The lessons learned over the past year will propel retail innovation faster than anyone could have imagined.
History will remember 2020 as the year the world turned upside down in the fight against COVID-19. No industry was immune to the turbulence. In retail, companies reimagined operations to keep associates, customers, and communities safe and equipped with the things they needed to live in our new reality.
Continuing innovation
In terms of technology, the need to keep people safe continues to be paramount. Retailers have accelerated innovations around contactless payments and click-and-collect methods that will likely be commonplace long after the pandemic. Not all technology is glamorous; things like sneeze guards, capacity counters, and shopping reservation integrations have proven to be effective and reassuring to both guests and associates. These safe-shopping measures allow retailers to build trust in their communities.
Expanding pickup options became the new retail norm. For example, Tractor Supply Co., an indispensable outlet for many rural families, implemented curbside pickup operations within days, allowing customers to continue accessing the supplies they need with little interruption.
According to eMarketer’s 2020 research, e-commerce grew 32.4 percent in 2020, peaking in Q2 when many stores were forced to close their doors. Click-and-collect doubled in 2020 and is up five times over the past three years.
The new normal
With the vaccine now widely available, experts anticipate a second acceleration focused on refining pandemic-driven investments and recommitting to trends derailed by COVID-19.
Post-pandemic shoppers will expect more from cross-channel experiences, beginning their shopping journey on a store app, website, or via shoppable social media and picking it up where they left off in-store.
Having now grown accustomed to online grocery, click-and-collect, and expanded buying options across platforms, customers are expecting retailers to make the online-to-physical experience even more seamless. We have already seen improvements in parking lot layouts, signage, and contactless payments to help accelerate this change.
Retailers who have invested in all facets of omnichannel infrastructure have been rewarded with customer loyalty and increased online sales; this trend will only accelerate.
Experiential shopping
If you can remember, in the two years leading up to the pandemic, experiential retail was on the rise with creative in-store innovations. A major challenge to innovators is determining what projects to invest in long-term.
Todd Vasos, CEO of Dollar General, says, “For us, some e-commerce priorities that were previously five years out are now more of a three-year horizon. We need to more quickly understand how to satisfy that consumer and accelerate our timelines accordingly.”
COVID-19 also persuaded retailers to create a more flexible investment landscape in 2021. Combined, this will create a hotbed for innovation over the next year. We expect retailers will begin to better weave in-store innovations like digital signage and mobile payments into their growing online digital presences.
Technologies that have moved through the hype cycle like augmented reality will find new life in this new blended world of physical and digital retail. From Nike to IKEA to Home Depot, retailers continue to experiment with physical and digital visualization to deliver a customer experience that is both functional and truly enjoyable.
At RILA’s Retail Innovation Center, we are working to help retailers create those experiences by connecting retailers with the startups, investors, and technologies that will drive retail in the 21st century. We remain optimistic that this second acceleration will be driven by the lessons learned through crisis and a lasting desire for leading retailers to use technology to serve their customers.
The retail industry rose to the challenge in 2020 as a year of new constraints led to rapid innovation, but the fundamentals are enduring. Creating a top-notch customer experience will always be the lynchpin for innovation in retail. What improves and what’s created next will be driven by customers. With retailers and customers unfettered by COVID-19 restraints, the second acceleration awaits.
