After the most unpredictable year in history, which trends do retail’s biggest bosses think will be prevalent in 2021? Retail Week finds out.
- Tesco’s Jason Tarry and Iceland’s Richard Walker believe the acceleration in online grocery shopping is here to stay
- Making stores and online work together more seamlessly will be key for Dixons Carphone’s Alex Baldock and Pets at Home’s Peter Pritchard
- Sustainability and experiential shopping also score highly, with customers expected to seek a more authentic and ethical experience
2020 has been one of the most unpredictable years in history. For retailers, this has meant stores opening and closing overnight, online surging to unprecedented levels and demand for certain products, such as fashion, falling off a cliff edge.
As we wave goodbye to retail’s annus horribilis, what do the industry’s top bosses expect to be big in 2021?
In terms of categories, the hard-hit fashion sector could be due a bounce back after a punishing year.
“Once nationwide vaccinations are under way, I would expect fashion to perform really strongly. There will be pent-up demand and high levels of savings among many consumers”
Henry Birch, The Very Group
The Very Group’s chief executive Henry Birch says: “Once nationwide vaccinations are underway, I would expect fashion to perform really strongly.
“There will be pent-up demand and high levels of savings among many consumers, who will be keen to resume normal life, go out and go on holiday.”
Meanwhile, Pets at Home boss Peter Pritchard believes the pets sector will continue to thrive as more people bring animals into their families.
“Substantial changes to our ways of working, such as more home working and flexible working, means more people are able to welcome pets into their lives. We have seen this trend all the way through Covid and I don’t think this will change,” he says.
And, with a baby boom predicted in 2021, expect maternity product sales from nursery furniture to baby clothes to soar next year.
John Lewis said searches for ‘new baby’ were already up a whopping 274% on its website in December.
The online revolution
The challenges of 2020 mean many retailers find it difficult to look too far into the future.
Tesco UK and Ireland chief executive Jason Tarry says: “I’m not yet looking too far beyond 2020 as we are still managing through the pandemic and preparing for Brexit.”
However, one trend he does see continuing into 2021 is the “huge growth in demand for online grocery shopping”.
“A significant number of people used online shopping for the first time during lockdown and found it a positive experience. We’re confident that demand will remain high”
Jason Tarry, Tesco
“In February, we were serving around 600,000 online slots a week; now we’ve more than doubled that capacity to 1.5 million weekly slots,” he says.
“A significant number of people used online shopping for the first time during lockdown and found it a positive experience.
“We’re confident that demand for grocery home shopping will remain high and we will continue to focus on providing outstanding service.”
Iceland managing director Richard Walker agrees that online has been the big trend of 2020.
“The real of impact of Covid-19 has been to fast-forward trends that were surely destined to develop over the next five years or so anyway, most notably the huge increase in demand for online retail,” he says.
“Sadly, this has greatly increased the already severe pressure on the traditional British high street.”
Better connecting stores and online
However, Dixons Carphone boss Alex Baldock, whose business has also experienced a huge online surge during the pandemic, isn’t underestimating the importance of stores. He picks omnichannel as his big trend for 2021.
“Yes, more customers are buying tech online. So it’s important that we are winning online. Still, 60% of customers want to shop in a mix of online and stores,” he says.
“In our space, omnichannel wins – this is our way of bringing the strengths of all our channels, stores and online, to all our customers, however they may be shopping”
Alex Baldock, Dixons Carphone
“In our space, omnichannel wins – this is our way of bringing the strengths of all our channels, stores and online, to all our customers, however, they may be shopping.
“We’ve innovated fast to bring the best of both to customers. We are much more rarely out of stock in-store and now we’ve brought the full online range to every store.”
Baldock points out that customers can now order and collect their items within the same hour.
Click and collect is also an area The Very Group’s Birch expects store-based retailers to invest in over the next year.
“I expect to see high street retailers rapidly innovating their in-store offers and focusing on making their click and collect and returns much easier,” he says.
“The debate of online/offline is over. Customers want to be totally in control of how they shop and how they receive”
Peter Pritchard, Pets at Home
Pets at Home’s Pritchard concurs: “The debate of online/offline is over. Customers want to be totally in control of how they shop and how they receive.
“Bricks-and-mortar retailers who are able to leverage their physical estate alongside their online presence have a huge advantage as stores become mini distribution centres. This is a huge opportunity to do a better job than pure online businesses.
“From our perspective, we now have more ways to shop than ever – click and collect, home delivery, contactless delivery in the car park – and 2021 will see even more choices for customers.”
Another way retailers have upped their omnichannel credentials of late is by offering customers the option to shop virtually.
Dixons Carphone led the charge with its ShopLive video shopping, launched during the first lockdown, which gives customers face-to-face advice from experts in-store.
More than 2,000 of its employees are now trained to use ShopLive and a further 500 have moved from retail operations to contact centres to cope with elevated demand.
“ShopLive customers are now twice as likely to buy and spend over 50% than unassisted online customers and it is an innovation that others will struggle to copy at the same scale. Who else already has 15,000 experts?” asks Baldock.
The electricals boss is more convinced than ever that stores are crucial.
“We’re not alone in the shift to omnichannel and the UK isn’t unique – omnichannel wins in every major market. And encouragingly, even with this rapid market shift and with one hand tied behind our back when our stores were closed due to lockdowns, we have maintained market leadership.
“Stores will still be important to us in 2021. When we have online and stores together, that is when we are at our strongest.”
However, Superdry chairman Peter Williams predicts life will not be easy for store-based retailers in 2021. He says agility and nimbleness will continue to be key for businesses.
“People are going to have to continue to be fleet of foot as the operating environment for retailers is still uncertain and subject to radical change at very short notice,” he says.
“For people who have stores, this is making life very, very difficult and complicated because at short notice they have to open, close or bring people into work and send them home.”
John Lewis executive director Pippa Wicks believes the past year has led shoppers to re-evaluate what’s important to them and encouraged many to look for more sustainable ways of living, which she thinks will be a prevalent trend in 2021 and beyond.
“When we asked a sample of customers about their priorities in the summer, a third highlighted the importance of being able to demonstrate the ethical credentials of the product they were purchasing,” she says.
The department store is already helping its customers to become more environmentally friendly.
John Lewis launched its furniture rental scheme with Fat Llama this year, an initiative so popular that Wicks points out the majority of products sold out within the first 48 hours.
“A third of customers highlighted the importance of being able to demonstrate the ethical credentials of the product they were purchasing”
Pippa Wicks, John Lewis
This has led the retailer to develop further rental and resale options.
“Looking further ahead, by 2025 we will have a ‘buy-back’ or ‘take-back’ solution for all categories, and all key raw materials in our own-brand products will be from sustainable or recycled sources.”
Despite Covid putting the kibosh on some of the more experiential elements of in-store shopping, this trend will return in 2021, according to Pritchard.
“We have all been thankful to shop online, but we have also exposed its weaknesses. As Covid comes under control, customers will increasingly be back in search of experience,” he says.
“Great stores have a huge opportunity to showcase what stores do best – the ability to experience a product and connect with real people, in our case access expertise. Customers, I think, are really valuing the role shops play as they see their high streets crumble.
“I think we will see a need to use and support the high street or lose it, but that requires retailers to really play to their A-game and show all the great reasons why physical shopping is a pleasure and an experience, and not a chore.”
When lockdowns truly are a thing of the past, consumers who have experienced a year of minimal social contact may gravitate back to stores, heralding a new renaissance for the bricks-and-mortar shop.