What does the future hold for retail in 2021?

With the shift to e-commerce, a rapid acceleration of technology, and the weakening of an already vulnerable high-street, the pandemic has driven an unexpected transformation of the retail space.

To mark the end of a challenging 12 months, the editorial team at Retail Systems have rounded up a host of industry experts to tell us their top retail forecasts for the year ahead.

A broadened omni-channel experience

Although the retail industry is largely conscious of the opportunity to deliver seamless, consistent, and fluid customer journeys, the number of businesses that have taken full advantage of omni-channel is still fairly limited.

“As a consumer, every time you are exposed to an improved experience your expectations are reset - to a new and even higher level,” says Oliver Guy, director of industry solutions, retail, Software AG. “The phrase omni-channel is tired and yet few retailers have delivered on its promises.”

This can easily be attributed to the sheer complexity of an omni-channel strategy, which relies on balancing excellent data, coordination, and operations.

“A simple buy-online-pick-up-in-store transaction can involve [more than] 20 systems - this is not easy,” adds Guy. “Add in the complexity of differing technology standards and vendors and you can see the pains felt by the IT team.”

But experts predict that next year omni-channel will no longer be optional for retailers in the UK.

According to global e-commerce platform Kooomo, in 2018 around 52 per cent of online stores had omnichannel capabilities. It says that in 2021, this trend is likely to broaden into full omni-channel strategies for businesses of all sizes.

A broadened strategy would involve everything from the synchronisation of stock, real-time inventory updates, and online and offline loyalty point collection, to redemption and unified customer service channels.

“With digital transformation projects sped up this year, 2021 is set to be an exciting year for retail and eCommerce,” says Ciaran Bollard, chief executive of Kooomo.

“While there may still be some difficult times ahead for the industry as a whole, those retailers who implement these strategies, and other innovative developments will certainly differentiate themselves from their competitors and have a better chance of succeeding in 2021 and beyond.”

Accelerated digital transformation

In the wake of the pandemic, reliance on technology has grown significantly.
Since the advent of coronavirus, reliance on technology has grown significantly. This trend shows no signs of slowing and is likely to continue next year.

“Rather than backing off on IT spend in 2021, retailers will keep digital transformation at the top of the agenda,” says Nikki Baird, global retail influencer and VP of retail innovation at Aptos.

“Investing in digital options from livestreaming, pop-up shops, and subscription services is a top priority as retailers shift focus on delivering profitable experiences through omnichannel.

She adds: “Brands are too narrowly focused, and retailers need to deliver services and products that become more essential to customers while looking to diversify geographically, especially in China, who are on the rebound from the pandemic.”

E-commerce won’t be the only digital focus for businesses. Companies will use the lessons learned from remote working practices to expand the digitisation across all of their processes, with the need for digitisation particularly felt in the supply chain.

“When shops were forced to shut earlier this year, many retailers were left with an overstock of both products and packaging, which were at a loss to the business, says Robert Lockyer, chief executive and founder of Delta Global, the packaging solutions company. “What would usually be ongoing manufacturing and delivery processes were halted, causing significant disruption, which was passed along points like a domino effect.

“Having suffered the impact of this once, many businesses will seek ways to reduce facing similar challenges in the future. And a digital supply chain management system could provide the solution.”

These systems will help connect the dots not only in the supply chain, but also across sustainability targets, sales channel growth, and creating positive customer experiences.

Integration and API platform MuleSoft believes that in 2021, organisations need to embrace a “digital ready” culture. It says that the ability to become more agile and innovative rapidly will be “critical” as organisations come under pressure to “quickly roll-out new digital capabilities and provide customers with the services they expect.”

Automated customer journeys

According to McKinsey, more than 50 per cent of retail activities can be automated using existing technology.

Lots of companies, including Tesco and Walmart, are already trialling drone deliveries, while it’s likely we’ll see more and more robot deliveries in cities.

“AI will be used to improve and automate merchandising decisions,” says Oliver Guy, Software AG.

