Top retail trends for 2021 you need to be aware of
- Innovation in customer experience (CX) will differentiate brands in the next few years
- Retailers need to consider subscription bundles to retain customer loyalty and generate recurring revenue streams
- Retailers need to level up their data insights to effectively optimize their operations
- Predictive algorithms will help with personalization and CX optimization
The retail industry around the world has seen unprecedented change in 2020.
The pandemic, which is still ongoing, accelerated growth in the digital sector. So retailers who already had a mature digital offering could reap the rewards. But many retailers, even in ASEAN, were not prepared for such a huge shift in consumer behavior.
But the trends that COVID-19 has accelerated were already influencing the retail sector pre-pandemic. For example, the business model was already changing for retailers and consumers were becoming more powerful pre-COVID. So the retail industry has to adapt to the new reality we may all face next year.
In part 1 of a series, we examine some of the trends that the retail industry needs to face in 2021.
Let’s take a look!
Customer Experience (CX) Innovation
Your brands’ customer experiences are the sum total of all the touchpoints you have with your customers. Every touchpoint on the customer journey is equally important.
We have previously discussed why you should invest in better customer experience, and we know investment in this area will be vital in 2021. So retailers need to think about how they can help their customers have a better commerce experience. But to do that, we also need to think a bit about choice.
Did you know that you can offer too much choice to your customers? And that too much choice can lead to a negative customer experience.
The well-known “Jam Jar” study, by Sheena Iyengar and Mark Lepper, found that consumers were as much as 10 times more likely to purchase jam on display when the number of jams available was reduced from 24 down to 6.
So, although it feels counter-intuitive, less choice leads to more sales.
Retailers should invest in a customer experience that guides users and respects their time. If your brand offers a lot of products, better filtering and search functionality can narrow the field of choice for users, which can increase sales. Personalization will also help users to get what they need much faster.
Subscriptions, Bundles and Boxes – Recurring revenue potential for retailers
Leading on from narrowing choice and guiding customers more effectively, 2020 has seen a rise in bundles and subscription services.
Bundles are convenient for customers and offer a potential recurring revenue stream for retailers, even during a pandemic.
The UK Royal Mail, in conjunction with Globaldata Consulting, conducted a study of the UK subscription box market in 2019. They discovered that the subscription box market has grown by 100% year-on-year and is forecast to grow by a further 72% by 2022. With the pandemic still rumbling on, it could be argued that growth in this sector is likely to increase even quicker than their forecasts.
And it’s not just new players in this market. Companies like Apple have started to offer bundled subscriptions with their Apple One service. Amazon, with their Prime offering, has been active in the subscription space for years.
It’s time for retailers to think about how they can offer recurring subscription bundles to their customers. Depending on the sector your retail brand operates in, this could be difficult. But the potential customer retention and loyalty rewards are staggering. Key customer demographics have become very used to this model. The study found that over half of 25-34 year olds in the UK (52.1%) have signed up to at least one bundle. They are also very popular with younger, affluent urban consumers. So this type of offering could potentially perform very well for retailers who want to appeal to younger customers in cities.
Improvements driven by big data
Generating better insights into your online and offline activities will be crucial for any retailer who wants to evolve in 2021.
Retailers need a solid O2O strategy with emphasis on proper attribution models so they know exactly which elements of their commerce experience are most effective and which need improvement.
Predictive algorithms that can help you to serve your customers more effectively will also likely be front of mind for many retailers over the next few years. But many retail organizations lack the resources necessary to scale up operations in this area.
MAQE has a team of data specialists to help your retail business make the most of your customer data and measure the effectiveness of your customer experiences. Talk to us via [email protected] to find out more.
Come back for part 2 where we will look at more top retail trends for 2021 including the need to be “Agile”, digital advertising, and ethical values.
How MAQE can help
MAQE are commerce experience specialists with a background in many different verticals, including retail. We can help you to implement an O2O strategy, find what your customers really want and help you to leverage data to improve customer experience. Talk to us via [email protected].