Retailtrends 2021

The Top 5 Retailtrends of the year

If 2020 has shown us one thing, it's that we live in unpredictable times. Gradually, the uncertainty and fluctuation that hit the retail sector last year is diminishing, so we are taking an optimistic view of 2021.

Retail Trend - Resource efficiency illustration - hands holding plant

Resource efficiency

Grocers and their employees were among the true heroes of 2020!

Despite the unpredictable challenges, they were on the front lines making sure their communities had the essentials they needed. In this unusual year, fighting food waste probably wasn't the top priority - but we believe it will be again in 2021.

Grocers will continue to expand their food waste reduction initiatives, not only because it's good for the environment, but also because it simply makes good business sense.

Supply chain improvements that reduce waste and carbon footprint can also reduce costs, increase sales and profitability, and save food retailers the immense amounts of money they lose due to spoilage - in Austria alone, losses are written off in the 2-digit millions every year.

A commitment to reducing food waste is, in all likelihood, the sustainability initiative that offers grocers the greatest and fastest return on investment.

Retail Trend - Flexible supply chains illustration - person sitting next to delivery cart

Adaptive Supply Chains

We've heard a lot about the need for "resilient supply chains" over the past year, but Circly prefers to talk about adaptive supply chains instead.

Retail won't just experience a few bumps in the road that we need to recover from - we need to be able to fundamentally adapt to sustained, real change.

The demand surges that hit retailers during the COVID-19 pandemic showed that even large, sophisticated retailers struggled to adapt their supply chains quickly enough to meet new demand patterns.

Take the example of toilet paper or pasta during the Corona crisis in Austria and Germany. While key retail supply chains were able to prevent catastrophic shortages, months of availability problems highlighted the need to make supply chain adaptability a higher priority.

To achieve true supply chain adaptability against future "shocks," retailers will work to improve visibility into their inventory and demand. This must be done at the item level and for each fulfillment channel offered. Retailers that do this will gain the ability to respond quickly to future changes in demand and supply and redirect their inventory to where it is needed most.

Retail trends Omnichannel illustration - person with shopping cart and mobile app in background

Omnichannel efficiency

The importance of omnichannel efficiency has been clear for some time, but the COVID-19 pandemic has forced the hand of many retailers who had not yet prioritized the issue.

The pandemic and its attendant lockdowns, including in the form of social distancing requirements, has nudged an unprecedented number of consumers toward omnichannel shopping, whether home delivery or in-store pickup.

Many retailers have had to scramble to establish new ordering and fulfillment channels to maintain or gain market share. Customers have largely been enthusiastic about this new convenience and are unlikely to abandon these new shopping habits altogether, even after the pandemic is over.

While some demand will certainly return to traditional brick-and-mortar channels in 2021, retailers cannot let their omnichannel progress from last year go to waste.

Since running omnichannel services is neither cheap nor easy, retailers need to figure out how to ensure it or risk seeing their margins get thinner as the business grows. In 2021, retailers will be working to manage these new channels efficiently with low costs, high availability, and fast, accurate fulfillment.

Artificial intelligence

Traditional time-series forecasts, which use historical data to model future demand, have already been and continue to be outdated as the pace of change in retail continues to accelerate.

However, with the short- and long-term demand shifts caused by COVID-19, these models will unfortunately be even less useful to retailers trying to calculate future demand.

As a result, even retailers that lag behind in terms of technological sophistication will have to turn to modern, AI-driven forecasting solutions in the coming year.

Early adopters, on the other hand, can use their head start to discover deeper benefits. After all, forecasting is just one application area for AI - there are many benefits in merchandising and operations as well. For example, using AI solutions to optimize capacity utilization and workforce planning can.

Retailers that are able to optimize these costs should be able to increase profitability and/or lower prices to capture market share and gain a competitive advantage.

Retail trend Circular Economy illustration with happy people

Sustainability in retailing

The importance of sustainability has been increasing for a number of years, both for consumers and for businesses of all kinds. Although there have been various issues in 2020 that could have distracted from this, it is still visible that this is an important part of the discourse in retail.

In 2021, more retailers will experiment with "circular economy" approaches that will aim to reduce waste by returning used items to the supply chain rather than throwing them away completely.

For example, some specialty retailers offer programs where they buy back used items from their customers and resell them at a discounted price. Another increasingly popular approach is to rent out items instead of selling them.

While there is some debate that these offerings are more about marketing and business models than sustainability, we expect that this mindset is about to begin to change. There is no doubt that reducing waste by encouraging reuse will have a positive impact on sustainability efforts - and those who adopt such approaches early can gain market share.

If there are any questions, about the top retail trends, please feel free to contact us. We will help you with the implementation or recommend a suitable partner for this.

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