“Business and supply chain execution will see control towers being deployed to monitor the business holistically blazing a trail toward the autonomous supply chain.”

James Smith, UK managing director of AutoStore, thinks that 2021 will be the year of automation and micro-fulfilment.

Consumer behaviour was changing long before the pandemic, but it has accelerated these changes, and customers are looking for brands that can keep up.

“Through automation, retailers will be able provide a greater service through micro-fulfilment centres,” says Smith.

“These facilities are designed to bring automation to the shop floor and allow businesses to fulfil local demand both in person and online, improving the last-mile delivery aspect of a service.

He adds: “This will also see the facilitation of click-and-collect, processing returns, and even hyper personalised experiences through the utilisation of VR and AR.”

He predicts that automation will aid the retail sector in evolving its customer journey by creating central hubs within communities that can provide the ultimate customer service.

There will also be a move towards self-authentication so that customers can get in touch with service teams faster. This will likely rely on businesses breaking down silos across their systems and using customer data.

Artificial intelligence will play a key role in helping retailers automate to cope with any future disruption.

“A lack of automation has slowed retailers down during the pandemic, with nearly 80 per cent having to increase manual intervention in response to fluctuating demand and supply,” says Wayne Snyder, vice president, retail industry strategy, Blue Yonder.

“In 2021, retailers will need to adopt AI to help keep up with these unpredictable swings in demand.”

He explains: “Understanding the on-going changes in consumer behaviour or how daily life changes as a vaccine rolls out, retailers will need supply chains flexible enough to keep up.”

AI can be used in a multitude of areas, from making decisions about sourcing items at short notice, to establishing logistics plans.

The pandemic forced customers to engage with technology, many of whom were not familiar with it before but are now comfortable with using it.

“As a brand, it is essential to capitalise on this momentum and both invest further and innovate in your digital platforms if you want to be successful in 2021,” says Brad Christian, global chief customer officer, Conversity. “If you don’t, you risk being left behind by more agile and innovative competitors.”

No more quick fixes

The pandemic drove businesses to implement digital technologies in haste, with many businesses compacting what they’d usually do in one or two years into just six months.

According to MuleSoft, the integration and API platform, many retailers ended up opting for a quick method of connecting systems and data, often using point-to-point integrations, which isn’t a sustainable technique from a long-term perspective.

That’s because it can lead to tight couplings between systems that can limit agility and delay future innovation.

MuleSoft predicts that next year organisations will be seeking out ways to reduce the “technical debt” they’ve collected in the short-term, perhaps by using APIs which can create loose coupling between systems.

Next year retailers might also need to re-think how they manage stock, because short term fixes will no longer be appropriate.

“In response to lockdown regulations, many retailers have looked to sell their store stock to clear excess inventory or as a way of alleviating pressure from their online warehouses,” says Wayne Snyder, Blue Yonder. “But in 2021 they need to move away from just thinking about clearing a short-term problem and take a more strategic approach.

He adds: “This means everything from forecasting demand by fulfilment method, to ensuring inventory is in the correct location to meet the omnichannel demand.”

Sophisticated personal experiences

In 2021, personalisation technology, including intelligent guide selling, chatbots, and other online tools will become more advanced.

“Other measures to make the customer experience more engaging will also figure prominently, including faster checkout processes, tailored cross-selling, voice ordering, and video content designed to stimulate customers – like virtual gym classes or cooking lessons,” says Brad Christian, global chief customer officer, Conversity.

“Essentially, the innovation is about giving customers the inspiration they’re lacking because there are fewer reasons to visit physical stores: if a brand can really fire the imaginations of prospective customers, they will provide something different, something more experiential and put themselves on a path to do well in 2021.”

Sarah Curran Usher MBE, general manager EMEA at True Fit, says that while discounting might seem an obvious route to stimulating demand, especially at a time when shoppers are increasingly cautious due to economic uncertainty, long-term retailers need to focus less on markdowns and more on margin protection.

