Editor’s Note: On May 18, 2021, Deborah Weinswig, CEO and Founder of Coresight Research, presented at the annual Aptos Engage Reimagined event. In this blog, which was originally shared in Coresight Research’s free report, we offer insights from the session, in which Weinswig discussed the current US retail landscape and key retail trends for 2021 — covering digital payments, last-mile logistics, livestreaming, sustainability and more.
Weinswig highlighted that the changing landscape in the US is being driven by a decrease in birth rates, consumer migration to less densely populated areas, and the continuation of working-from-home trends. It will be key for retailers to keep an eye on these three shifts to understand long-term, radical changes in consumers’ spending habits.
Livestreaming will continue to grow in scope and size in the US, but both Weinswig and Dave Bruno, Director of Retail Industry Insights at Aptos, emphasized that opportunity for retailers lies in having store associates host livestreaming sessions rather than working with traditional influencers.
BNPL (buy now, pay later) services and retail media are two relatively straightforward ways in which retailers can drive topline growth, driven by increasing consumer demand and in-store digitalization.
Weinswig highlighted several demographic shifts taking place in the US that will have a major impact on the retail environment through the remainder of 2021 and beyond.
We expect to see a major decline in the US birth rate this year, with research group Brookings estimating 300,000 fewer births. This will be a result of the Covid-19 pandemic compounding an already sharp decline in 2020 in the US, mirroring a trend that is also taking place in other countries around the world, from Italy to China to India.
Also altering the US demographic environment has been a trend toward more 18–29-year-olds living with their parents, office workers’ continuation of the working-from-home trend, and consumer migration out of major cities. Weinswig explained that the migration out of cities will likely be a boon for retail spending, as costs of living will be lower, freeing up disposable income.
The potential ability to spend more due to migration patterns is coupled with $1.5 trillion in excess savings, according to Bloomberg Economics — with personal savings having been boosted by government stimulus and limited spending opportunities amid pandemic-led store and foodservice closures. Many consumers are beginning to spend more freely as virus fears fade moving into the summer—and positive macro indicators are likely to result in a retail spending surge in the summer, Weinswig said (see image below).
However, Weinswig said that in the current environment, excess savings and pent-up demand are actually somewhat worrisome. Supply chain issues are causing shortages of all kinds of products across the US, in some cases hiking prices and fueling fears of inflation that appear increasingly real and immediately relevant to retailers.
After providing a backdrop to contextualize the current retail environment, Weinswig laid out eight key retail trends that retailers must be conscious of to succeed in the continually volatile world of retail through the remainder of 2021.
1. Social Commerce and Livestreaming
Weinswig highlighted the increasingly important role that social commerce and livestreaming are playing in retail. She and Bruno discussed the role that store associates can play in the livestreaming ecosystem, agreeing that associates are often a good way for retailers to livestream at lower costs compared to working with mainstream influencers. With associates, Weinswig said, “You can be [livestreaming] out of the basement of your home — it’s just a smartphone, a stand and a light!” Store associates also help brands and retailers to create a more authentic and personal experience for viewers than celebrities or influencers, with content that can be crafted to local target markets, such as an individual store or area.
2. Digital Payments
Another digital retail innovation that Weinswig highlighted is BNPL. The importance of new digital payment technologies is increasing, as consumers are becoming more intolerant of friction in the payment process and are always looking for convenience in the shopping experience. In particular, Weinswig reiterated how beneficial and low-cost it can be to implement BNPL services, indicating that most retailers she has talked to that have implemented BNPL technology have seen “double-digit sales growth” as a result.
Bruno agreed, adding, “There is no reason not to do it [implement BNPL services]. It is basically the same price as a credit card, and all the clients I talk to say they love it.”
3. Retail Media
The rise of retail media has been accelerated by the pandemic. Online channels are the most obvious vehicles for retail media, with retailers such as Best Buy, Target and Walmart all taking advantage, Weinswig said.
However, Bruno also noted the opportunities for driving revenue that retail media provides brick-and-mortar stores. “Look at all the money that Kohl’s invests in screens all over their stores. Think about all of that advertising revenue that could be made available to them [by advertising on those screens] — it expands [retail media] beyond online channels,” he said.
Coresight Research believes that sustainability has become a crucial component of any strong retail strategy, with all stakeholders —consumers, employees and investors— taking sustainability increasingly seriously since the outbreak of Covid-19. Retailers should ensure their stakeholders understand that sustainability is a critical part of their path ahead, and consumers must be able to easily understand retail sustainability efforts for them to be most effective, Weinswig said.
5. Last-Mile Logistics
Retailers, brands and malls are innovating in last-mile logistics to appeal to consumers who prioritize speedy delivery and are buying online at record rates. Autonomous delivery vehicles, smart lockers and BOPIS (buy online, pick up in-store) services are all reshaping last-mile fulfillment.
Weinswig focused on the potential for malls to serve as platforms for online orders. Kimco now operates 300 centers that feature curbside-pickup options, while Simon Property Group works with returns-as-a-service provider Fillogic to turn its malls into reverse logistics centers. Weinswig believes that this will continue to be a good option for malls, as they can leverage the emotional attachment that consumers have with their favorite shopping centers to make them attractive omnichannel platforms.
6–8. Healthcare, Resale/Rental Models and Supply Chain Shortages
With time running low, Weinswig briefly presented the final three trends that Coresight Research has identified as key for this year:
For more insights and data that focus on the intersection of retail and technology, visit the Coresight Research website.