The Retail industry has had to do a sharp re-think of its digital roadmap and transformation journey – Ecosystm research shows that about 75% of retail organisations had to start, accelerate, or re-focus their digital transformation initiatives. However, that will not be enough as organisations move beyond survival to recovery – and future successes. While retailers will focus on the shift in customer expectations, a mere focus on customer experience will not be enough in 2021. Ecosystm Principal Advisors, Alan Hesketh and Alea Fairchild present the top 5 Ecosystm predictions for Retail & eCommerce in 2021.

This is a summary of the predictions, the full report (including the implications) is available to download for free on the Ecosystm platform here.

The Top 5 Retail & eCommerce Trends for 2021

1. There Will Only be Omnichannel Retailers

The value of an omnichannel offer in Retail has become much clearer during the COVID-19 pandemic. Retailers that do not have the ability to deliver using the channel customers prefer will find it hard to compete. As the physical channel becomes less important new revenue opportunities will open up for businesses operating in adjacent market sectors – companies such as food and grocery wholesalers will increasingly sell direct to consumers, leveraging their existing online and distribution capabilities.

Most customers transact on mobile device – either a mobile phone or tablet.  New capabilities will remove some of the barriers to using these mobile devices. For one, technologies such as Progressive Web Apps (PWA) and Accelerated Mobile Pages (AMP) will provide a better customer experience on mobile platforms than existing websites, while delivering a user experience at par or better than mobile apps. Also, as retailers become AI-enabled, machine learning engines will provide purchase recommendations through smartwatches or in-home, voice-enabled, smart devices.  

2. COVID-19 Will Continue to be an Influence Forcing Radical Shifts

In driving the economic recovery in 2021, we will see ‘glocal’ consumption – emphasis on local retailers and global players taking local actions to win the hearts and minds of local consumers. There will be significant actions within local communities to drive consumers to support local retailers. Location-based services (LBS) will be used extensively as consumers on the high street carry more LBS-enabled devices than ever before. Bluetooth beacon technology and proximity marketing will drive these efforts. Consumers will have to opt-in for this to work, so privacy and relationship management are also important to consider.

But people still want to “physically” browse, and design aesthetics of a store are still part of the attraction. In the next 18 months, the concept of virtual stores that are digital twins will take off, particularly in the holiday and Spring clearance sales. Innovators like Matterport can help local retailers gain a more global audience with a digital twin with a limited technological investment. At a minimum, Shopify or other intermediaries will be necessary for a digital shop window.  

3. The Industry will See Artificial Intelligence in Everything

AI will increase its impact on Retail with an uptake in two key areas.

• Customer interactions. Retail AI will use customer data to deliver much richer and targeted experiences. This may include the ability to get to a ‘segment of one’.  Tools will include chatbots that are more functional and support for voice-based commerce using mobile and in-home edge devices. Also, in-store recognition of customers will become easier through enhanced device or facial recognition. Markets where privacy is less respected will lead in this area – other markets will also innovate to achieve the same outcomes without compromising privacy but will lag in their delivery. This mismatch of capability may allow early adopters to enter other geographic markets with competitive offers while meeting the privacy requirements of these markets.
• Supply chain and pricing capabilities. AI-based machine learning engines using both internal and increased sources of external data will replace traditional math-based forecasting and replenishment models. These engines will enable the identification of unexpected and unusual demand influencing factors, particularly from new sources of external data. Modelling of price elasticity using machine learning will be able to handle more complex models. Retailers using this capability will be in a better position to optimise their customer offers based on their pricing strategies. Supply chains will be re-engineered so products with high demand volatility are manufactured close to markets, and the procurement of products with stable demands will be cost-based.

4. Distribution Woes Will Continue

Third party delivery platforms such as Wish and RoseGal are recruiting additional international non-Asian suppliers to expand their portfolios. Amazon and AliExpress are leaders here, but there are many niche eCommerce platforms taking up the slack due to the uneven distribution patterns from the ongoing economic situation. Expect to see a number of new entrants taking up niche spaces in the second half of 2021, sponsored by major retail product brands, to give Amazon a run for their money on a more local basis. 

As the USPS continues to be under strain, delivery companies like FedEx in the US who partner with the USPS are already suffering from the USPS’s operational slowdown, in both their customer reputation and delivery speed. In 2021, COVID-19 – and workers’ unions – will continue to impact distribution activities. Increased spending in warehouse automation and new retail footprints such as dark stores will be seen to make up for worker shortfalls.  

5. China’s Retail Models Will Expand into Other Markets  

China’s online businesses operate in a large domestic market that is comparatively free of international competitors.  Given the scale of the domestic market, these online companies have been able to grow to become substantial businesses using advanced technologies. All the Chinese tech giants – among them Alibaba, ByteDance, DiDi Chuxing, and Tencent – are expanding internationally.

China’s rapidly recovering economy puts those businesses in a strong position to fund a competitive expansion into international markets using their domestic base, particularly with their Government’s promotion of the country’s tech sector. It is harder to impose restrictions on software-based businesses, unlike the approach that we have witnessed the US Government take for hardware companies such as Huawei – placing constraints on mobile phone components and operating systems.

These tech giants also have significant experience in a Big Data environment that provides little privacy protection, as well as leading-edge AI capabilities. While they will not be able to operate with the same freedom in global markets, and there will be other large challenges in translating Chinese experience to other markets – these tech players will be able to compete very effectively with incumbent global companies. Chinese companies also continue to raise capital from US stock exchanges with The Economist reporting Chinese listings have raised close to USD 17 billion since January 2020.