8 Retail And Retail Technology Predictions To Watch Out For (2021)

We can all breathe a sigh of relief, as we bid 2020 “adieu.”

A year in which the retail industry experimented, optimized and implemented new technologies to design a safe and profitable shopping experience for customers and employees alike.

With retrospective articles aplenty, including our own top retail marketing articles, Trevor Sumner, has decided to look forward and breakdown his retail and retail technology predictions for 2021. Note: Please see our latest on 2022 Retail and Retail Technology Predictions.

2021 Retail Predictions:

1. 2021 Retail Spending Will Outpace Top End Estimates As Stores Scramble To Recapture Profitable Shoppers

2. 5G Gets Real And Accelerates IoT Adoption By Order Of Magnitude

3. The “New Normal” Means A Faster Pace Of Retail Technology Rollout

4. Retail Technology Finally Empowers The Retail Sales Associate Customers Deserve

5. Local Stores Will Become Broadcasters And Narrowcasters

6. Major Retailers Will Start Providing Payment Services Directly

7. Amazon Will Make A Big Move In Brick-And-Mortar. What Will It Be?

8. A New Model Of Restaurant Group Snatches Up Empty Storefronts At Scale

Read the full article and let us know what you think!

Retail Prediction 1: 2021 Retail Spending Will Outpace Top End Estimates As Stores Scramble To Recapture Profitable Shoppers

Forced lockdowns, 10 million jobs lost, record poverty, 400,000 Americans died from the Covid pandemic and retail sales were up for the year. Hunh? Retail was far more resilient than anyone I know predicted, helped by spending shifts from restaurants and events to core shopping, especially grocery, but also pets, home goods, health, electronics, etc. Fitch estimates that between $400 billion and $500 billion in consumer spending on experiential services like travel and dining went to physical goods. Even with the increased spending, Americans have $1.3 trillion more in savings than before the pandemic, although that’s concentrated among the wealthy.

What that means is that the wealthy will spend their glut as soon as they can go out and show off their opulence (believe me, I just got back from Palm Beach). Meanwhile, a new stimulus was just passed, another one is being considered, and 21 states are instituting increases in their minimum wages in 2021. So many more working-class Americans will have access to more money such that 2021 is poised to be a record year and it will sizably beat the modest eMarketer projections of 2.3% growth in 2021 and 4.1% next year. 56% of people expect to spend more in-store after becoming vaccinated and they expect that time to be within 3-6 months, affecting summer spend. If Biden’s team can deliver 100 million shots in 100 days, that’s a lot of shoppers.

Interestingly, as we have documented, physical retailers took eCommerce share from Amazon and online pure plays, and are set up to market to the crowds of product hungry shoppers with new digital capabilities and improved logistical supply chains and fulfillment networks.

“There will be an all-out battle for foot traffic once shelter-in-place orders are lifted,” predicted the founder and CEO of Trove, Andy Ruben.  “Retailers and brands will be judged by the early traffic and sales numbers they generate at that point, similar to how Black Friday results are seen as a gauge of holiday success.”

Expect new strategies and tactics to emerge. Amazon PrimeDay will return to the summer. Brick-and-mortar retailers will compete with them for shopper attention and to boost early year spending to test the demand waters before the holidays. As they chum the water, retail will enjoy a very welcome feeding frenzy.

In fact, with brick-and-mortar having rebound tailwinds and eCommerce I believe struggling to keep up with last year’s growth, I predict brick-and-mortar sales growth will beat eCommerce growth on dollar basis in 2021. Shocking?

Retail Prediction 2: 5G Gets Real And Accelerates IoT Adoption By Order Of Magnitude

5G is here. Well kind of. It’s in some cities in limited areas. And AT&T will tell you their service is 5G, even though it’s just dressed-up 4G. 5G is not just about speed and latency. It’s about device density and connectivity - and 5G networks can be launched in stores just like WiFi networks - and they will.

Walgreen’s announced they were launching 5G in 9,000 of its stores to power in-store devices, robots and digital experiences. And that’s why 2021 will be the year that 5G becomes real and so with it IoT. A real technology enabler and competitive differentiator. Deployments will lead to an explosion of in-store applications that create new efficiencies, new intelligence and more rapid technology innovation in-store. IDC’s predicts interactive smart shelves, robots and updated IoT systems will increase in demand by 10x by 2025. 10x!! Digital competencies will push physical retailers to adopt more agile cultural practices and continue to establish physical retail as the key to long-term profitability.

Retail Prediction 3: The “New Normal” Means A Faster Pace Of Retail Technology Rollout

I’m not going to sugarcoat it. Working in retail technology is harder than in many other technology segments I have worked in over the last 20 years. On top of the shifting priorities, cultural mindsets for rapid technology adoption are lacking in shifting organizations, siloed talent pools lead to technophobia, there’s a lack of true data orientation, cloudy technology vision - and as if that wasn’t enough, there just hasn’t been a sense of urgency and a proven track record of launching quickly … until 2020. Retail’s rapid response to Covid will lead to a permanent shift in expectations on what can be accomplished quickly when pressure and resource are applied.

