COVID-19 has been the biggest disruptor the retail industry has ever experienced. At its onset, it was difficult to see beyond closed stores, masks and panic buying of essential goods. However, more than a year later, the industry, powered by resilience, has emerged to be in a place of strength. New protocols, services and shopping opportunities have already transpired, and much more innovation and technology will continue to shape the landscape looking ahead.
Here’s a look at some trends we’re monitoring and what we expect to see in the next normal.
Physical retail wasn’t dead before and isn’t dying now
The US retail industry gained substantial tailwinds in the second half of 2020, and ended the year with a sales gain of 3.4%, closely in line with Mintel’s +3% prediction. Retail’s expansion was fueled by significantly accelerated eCommerce growth, with sales jumping 31.8% in 2020 (versus Mintel’s estimate of 32.6%). Yet, even with all eyes on eCommerce, it still only comprised less than 14% of total sales in 2020. While it’s on track to expand further to comprise nearly 23% of sales by 2025, the lion’s share of sales still occur in physical retail, and brick and mortar is rebounding as consumers show a willingness to return to stores as the vaccine rollout continues and retailers relax their COVID-19 restrictions. The industry will continue posting sales gains more in line with pre-pandemic levels throughout 2025. Physical retail’s role is arguably more vital than ever but will look different in the future and will continue to evolve. We will see more next-generation store concepts, more digitization to further streamline the shopping process and in some cases, stores evolving to become fulfillment centers to handle online demands.
“Clean shopping” will continue as a key retailer driver
Primary drivers of retailer preference involve the basic consumer needs – fair prices, good customer service, and ample product selection and availability. But the pandemic added cleanliness and hygiene to consumers’ lists, and this is something that’s here to stay. According to Mintel’s Global COVID-19 tracker data as of Q1 2021, four in five adults said the pandemic forever changed how they think about health and safety. The number one factor that consumers now look for from retailers when deciding where to shop is updated policies on cleanliness and sanitation. They equate this with safety which ties back to their renewed prioritization of total wellbeing. Retailers must look to update and uphold their policies even after the pandemic threat is over, both in stores and online. Contactless shopping options are one of many viable ways to address this concern.
Experiential retailing will reemerge, with in-person experiences more commonly paired with virtual components
Consumers are yearning for normalcy and the ability to partake in events and activities they’ve been restricted from for more than a year. As they branch out more, retailers are responding by initiating more opportunities that invite gathering, interaction and fostering community. The top types of retail experiences consumers like are those that allow them to learn something new, invite them to get hands-on with digital tech or that make them feel like they are part of a community, according to Mintel research on in-store experiential retailing. That said, consumers are exhibiting caution in this regard, not quite comfortable being in large crowds again. Many would prefer events that are controlled (eg attendance limits, restricted to the fully vaccinated) and that are held outside. Even so, nearly three-quarters of adults are willing to show vaccination proof in order to gain entry into large indoor events, which means retailers can feel confident about instituting such guidelines to ease overall concerns, according to Mintel’s Global COVID-19 tracker data. The door is open for retailers to get creative about bringing their offerings to outdoor space as feasible, perhaps via mobile pop-ups. For hesitant shoppers who want the community and entertaining aspects that events can offer without the crowds, retailers should offer virtual options so they can participate from behind a screen if they prefer.
Conscious consumerism is not a trend; it’s a choice
More than ever, consumers, especially the youngest generations, are hand-selecting where they shop based on whether a company’s ethical and moral code matches their own. Consumers want to know their hard-earned money is going to support causes they believe in, and they’re using their purchasing power to make their opinions known. At least a quarter of Gen Z adults will support retailers who are transparent about their internal initiatives such as efforts related to diversity, equity and inclusion or who treat their employees fairly, according to upcoming Mintel research on winter holiday shopping. Now is absolutely the time for brands to proudly tout what they stand for, and believe in.
Retail will get up close and personal
Nearly three in five consumers choose to shop with retailers who make them feel like they are getting a good value. While value is often defined in terms of dollars and cents, savvy retailers will realize that value extends far beyond financial definitions and that efforts to add personalization are worth more than can be quantified. A quarter of consumers in Mintel’s research said they want to shop with retailers who treat them like a good friend, according to Mintel research on the state of retail and eCommerce. Thus, the new age of personalization will entail more appointment shopping, both in stores and digitally, through virtual consultations, livestreaming and tools such as AR and VR that can better showcase customization options.
What we think
Despite ongoing challenges, retailers and brands are responding enthusiastically to a multitude of new opportunities to better connect with customers based on their current and predicted priorities. They will continue to innovate and evolve in ways that make customers feel safe, supported and appreciated, both personally and financially.
