Planning For 2020: How To Prepare For The Next Decade Of Retail Success

Many industry experts predicted a “Retail Apocalypse” to occur, but luckily that forecast never came to pass. Here we’ll analyze the top five changes from the past two decades of retail, and also explore five trends that are sure to dominate the retail landscape in 2020 and beyond.

We are fast approaching the third decade of the 21^st century, and a lot has happened in the past 20 years. Four presidents have lived in the White House, Facebook has connected family and friends from afar, Apple released 24 different iPhone iterations, and the rise of the Internet changed retail forever. Although many industry analysts predicted a “Retail Apocalypse” of sorts to occur during the past decade, luckily that forecast never came to pass. While – yes – the retail industry has definitely changed, it’s very far from dead.

In this blog we’ll analyze the five most significant changes that rocked the retail world during the 2000’s and 2010’s, and we’ll also explore five of the most exciting trends that retailers should pay attention to moving forward. As the saying goes, “by failing to prepare, you are preparing to fail,” so it’s essential to take note of new industry developments while planning for New Year success. That said, it’s always important to prep for the future with an open mind, and leave plenty of room for redirection. After all, you never know what surprises the next decade has in store.

The Top 5 Retail Takeaways From The 2000’s & 2010’s:

1. Omnichannel Reigns Supreme

While the traditional brick-and-mortar retail format used to rule the commerce world, that era has come and gone. With the rise of the internet and the popularity of online shopping, retailers of all types have been forced to adopt a more “omnichannel” approach in order to survive.

So, what does “omnichannel” mean? According to Shopify, “omnichannel retailing is a fully-integrated approach to commerce, providing shoppers a unified experience across all channels or touchpoints” of communication. No longer is just having a website enough. Instead, successful retailers of the past two decades have strategically married messaging across all forms of communication to create one cohesive, consistent, personalized shopping experience, no matter how, when, or where their customers decide to shop.

2. It’s All About The Experience

With so many options for buying online, retailers have recognized the need to differentiate themselves from their digital counterparts by developing enhanced shopping experiences that just can’t be replicated online. One retailer that prioritized experience above all else is Target – and their profits are proof that it’s working. In an effort to enhance the consumer shopping experience, Target launched a massive campaign to redesign 1,000 stores by the end of 2020. According to Joe Perdew, Target’s vice president of store design, the reasoning is obvious: “we start by putting the guest at the center of everything we do, and think about the human, physical and digital aspects of the experiences we want to deliver.” By strategically using spaces, fixtures, interior design, and lighting, Target aims to make the entire shopping experience as inspiring – and enjoyable – as possible.

3. Customer Service Is Essential

Much like the overall shopping experience, high-quality customer service is becoming increasingly important to successful retailers. Because people can go online to buy pretty much anything they want, there’s no “need” to shop in-store. That is, unless you’re seeking the assistance or advice of a highly trained customer service representative who can help you make an informed purchase decision. Today’s customer service representatives need to actually enhance the shopping experience and create meaningful interactions with shoppers. As FreshDesk says, “things like well-trained salespeople, responsive communication, effective use of technology, showing empathy for customer needs and providing personalized experiences are just a few retail customer service examples your company can do to ensure positive outcomes.”

4. Eco-Friendly Is On Fire

It’s a trend that the food industry has noticed, as well; as people become more conscious about their carbon footprint on the environment, they’re beginning to change their daily habits, such as eating red meat and using reusable grocery bags. However, the trend towards being eco-friendlier goes way beyond plant-based diets and plastic bag bans, and the retail industry has also been affected. According to Retail Next, there are now more socially-conscious and eco-aware buyers, and they’re beginning to expect more from the retailers whom they patronize. A “conscious consumer” is described as someone who considers the social, ecological, environmental, and political impact of products and makes purchase decisions accordingly. Companies like Toms have been taking advantage of this sustainable trend for years by adopting the tagline, “Stand For Tomorrow” and donating a pair of shoes for every pair sold. Other brands like Imperfect Foods, Rothy’s, and Warby Parker soon followed suit.

5. Millennials Are All Grown Up

In 2019, Millennials officially surpassed Baby Boomers as the nation’s largest living adult generation, and millennials just so happen to be in their prime spending years. Indeed, according to Lexington Law, millennials spend approximately $600 billion in the United States every year. Millennials are also the first generation of “digital natives” who grew up with the internet and all of its infinite possibilities, and they often expect everything to operate as fast as the iPhones in their back pockets. As Entrepreneur puts it, “this is the generation that doesn’t want to be marketed to, they’d rather be engaged.” Retailers who form genuine relationships with their target audience though authentic content and online engagement will continue to thrive come 2020. By paying attention to millennial wants and needs, retailers will be better able to understand what steps they need to take in order to prepare for a future of success.