So many publications from WSJ to Forbes to TechCrunch have declared that “every company is now a tech company” that it is hard to source who originally said it. 2020 proved that technical orientation and agility were as key to success as almost any other factor. With more modern tech stacks, new capabilities arise and differentiate brands and retailers at a time where the competition for the shopper is the most fierce. We will not be going back. Expectations from shareholders, executives, employees and shoppers have changed. The retail technology market will substantially increase from its already robust 18-20% CAGR growth, especially in hot areas like in-store digitization or local fulfillment, where IDC expects 75% of grocery eCommerce fulfillment will come from (because iocal fulfillment is the only profitable way to do it.).

The shift will be painful for some and lucrative for others. Winners and losers will be created by their success in technology as a core competency. Retail technology is now a first class citizen in-store. And it’s about damn time.

Retail Prediction 4: Retail Technology Finally Empowers The Retail Sales Associate Customers Deserve

One area where technology will be applied very successfully is an area where Amazon cannot and will never compete - the sales associate. "Retail needs great sales associates now more than ever,” said AllWork CEO Glenn Laumeister, a leader in sales associate sourcing, training and enablement. “Customers have been used to shopping online but the truth is, that’s a pretty lonely experience and most people miss shopping in stores. They miss the one-on-one interaction and the expertise that comes with shopping with a store associate. Expert salespeople, and their managers, will need new tools to help safely and efficiently answer shoppers' questions and ultimately help them make the best product selections. We will certainly see the rise of digital tools to help promote learning, increase in-store engagement, and optimize these sales associates and their interactions with customers."

Technology is quickly automating the medial tasks to allow sales associates to focus on shopper value-added efforts. “Today’s workforce management solutions offer retailers real-time data and analytics that not only enable the ‘smart’ automation of manual tasks but also generate predictive scenarios and their impact on in-store traffic.” said Sanish Mondkar, founder and CEO, Legion Technologies.

Technology is now much more accessible to sales associates to answer hard questions in real-time from inventory to product information. This is in part driven by the digitization of products because of shifts in eCommerce and omnichannel fulfillment. Powered by more robust online and structured databases and Product Information Management (PIM) systems, it is now easier to answer whether a product is in-store or whether it can be shipped from a nearby store in that color you want.

Theatro is one company innovating here with voice-activated commands for mic-ed up sales associates that can quickly route requests to the right person, or answer questions in real-time using natural language search. Or check out RillaVoice, which automatically records and parses sales associate conversations for training and eventually follow-on marketing.

All of these tools will be more than simple utilities but focus on building deeper connections across channels. One example is Salesfloor, which provides sales associates with smart tablets to quickly aid customers with personalized recommendations and CRM, such that a sales associate can reach out to a customer after they have left the store or route eCommerce chat requests to available local store associates (a feature that went from zero to hero during Covid). The local sales associate connection will matter more than ever..

Retail Prediction 5: Local Stores Will Become Broadcasters And Narrowcasters

We won’t just connect the local online shopper to the local store, but also the local store to the online shopper. Content will increasingly become hyperlocal. Beauty Counter last month announced it was opening a live streaming studio in the back of its retail shop, clever use of retail space in a real estate market desperately looking for new uses of it.

Just as we have seen spokespeople give way to micro-influencers, 2021 will be the year that the store becomes a substantial media creator. Lowered barriers for production and narrowcasting and increased shopper desire to support local businesses will make small businesses broadcast big and big chains narrowcast small. And stores will plug those very same influencers to earn media and co-promote audiences.

“We’ll see more live streaming from stores in 2021 as retailers look to engage more deeply with customers and offer new personal shopping experiences,” predicted Maxine Clark, founder and former CEO of Build-A-Bear Workshop.

Livestream shopping on social media sites like Tik Tok and Instagram will only pour fuel onto the fire. The Interactive Advertising Bureau (IAB) recently predicted that Livestream-generated sales are expected to double to $120 billion worldwide in 2021 as evidenced by the recent Walmart Livestream deal with TikTok.

Retail Prediction 6: Major Retailers Will Start Providing Payment Services Directly

Most major retailers upgraded their retailer loyalty programs this year. That may just be the beginning. Walmart has launched its premium membership Walmart+ to compete with Amazon Prime. CVS has it’s Carepass program. Expect more premium membership programs to flourish. How far could you go down the rabbit hole here?

Well, Chris Walton suggests Walmart will bundle its Sam’s Club membership, which makes a lot of sense. Creating cross-brand loyalty and encouraging spend could win even if operating initially at a membership revenue loss.

