In January 2021, we were supposed to be in New York again for the NRF conference, but the conference will be a little different 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 virtual and takes place 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 insights from the physical conference. However, we have gathered some interesting 2021 predictions for the retail industry, which Susan Reda, Editor from Stores Media, NRF, has presented in relation to the virtual conference.
What impact has Covid-19 had on the NRF's 2020 predictions?
When NRF presented their predictions for 2020 last year, the consequences of Covid-19 were not considered. What impact has a global health crisis had on the retail industry's development?
Last year, Reda predicted that resale and re-commerce companies would become big in 2020. Covid-19 has only strengthened that prediction. Resale and re-commerce companies sell products previously owned by other consumers. The products can be used or new, and they can be anything from clothes, books, electronics, etc. The pandemic has had economic consequences that have made consumers more economically conscious. Also, the pandemic has turned on a desire 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. One of the major take-aways from the retail industry's 2020 is that online shopping has increased significantly.
Three of the NRF’s forecasts for 2021
We have left 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 continue for several more months. It will probably be a while before most consumers feel safe shopping physically again, which will impact how the retail industry looks in 2021.
1. Contactless technology is becoming mainstream
One of Reda's predictions is that contactless technology will become mainstream in 2021. She writes that during the pandemic, innovation was significantly increased to reduce the frequency of contact. For example, more and more retailers have implemented contactless payment in their stores - 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. IKEA is an example of a retailer that has success using AR. Via an app, consumers 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 physical interaction, the decision-making process is made easier for the customer. In fact, the use of AR to test products reduces the number of returns.
2. Shopping on social media is growing at record high speed
According to Reda, one of the big 2021 trends will be Social commerce or shopping via social media. Reda points out that social commerce can grow faster than overall e-Commerce.
Social commerce differs from social media marketing as the customer is not directed to a webshop but can purchase the product directly from the social media 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 creating direct transactions, social commerce has proven to increase traffic to your website. Sharing links to your products via social media is a great way to drive traffic to your webshop. The increased traffic will ultimately impact your ranking on various search engines, such as Google.
The last benefit of social commerce is that it encourages consumers to communicate with your business through two-way communication. If you as a retailer use social commerce, you create a better relationship with your customers and increase customer loyalty.
There are undoubtedly many benefits and opportunities associated with social commerce, and many retailers have discovered them. Recently, Technavio reported that the social commerce market is ready to grow by $ 2.051 billion from 2020-2024, evolving with an overall annual growth rate of nearly 31 percent.
3. The production will be "on-demand"
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 produced when requested. This means 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, 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 demonstrated that they can adapt to the latest fashion trends and deliver them in the store before it loses 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.