The Top 5 Trends To Expect In 2020 & Beyond:

1. Data-Driven Merchandising

In 2019, customers began to demand more personalized shopping experiences. According to Compliant IA, “POS data, stock levels, and local trends are playing a bigger role in merchandising decisions, and this trend is bound to continue.” Big-box retailer Nike has already innovative steps with its new flagship location in New York City, in which part of the store is merchandised based on what items sell best online in the shop’s zip code. According to John Hoke, Nike’s Chief Design Officer, “the future of retail is going to be less fixed, more fluid, and hyper-responsive to consumer trends and needs.” By using data-driven merchandising to make the shopping experience more tailored, companies also make the shopping experience more enjoyable – a win win situation for retailers and brand loyalists alike. In order to succeed in the next decade, retailers need to invest heavily in analytics and AI tools that offer insight into consumer preferences, so they can understand exactly how to market their products.

2. Private Label Products Explode

Mega-retailers like Target and Amazon are already taking advantage of the popularity of private label products, and that trend is only going to continue to explode in 2020. Long gone are the days when people flat-out refused to buy any laundry detergent except Tide. Whereas traditional shopping carts typically contained only 25% private label products, that percentage goes up to 32% when a millennial is doing the shopping. Today’s generation of consumers are expanding their tastes, and they’re turning away from elite, high-price brand names. As growth strategist Eddie Yoon told Retail Wire, “private label is also the clearest expression of a retailer’s ‘brand’ and value proposition. If a retailer can’t come up with a compelling private label product, it’s the clearest sign that it doesn’t have a clear, convincing and differentiated strategy and that it doesn’t really know who its super-consumer is.”

3. Payment Flexibility Is A Must

According to Vend, about 90% of shoppers say they use multiple devices to make online purchases, and 46% of smartphone owners use peer-to-peer payment apps such as Apple Pay, Pay Pal, and Venmo. In 2020’s hyper digitized world, even credit cards won’t be modern enough, and many millennials are turning away from them altogether. According to Retail Dive, a 2016 survey by Bankrate.com revealed that only 33% of adultsaged 18 to 29 own a credit card. Therefore, if retailers want to get “in” with this powerful demographic of shoppers, payment flexibility is a must. Beyond peer-to-peer payment apps, another way retailers can win over millennial shoppers is by offering pay-as-you-go plans so customers can pay off their purchases in monthly installments, which makes buying high ticket items more realistic. Another bonus? By offering this type of service, retailers can also establish an ongoing business relationship with the younger population of American consumers. One such service that’s seen success is Afterpay, which works with popular retailers like World Market, Ulta, and Outdoor Voices.

4. Subscription Boxes Go Mainstream

According to McKinsey & Company, the subscription box model of shopping has grown 100% over the past five years, and although subscription boxes account for a minority of the retail industry’s annual profit, they provide a wide window of revenue opportunity. Practically everything can be purchased through a subscription nowadays. Food, clothes, razors, and yes – even fishing equipment – is all fair game. And it’s not just a trend that’s perpetuated by small, progressive companies. According to Forbes, big box retailers like Target and Walmart have both started “Beauty Box” subscription box services, and Amazon boasts over 150 box varieties. By eliminating the complex decision-making process, subscription boxes take the stress out of shopping and allow brands to deliver a personalized, curated experience. Some subscription companies like Trunk Club even blend the online and in-person experience by encouraging customers to meet personal stylists at “Clubhouse” locations to get fitted in person, which makes the shopping experience even more rewarding.

5. Store Design Dictates Sales

Arguably, this item reiterates the importance of creating enjoyable shopping experiences, but it’s so important we’ll explain it twice. Although the logic behind optimized store design is not new by any means, its significance has been magnified by today’s experience-obsessed consumer. According to Compliant IA, retail merchandising will continue to be one of the biggest drivers of sales and consumer engagement in 2020. The way a retailer’s store is designed and organized speaks volumes about a brand’s reputation and respect for its shoppers, and it also has a major impact on overall brand perception. Excellent retail merchandising strategies do more than make a company look good; rather, they physically influence the entire shopping experience from beginning to end. Brick-and-mortar retailers will always have an advantage over their online counterparts, and that’s the ability to stimulate all five senses at once. By investing more in store design and savvy merchandising, retailers will be able to differentiate themselves in the new decade and make an undeniably compelling argument for shopping in-store.

How Can You Prepare For Retail Merchandising In The New Year?

People will always spend money, and that’s a good thing! Otherwise, how would the economy survive? However, how they spend money – and who they spend money with – is changing. In order to get ahead, retailers need to evolve. After all, we’re almost 20 years into the 21^st century. If there was ever a time to evolve, the time is now.

In order to understand the best way to evolve, many retailers are choosing to partner with third-party industry experts who can help them navigate the complicated, everchanging commerce climate. Third-party experts are immersed in the retail industry every day, and they experience the changing trends first-hand. If you’re looking for the right third-party partner to help you master the retail industry in 2020, look no further than SRS.

When it comes to retail merchandising, SRS can do it all. We combine our 200+ years of industry experience, big box retailer relationships, and extensive team of merchandising specialists to deliver customized solutions that help modernize retailer locations, and enable companies to better connect with their customers, both online and off. From data and strategy, retail merchandising, and logistics and fulfillment, we can create a specific plan that will seamlessly take your store into the next decade.

If you’re ready to get started, contact us at sales@srsmerchandising.com or (513) 272-3439.

Together, we’ll make 2020 your best year yet.