But while premium membership and membership benefits were very 2020, I suspect something is bigger afoot for 2021. Payments. Most retailers have branded credit cards because it increases consumer spend, makes incremental revenue, gathers additional spend data and improves return on equity by being high risk and high leverage.

A wave of new technologies are swirling around in payments that may shake things up. Buy now pay later is rapidly being adopted in retailer environments that cater to shoppers who say they would then spend 10-40% more. Paypal is moving into physical retail with launches at retailers like CVS (the stock is up 30% since the announcement). Stripe is rapidly creating a payment platform as a service offering. And these payment services are beginning to offer bitcoin as an option such as Square’s popular Cash App (and they invested $50 million in bitcoin in the fall that’s now worth over $100 million). Apple is now a payment company. If you think about how Uber and Lyft or even retail worker marketplaces like DoorDash and Instacart process payments, they are payment companies too.

What does all this mean? To tell you the truth, I am not really sure, but the tea leaves point to big opportunities for retailers to vertically integrate payments into their operations and customer loyalty. How that happens in the highly regulated payments industry is unclear to me but we should see some groundbreaking announcements of new models this year. Here is a great read on why “Every Company Will Be A Fintech Company.”

Retail Prediction 7: Amazon Will Make A Big Move In Brick-And-Mortar. What Will It Be?

Amazon had a record year, fueled by the shift to eCommerce (Amazon), increased cloud computing usage (Amazon Web Services), scalable delivery logistics (Amazon Marketplace), and increased media consumption (Amazon Prime Video).

Despite those strengths, Amazon in many ways lost share to its key competitors like Walmart and Target. Physical retailers took eCommerce share from online only players like Amazon. And more online orders were processed by local store networks than ever - 41%!!! 2020 was the year physical retailers struck back, forced out of necessity.

Amazon earnings may look like they are sitting pretty, but the writing is on the wall, and Amazon needs to figure out local commerce to maintain its growth rates. Expect Amazon Go technology to be more widely adopted in non-competitive applications like Travel Retail. Kohl’s will go even further sleeping with the enemy, as rumors fly about Amazon grocery being added to their locations on top of Amazon returns and Sephora beauty, creating an interesting swirl of premium convenience. But it’s not big enough for Amazon’s appetite.

Amazon will look to acquire a retailer or a struggling mall group to create a proving ground for a connected commerce platform that bridges online and physical retail, but in non-obvious ways like creating the next generation mall ecosystem powered by Amazon Mall OS or providing eCommerce delivery directly from mall stores as a service.

The promise will be fascinating, but the FTC won’t be having it. With pro-worker Democrats in power in all three branches of government, Amazon will likely face a backlash for worker’s rights, unionization, anti-competitive practices and unfair competition with SMBs - and such a move to the mall or major retailer will be a bridge too far. Either Amazon will have to dial its ambitions way back or it will have to make some huge concessions that might include splitting up its business units.

Retail Prediction 8: A New Model Of Restaurant Group Snatches Up Empty Storefronts At Scale

A lot has been made about the rise of ghost kitchens and other restaurant models which allow for greater food delivery models. It’s interesting, but there’s a bigger opportunity in my mind that people aren’t talking enough about.

In cities like New York, analysts are predicting 30-40% of restaurants will shut down permanently. As a foodie, I believe this is a tragedy… and a huge opportunity. With half of the market washed out, who takes their place? Existing restauranteurs who probably struggled to make it through and or short on cash? Maybe with forward-looking financial partners.

Rather than Tom Collichio figuring out how to get Craft back to profitability, he should be talking to Blackstone about raising a multi-billion dollar venture to rapidly fill the empty restaurant market. Does that mean NY will have 100 copies of Crafts? Probably not. But imagine the scale of the food supply if you could stand something like that up?

Jon Krieger’s RetailWorx is a fascinating model providing key services for real estate developers to improve their property values with premium coffee shops, taco places, sandwich shops and services (dry cleaning, gym, etc.). Is there a real-estate coordination play here?

David Chang experimented with scalable high-quality delivery with Maple, which he abandoned because the consumer wouldn’t spend enough for the margins of delivery. Will his entrepreneurial mindset shift to the bigger opportunity of all those empty restaurant storefronts and the masses of eaters like me desperate to return? I hope so if only to slurp that silky ramen, or umami Bo Ssam. Someone is going to figure it out and it’s going to be BIG.

As we learned throughout the pandemic. Chaos breeds opportunity. And the supply vacuum of that many restaurant closures is one heck of an opportunity.

I hope you enjoyed reading all of this as much as I enjoyed writing it. Here’s to an amazing 2021, and let’s check in quarterly and see how I did. I hope most of all that I provoked your imagination for what could be possible whether it is in 2021 or beyond. As Abraham Lincoln once said, “the best way to predict the future is to create it.”

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