ecom­merce, phys­i­cal stores will be the focus again, but with a new empha­sis, by late-2021. “We’re all crav­ing to go into a store again,” says Berg.

While COVID-19 has undoubt­ed­ly accel­er­at­ed the rise of ecom­merce, there will always be a place for bricks-and-mor­tar retail­ing. How­ev­er, Berg warns that mediocre 2020 play­ers won’t sur­vive the pan­dem­ic and are unlike­ly to return as tra­di­tion­al retail­ers.

“There will be few­er, but far bet­ter stores,” she pre­dicts. The stores that thrive will need to tap into emo­tion, human con­nec­tion, dis­cov­ery and com­mu­ni­ty. “Bricks-and-mor­tar retail will become a high-touch, sen­so­ry-dri­ven expe­ri­ence,” she says. “There’s an oppor­tu­ni­ty for retail­ers to start inno­vat­ing with the phys­i­cal space again.”

Berg also says phys­i­cal stores will need to become fric­tion­less in more ways than one. This includes con­tact­less pay­ments, reduc­ing phys­i­cal touch­points, and expand­ing and sim­pli­fy­ing click and col­lect. “So, more con­ve­nient by using tech­nol­o­gy to reduce fric­tion in-store and mak­ing it eas­i­er and quick­er for cus­tomers to get in and get out,” she says.

2. Personalised offers

One of the key future retail trends, per­son­al­i­sa­tion engines will become more sophis­ti­cat­ed by the end of 2021. Data that feeds into per­son­al­i­sa­tion will hone the abil­i­ty for retail­ers to sug­gest offers and con­tent to con­sumers right at the moment of con­sid­er­a­tion.

“In the old days, peo­ple vis­it­ed local shop­keep­ers who knew them by name and could pre­dict their needs based on what they want­ed through a per­son­al rela­tion­ship,” says Riyadh Bhy­at, head of Quan­tium in Europe, Mid­dle East and Africa.

Bhy­at says in 2020 some retail­ers are recre­at­ing that expe­ri­ence at scale using data-dri­ven algo­rithms tak­ing in hun­dreds of fac­tors to dri­ve hyper-per­son­alised offers and ser­vice for nation­al retail­ers. “2021 will point to the future when retail­ers will do your shop­ping for you,” he says.

“When you opt in as a cus­tomer, they’ll pre­dict your needs and deliv­er them, there­by min­imis­ing search time. In fash­ion, this will extend to select­ing items that per­fect­ly fit you, based on the body scans you’ve shared.”

By late-2021, data will be inte­gral to the way busi­ness­es hear the voice of con­sumers and under­stand cus­tomer expec­ta­tions. “It allows them to engage the peo­ple they serve not as demo­graph­ics or seg­ments, but as indi­vid­u­als and at scale. Who­ev­er does this best over the next decade in any giv­en mar­ket will undoubt­ed­ly win,” says Bhy­at.

By 2025

3. Blended retail experience

The 2020s will be a decade of dis­rup­tion; COVID-19 was just the cur­tain open­er. In 2025, we’ll still be expe­ri­enc­ing the tail end of the pan­dem­ic in terms of its impact. “Hybrid work­ing mod­els, reduced busi­ness trav­el, com­mer­cial build­ings at low­er occu­pan­cy and dis­cre­tionary spend­ing will remain cau­tious,” says futur­ist Dr Richard Hames. Future retail trends will see “retail the­atre” devel­op at this time.

By mid-decade, the con­ven­tion­al retail mod­el of just hang­ing rows and rows of clothes on hang­ers and sup­ply­ing a cou­ple of chang­ing rooms and a mir­ror will be on the way out. “A resur­gence in shop­ping malls, offer­ing a rich­er range of expe­ri­ences by blend­ing retail, music, din­ing and enter­tain­ment will take its place,” says Hames.

Devel­op­ment of part­ner­ships between dif­fer­ent retail­ers, from hair­dressers and spas to cloth­ing retail­ers and office sup­plies, will see ‘unlike’ providers col­lab­o­rate as part of a blend­ed retail expe­ri­ence. 

Mid­way in the decade will also be an inflec­tion point in ecom­merce, accord­ing to retail ana­lyst Berg. As the decade start­ed, ecom­merce was focused on reduc­ing fric­tion and aim­ing for a seam­less expe­ri­ence, but it will move to being more engag­ing and immer­sive. Tra­di­tion­al retail­ers and online retail­ers will tran­si­tion towards a con­ver­gence point. “Con­sumers have come to expect fast and free deliv­ery and returns, and then post-COVID; it’s about immer­sion and dis­cov­ery,” says Berg.

4. Customer expectations rule

In 2025, more retail­ers will tap into local com­mu­ni­ties, devel­op­ing hyper-per­son­al­i­sa­tion and hyper-local­i­sa­tion to attract con­sumers with suit­able offers. The trend towards hyper-per­son­al­i­sa­tion could see more retail­ers deliv­er a “white glove” ser­vice in a dig­i­tal way to meet ris­ing cus­tomer expec­ta­tions.

