The U.S. and global economies saw significant upheaval because of the COVID-19 pandemic. Apart from grocery, the retail industry took the brunt of the pandemic. The challenges were widespread and resulted in an alarming number of both temporary and permanent store closures. In the coming year, the retail sector will continue to make adjustments because of the COVID-19 pandemic. There will be new challenges, which inevitably will spur the adoption of new technologies and business practices in the ongoing battle between online and brick-and-mortar.
Here are the major trends to watch in 2021:
1. People Crave Connection
Some changes will become permanent, but one thing unlikely to change is the human desire for contact with others. A need for human connection is one of the biggest reasons physical stores aren’t facing extinction, despite current challenges. Brick and mortar retail is here to stay though the core functions may be repurposed; many may become mini distribution centers. No matter how many shopping-related tasks you can complete online, people still crave interaction with store employees and other customers when visiting stores. You cannot replicate certain aspects of the in-store shopping experience. The retail technology used to empower and improve the customer experience is what will set brick and mortar retailers up for success in the new year.
2. Safety of Customers and Employees
As retailers try to draw traffic to brick-and-mortar stores, they must address customers’ health and safety concerns. Safety precautions are becoming a brand differentiator and consumers will shop where they feel safe. Social distancing rules and masking requirements will remain in effect for the foreseeable future. As well as measures such as installing sneeze guards at retail counters, POS stations, and self-checkouts and placing sanitizers in high-traffic areas. Retailers also need to inform patrons they are sanitizing stores on a regular basis. Safety and health requirements will remain a priority as long as the risk of contracting the virus exists.
3. BOPIS and Curbside Pickup
For many customers, physical retail stores will fill more of a warehouse or mini-distribution center role. The pandemic has introduced more customers to BOPIS (buy online, pick up in store) and curbside pickup. Some folks who place orders online to pick up in store want to minimize contact with other customers and store employees without sacrificing delivery. They will run to the store to pick up or exchange items, at the curb or at a designated checkout counter. The adoption of these shopping practices will stay and gain traction well into the future.
4. Inventory Management
Managing inventory has become more challenging for retailers. Supplies out of China, where so many products are manufactured, are still taking longer to arrive than in pre-pandemic days. What used to take four weeks now takes up to nine, forcing retailers to project out inventory for longer periods. Another issue is online ordering. If a product is out of stock, are online systems smart enough to recommend an alternative? In a store, a customer buying cereal would just get a different cereal if their usual is out. To prevent lost sales, retailers need the capability to give customers the same choices online, which requires finely tuned algorithms synced with backup inventory systems.
5. Year-Round Black Friday
One major change we’ve seen during the pandemic is how retailers handle promotions. Black Friday was extended from one day to a week-long event. It gave us a glimpse of what’s to come – longer-lasting promotions for high-sales retail events such as Valentine’s Day, Easter and back to school. Discounts more moderate than in the past – say, 40% instead of 70% – will become common. Retailers faced with declining in-store sales stand to profit from offering less extreme discounts over a longer period of time.
6. Home Delivery
The pandemic has given home delivery for groceries a boost. Non-food retailers will be using it as well. Customers who order online will not always want to wait several days for delivery, especially when delays have become common. Two-day delivery may not be fast enough. Some opt for BOPIS or curbside pickup if it means they can get a gift or special item sooner. For home delivery to be effective, retailers must invest in omni-channel technology that gives customers a unified view of online and in-store stock, so it will take some effort to make it happen. No one wants to drive to a local store to buy a last-minute gift only to find the item they were told was in stock is not there. Consumer loyalty is built around trust and transparency—proper inventory systems ensure visibility to stock availability whether it’s shipping from a warehouse or in a store.
7. Retail Labor Pains
Retailers may struggle with filling vacant positions, especially if new government stimulus packages pay workers to stay home. With the minimum wage increasing, the cost of labor is on the rise. Lack of qualified labor to fulfill entry-level positions is also problematic. Retail technology such as cash management systems and staff scheduling applications can help address the issue. For instance, data analytics can reveal sales peaks and valleys, enabling store managers to schedule staff accordingly.
Many Retail Unknowns
How permanent each of these changes will become remains to be seen. It may take some time before customers feel comfortable shopping inside stores. Vaccines will certainly help. As 2021 gets underway, a lot of uncertainty remains, but it’s reasonable to expect that retail technology will evolve and the desire for human connection in stores will continue to keep brick and mortar alive for years to come. The one thing that is certain is consumers have demonstrated their resilience and adaptability throughout these extraordinary times.
2020 has been an interesting year and we’re eager to jump into new success and promises for 2021. We hope it’s productive and profitable for all of you. To see our 2020 predictions and what came to fruition, click here.
President and CEO
APG Cash Drawer, LLC