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The Retail Trends of 2020: Predictions

At times, it seemed as if the last decade spelled nothing but decline for physical retail chains. Online shopping was booming, and many businesses thought to be ‘too big to fail’ experienced store closures and lay-offs. 2019 saw retailers fighting back, however, as many companies adapted, innovated with new store formats, and re-asserted themselves in the marketplace. According to IHL, “more than five retail chains are opening stores for every retailer that is closing stores in 2019. This is up from 3.7 in 2018.” The report also shows that the number of chains adding stores in 2019 has increased 56 percent, while the number of closing stores has decreased by 66 percent in the last year.

With many retailers geared up to provide a new level of omnichannel customer experience for consumers, 2020 is going to be an exciting year. So, let’s look at a few of our retail predictions for 2020, and also look back at our 2019 predictions.

1) 2020 will be the year for the software-defined store

Software-defined store is the future-proof solution many retailers are turning to, as they struggle to revamp their in-store infrastructure in a cost-efficient manner. With rising labor costs impacting margins, and increased competition in the marketplace, retailers are looking for maximum operational efficiency, driven by in-store innovation with frictionless checkout and omni-channel convenience. This isn’t easy to achieve when the cost of support and maintenance for today’s aging and complex store technology keeps rising.  On top of that, many retailers are prevented from rolling out new applications and services across their store demographic to drive improved performance and operational efficiency.

To beat this challenge, centralized management of stores through a software-defined store strategy will become a key tool that retailers will implement, in order to continue in-store innovation at a rapid pace and meet the demands of consumers.

The software-defined approach enables retailers to roll out new applications swiftly from a central control point, providing a singular view of store technology, which speeds up diagnosis and resolution of issues while reducing the volume of costly site visits. By decoupling the hardware from the software, retailers can move away from single-application devices to a leaner environment, resulting in cost savings for every store. Consequently, the retailer has flexibility and adaptability built into its core, and their store technology becomes a competitive asset for the business.

2) More line-busting checkout options

Retailers are spoiled for choice when it comes to methods of reducing in-store waiting times: self-serve kiosks, mobile payment apps, click & collect are just some of the validated options available. While these self-serve options will continue to empower the customer and provide higher levels of convenience, there will also be a significant drive to empower store associates, enabling them to become more mobile with the right technology to accelerate the transaction process. As more retailers add such innovations, customer expectations increase. Retailers who fail to offer more options for expedited and convenient checkout options will suffer from declining customer loyalty and sales due to abandoned baskets.

3) Increased collaboration between retail partners to improve the customer experience

We’ve seen examples in 2019 of retailers announcing new partnerships with other retailers to drive new footfall, such as the ‘store within a store’ concept – including Disney’s plans to open 25 stores within Target locations. Those who embrace this experiential approach are recognizing the value of new retail concepts, in any channel, to fulfill customer needs and to deliver customer care with convenience and familiarity.

4) Drone deliveries, driverless cars and click-&-collect will fuel omnichannel fulfillment efficiency

According to recent research, 92 percent of consumers said they would like “free one-day delivery by whatever means is most expedient – drone, driverless car, messenger, etc.”

Omnichannel fulfillment has proven to be one of the more vital aspects in the drive to meet modern customer expectations, which is why several companies started looking into drone delivery, driverless car delivery, and click-and-collect.

This year will likely see a prolific increase in the number of fulfillment initiatives. Furthermore, the previous prediction about increased partnership activity is exemplified with Walgreens allowing shoppers to pick up online orders from Urban Outfitters, Free People, and Anthropologie at local Walgreen stores. Grocers will also be looking with interest at the early results from the micro-fulfillment strategy adopted by Meijer – in contrast to the macro-fulfillment approach from Kroger’s partnership with Ocado.

2020: The Year of In-Store Innovation

Physical retail is by no means dead, it’s just evolving and becoming more efficient thanks to the help of technology and retailer’s innovative ideas. With some of the key technologies and ideas already put in place as a foundation, 2020 will be the year of in-store innovation.

2019 In Review

At the end of last year, many industry observers, including ourselves, predicted a large rollout of Amazon Go stores across the U.S. and many gave the number of 3000 stores in the US by 2021. This no longer appears likely with Amazon reviewing its strategy. We were correct, however, in our assumption that Amazon Go would prove a catalyst for more retailers to test cashierless stores, with the likes of Tesco embarking on this new technology, together with reports on Sam’s Club and Giant Eagle among others. It was also interesting to see Sainsbury in the U.K. terminate their self-checkout trial as customers just weren’t ready.

While we anticipated this drive for frictionless checkout, we also expected retailers to adopt alternative POS solutions rapidly. 2019 saw this prediction gain pace, evident with headlines such as Walmart ‘Fast Lane’Aldi’s first-ever self-checkout machinesKroger launching Kroger Pay & Kroger Awards and the push for smart shopping carts that could revolutionize grocery shopping from vendors such as Veeve and Caper. This is just the tip of the iceberg and it will be no surprise when further developments shine in 2020.

Finally, let’s take a look at the rise of experiential shopping predicted by many to be a top trend in 2019. This movement was largely ignited by the likes of Nike and Adidas with their New York stores at the beginning of 2019 and the momentum has not slowed down. The experiential shopping concept will continue to bloom in all shapes and sizes with Nordstrom, Lululemon and many more but the variation in 2020 will be the number of partnerships that will be formed to accelerate footfall in-store.

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