Hello, 2020! As we welcome in the New Year and a brand new decade, it seems like the perfect time to take a look at some of the key retail industry trends for 2020 that Peak believes will shape the sector over the next 12 months. The ever-changing, increasingly-complex industry will no doubt continue to challenge those businesses who don’t move quickly enough when it comes to the adoption of new technologies and ways of thinking, and there are a few areas in particular that we see artificial intelligence (AI) playing a crucial role in 2020…
A pressing issue that all businesses (and indeed individuals) need to address, more and more customers are holding brands to account when it comes to sustainability and environmental responsibility. The retail business of the future, we believe, is one that is conscious of the people it’s serving and the impact it’s having on the environment. However, it’s important for retailers to be aware that sustainability is also crucial when it comes to driving profitability.
This year, we’re expecting more retailers to use AI to analyze their vast amounts of data to optimize processes across the value chain – this could be as simple as having the right amount of the right product in the right place, at the right time. This reduces waste and cuts costs, which is great for the planet, but also for your bottom line.
Rental and resale opportunities
The retail rental and resale markets will continue to grow in 2020, with online businesses disrupting traditional retail models as more and more consumers become aware of the aforementioned sustainable imperative. US company Rent the Runway now has five stores across the States and, since June 2019, has opened a number of drop-off and collection points in popular department stores.
For an example a bit closer to home, look no further than Depop. Hugely popular with Gen Z, the app allows users to not only buy and sell clothing, but also explore the latest trends and content, and form communities with likeminded individuals. The AI-powered, algorithm-driven platform has resulted in a highly-engaged user base who feel passionate the brand they’re interacting with – which should be food for thought for many retail businesses out there looking to achieve online sales success this year.
Another retail trend to look out for in 2020 is the rise in retailers who are taking a platform-based approach to customer experience. We’ve often pointed out that, for today’s consumer, retail is no longer just about walking into a store and buying something – there are more customer/brand touchpoints than ever before, with shoppers desiring an experience that allows them to like, comment, follow, and engage with their favorite brands at the touch of a button. Businesses that evolve into being a platform that fits that purpose will no doubt reap the rewards. This new way of interacting and serving customers offers significant added value for retailers, building brand loyalty and enabling businesses to – thanks to the data and insights generated – understand their target market more than ever before.
The connected retail experience
We believe that connected retail, sometimes referred to as unified commerce, is without doubt the future of customer experience. With shoppers becoming increasingly more demanding, data and AI will be the key to developing a single view each customer on an individual level, in order to deliver a seamless, truly personalized experience across a multitude of touchpoints. As we move into 2020, retailers must invest in a connected retail approach that stitches together the different elements of the consumer journey to drive new efficiencies. Fashion businesses were once siloed, and functions such as merchandising made decisions independently of the supply chain or marketing teams, for instance. From our experience, AI is the key to unifying the modern retail business to optimize processes across a business in order to enhance the entire customer journey.
“The use of AI to drive more personalized experiences for customers however they shop will be a growth area, as retailers get smarter at using data to give customer a truly personal service.”
— Sebastian James, CEO, Boots
Steering away from sales
In terms of retail industry trends for 2020, we’ll see retailers begin to shift their focus from focusing on a one-size-fits-all approach for traditional sales bonanzas and marquee retail dates. The idea of relying too much on Black Friday or the Christmas period to provide you with the vast majority of your annual revenue is outdated, and no longer the guaranteed sales successes they once were. Rather than placing too much of a heavy emphasis on key calendar moments in 2020, forward-thinking retailers will be focusing on customer behaviors that can be predicted at any time of the year – and AI is incredibly effective when it comes to this.
By utilizing AI to spot trends, product preferences or likelihood to buy, retail businesses can discover a clearer view of what customers really want, all year round.