"The Big Apple, 40,000 Visitors" This is how last year's rendering of our visit to the world's most important retail conference began. When we attended the National Retail Federation's annual conference in New York, January 2020, we had no idea Covid-19 would develop into a global pandemic with such big consequences.
In January 2021, we were supposed to be in New York again for the NRF conference, but not surprisingly, the conference will be held a little differently this year. Due to Covid-19, the NRF has divided the conference into two parts - a chapter one and a chapter two. Chapter one is taking place in a virtual format right now, and chapter two will be a physical conference in early June. If everything goes as planned, we will be participating in chapter two.
You and I will have to wait a few months to get the experience of- and reproduce from, the physical conference. Still, you should not be fooled by some interesting 2021 predictions for the retail industry. Susan Reda, Editor from Stores Media, NRF, has joined in connection with the virtual conference.
When NRF presented their predictions for 2020 last year, the consequences of Covid-19 were not considered. What significance has a global health crisis had for the retail industry's development?
Last year, Reda predicted that resale and re-commerce companies would grow by 2020. That prediction can only be said to have been bolstered by Covid-19. Resale and re-commerce companies sell products previously owned by other consumers. The products can be used or new, and it can be anything from clothes, books, electronics, etc. The pandemic has had economic consequences that have made consumers more budget conscious. Also, the pandemic has ignited a desire in many to show community spirit and act sustainably. In October 2020, Forbes wrote that there is a boom in the resale and re-commerce market, which is mainly driven by millennials and Generation Z. According to Forbes, today's resale / re-commerce market is approx. Worth $ 24 billion, expected to reach a value of $ 52 billion around 2023.
In addition to resale and re-commerce, we have seen that Covid-19 has helped accelerate other existing retail trends. This is especially true in the shift to e-Commerce. One of the major take-aways from the retail industry's 2020 is that online shopping has increased significantly.
We have stepped out of 2020, and thankfully for that. Although many probably hope and believe that a new year equals new and better times for the retail industry, we must, unfortunately, expect that the effect of Covid-19 will be felt for several more months. It will probably be a while before most consumers feel safe shopping physically again, and this will have an impact on how the retail industry looks in 2021.
One of Reda's predictions is that contactless technology will become mainstream in 2021. She writes that during the pandemic, innovation was greatly increased to reduce the frequency of contact. For example, more and more retailers have implemented contactless payment in their business - a trend that has been received with great pleasure by consumers.
In addition to contactless payment, consumption online has increased, and technologies such as AR (Augmented Reality) and VR (Virtual Reality) have gained a foothold in the market. An example of a retailer that is successful with the use of AR is IKEA. Via an app, the consumer can virtually see what more than 2,000 products look like in their homes before deciding which items they want to buy. In addition to reducing the physical interaction, the decision-making process is facilitated for the customer. It turns out that the use of AR to test products reduces the number of returns.
According to Reda, one of the big 2021 trends will be Social commerce or trading via social media. Reda points out that social commerce has the potential to grow faster than overall e-Commerce.
Social commerce differs from social media marketing as the customer is not transferred to a web shop but can directly purchase the product from the social platform they use. Compared to traditional e-Commerce, social commerce shortens the customer's buying journey. Retailers using social commerce reduce the number of steps in the buying process, giving potential customers fewer opportunities to change their minds. Creating a hassle-free shopping experience by reducing friction points and offering direct "one-click" shopping opportunities increases consumer confidence and leads to more sales.
In addition to leading to direct transactions, it has been proven that social commerce increases the traffic to your website. Sharing links to your products via social media is a great way to drive traffic to your web shop. The increased traffic will ultimately impact your ranking on various search engines, such as Google.
The last benefit of social commerce is that social commerce encourages consumers to communicate with your business through two-way communication. So, if you as a retailer use social commerce, you create a better relationship with your customers and thereby increase customer loyalty.
There is undoubtedly a sea of benefits and opportunities associated with social commerce, and many retailers have caught their eye. Recently, Technavio reported that the social commerce market is poised to grow by $ 2.051 billion from 2020-2024, evolving with an overall annual growth rate of nearly 31 percent.
When it comes to clothing in retail, Reda believes that "on-demand manufacturing" will be a big trend in 2021. On-demand manufacturing is a production model where the product is only manufactured when it is in demand. This will mean that retailers can respond more quickly to customer demand and minimize surplus inventory.
Although on-demand manufacturing has been popular for several years, Reda points out that it will grow big, especially with today's consumers. Today's consumers are paying particular attention to sustainability, and on-demand manufacturing is moving us closer to the goal of zero waste.
The clothing chain Zara is an example of a retailer that is successful with on-demand manufacturing. Zara has shown that they can jump on the latest fashion trends and deliver them in the store before they have lost their popularity. Through data analysis and automation technologies that provide insight into what customers want, Zara can implement on-demand manufacturing strategies to focus on agile production. This helps to close the gap between production and the consumer.
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