“In lock­down, retail­ers have recog­nised the need to con­nect online con­sumers with in-store staff and this will become more of an oppor­tu­ni­ty to dif­fer­en­ti­ate and devel­op cus­tomer loy­al­ty through supe­ri­or ser­vice,” says Berg.

Future retail trends will see stores evolve and fol­low the exam­ple of Star­bucks and Nike to play three roles. These are as a trans­ac­tion­al hub for imme­di­ate con­sump­tion, as an expe­ri­en­tial venue and as a show­room to com­mu­ni­cate about the brand and sup­port online sales as ecom­merce ful­fil­ment points, accord­ing to Kanaiya Parekh, expert retail part­ner at Bain & Com­pa­ny.

Parekh pre­dicts new dig­i­tal solu­tions will enable retail­ers to meet ris­ing cus­tomer expec­ta­tions. Devices such as facial scan­ners will analyse skin to sug­gest per­son­alised care based on indi­vid­ual needs and pri­or expe­ri­ences. Vir­tu­al real­i­ty will enable cus­tomers to browse, inter­act with and read infor­ma­tion about prod­ucts in a vir­tu­al envi­ron­ment.

“Dig­i­tal kiosks, pow­ered by arti­fi­cial intel­li­gence (AI), at fast food restau­rants, equipped with auto­mat­ed facial recog­ni­tion, will let cus­tomers nav­i­gate the menu, self-order and use con­tact­less pay­ment,” says Parekh.

By 2030

5. Smart supply chains

Smart sup­ply chains apply­ing AI to pre­dict demand and cal­cu­late sup­ply will result in a direct ben­e­fit to the envi­ron­ment by 2030. “Stores used to be run by peo­ple who would gauge how much of each prod­uct they need­ed. Today there are deeply inte­grat­ed sys­tems man­ag­ing stock replen­ish­ment, but these sys­tems result in huge amounts of waste. Moun­tains of food and cloth­ing get destroyed each year due to the dif­fi­cul­ty of pre­dict­ing what cus­tomers will want and when,” says Quantium’s Bhy­at.

“In 2030, entire val­ue chains will be aligned to accu­rate pre­dic­tive mod­els of con­sumer needs,” he says. Bhy­at pre­dicts retail­ers will grav­i­tate to sup­pli­ers with val­ue chains more respon­sive to con­sumer behav­iour. “They will seek to col­lab­o­rate with more pro­gres­sive sup­pli­ers and poten­tial­ly look to inte­grate sup­pli­er and cus­tomer AI capa­bil­i­ties,” he says.

“This kind of AI-to-AI inte­gra­tion will result in auto­mat­ed sup­pli­er-cus­tomer sales nego­ti­a­tions in closed busi­ness-to-busi­ness dig­i­tal mar­ket­places and upstream inte­gra­tion with sup­pli­ers of raw mate­ri­als and financ­ing solu­tions.”

Instead of moun­tains of waste, data and AI will pre­dict stock require­ments, there­by lim­it­ing wastage and reduc­ing the impact on the envi­ron­ment. And by 2030, retail in devel­oped mar­kets will have envi­ron­men­tal issues embed­ded in it. “Cus­tomers will be able to under­stand and off­set the car­bon emis­sions of their retail spend­ing through their bank,” says Bhy­at.

6. Seamless shopping

Con­sumers will have seam­less shop­ping expe­ri­ences through social plat­forms in 2030, shrink­ing wait­ing time for cus­tomer ser­vice queries with smart chat­bots and bring­ing high­ly per­son­alised expe­ri­ences through user-gen­er­at­ed con­tent.

Prompt­ed by COVID-19 a decade ear­li­er, which helped pro­pel online retail towards true omnichan­nel social com­merce, dis­crete sales chan­nels will have dis­solved. High­ly immer­sive retail expe­ri­ences will be pro­vid­ed by vir­tu­al and aug­ment­ed real­i­ty. “In 2030, sales chan­nels will include vir­tu­al real­i­ty and ful­fil­ment will include drone deliv­ery,” says Bhy­at.

Brands will enable cus­tomers to move from offline to online, while pro­vid­ing a per­son­alised expe­ri­ence. “Social com­merce can com­bine the per­son­al touch con­sumers used to find in a store with the con­ve­nience of an online pur­chase,” says Luis Bae­na, prin­ci­pal at Oliv­er Wyman.

“Con­sumers are increas­ing­ly using social media to engage with brands across the entire cus­tomer jour­ney, from dis­cov­er­ing new brands and prod­ucts to writ­ing reviews, com­ments and feed­back.”

When it comes to the effect on future retail trends of social com­merce, it will be a lev­eller between large brands and chal­lenger brands. “Social com­merce will increas­ing­ly become a pow­er­ful tool for small brands to access their well-tar­get­ed cus­tomer seg­ments and make them able to com­pete with large brands,” says Bae­na.

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