“And key to being able to sell more stock at full price is data insights, delivered on an individual, one-to-one customer level,” she says.

According to her, key to creating the granular level of understanding needed to generate engagement around products customers will love and keep, is knowing how every consumer shops across products, including everything from size and fit to style.

“This enables retailers to close what we call the loyalty loop, meaning a virtuous circle of trust that’s built up between a brand and a customer, that drives not just the confidence to buy, but crucially loyalty and customer life-time value,” she adds.

The post-purchase journey is absolutely key to fulfilling this relationship between retailer and customer.

“With brands pulling out all the stops to attract and keep new customers, retailers will need to offer an increasingly tailored post-purchase journey should they wish for customers to return,” says David Grimes, chief executive, Sorted.

“With the shift to online, we can naturally assume a greater number of deliveries and customers that will want brands to deliver at speed.”

He explains: “In 2021, keeping customers informed on the status of their order will be more important than offering a product that is cheaper than that of another retailer - most products nowadays are competitively priced.”

Grimes points out that some retailers like John Lewis are already communicating with their customers well, while others are not.

"This is only widening the gap between the retail ‘winners’ and ‘losers’,“ he adds. “Offering communications that span a number of channels – from social media interactions, tailored email messages and text message order updates as frequently as a customer wishes – will help to secure brand loyalty.”

Reinvention of brick-and-mortar stores

Last year the experts we spoke to predicted that in-store operations would be revitalised in 2020. But unfortunately, coronavirus spoiled any chances of that.

Many big high-street brands, including Arcadia Group and Debenhams, failed to stay afloat during the pandemic.

However next year, equipped with the many lessons learned from Covid, it’s likely retailers will not only revitalise in-store, but completely reinvent it.

“Across all types of retail, physical stores will become digital operational hubs for delivery and order pick-up while also becoming experience centers,” says Oliver Guy, Software AG. “A digital operational hub is essential to meeting customers’ same-day delivery expectations without investment in additional distribution centres.”

With the pandemic driving customers online, in 2021 it’s likely retailers will start to repurpose store space.

“Some of this will be a move to ‘dark’ stores or creating additional backroom space as retailers look for new ways to cater for rising online demand,” says Wayne Snyder, Blue Yonder.

“We’ve already started to see major retailers turn shop floor space into local distribution or fulfilment centres where orders can be packed up for delivery or for curb side collection.

He adds: “This is the start of a major trend, which could play a key role in helping those retailers that have been hit hard by pandemic, such as department stores, to stay afloat.”

Retailers are also likely to begin to collaborate with each other by sharing the floor space that has opened up.

“I think 2021, unfortunately, still looks a lot like 2020, where we'll have fits and starts and people who are vaccinated and people who are not, until we reach the point where we can get at least 75-80 per cent of the population vaccinated,” says Raj de Datta, chief executive & co-founder, Bloomreach.

“Then, if we can start to be able to get out there and have confidence in our health, then I think brick-and-mortar retail does start to come back, but not to the way it was.”

He explains: “I think it comes back to a new way which is “digital first”, where physical locations are diminished from pre-pandemic levels. People will still want to get out, go to stores, go to see things and see places.

"I also think certain retailers will win big and will have established themselves in the minds of consumers, much more prevalently than they had in the past, while others will fall away."

David Grimes, CEO of delivery company Sorted, says that for the high street to survive it must evolve beyond its current state.

“A Walker study found that at the end of 2020, customer experience will overtake price and product as the key brand differentiator – 45 per cent claimed this to be the business priority,” he says.

“Now, having a mere click and collect service as the only ‘revolutionary’ delivery offering is no longer enough to meet the rising expectations of consumers who require their products quickly and conveniently.

He concludes: “Therefore, we expect to see those retailers who stick to a limited point of customer fulfilment be left in the shadow of those who stay ahead of the innovation curve.”

Digitalisationof payments

A shift to digital payments has been on the cards for some time. But this year, with the urgency for digitalisation across all industries and services, it has been driven to the fore.

Western Union projects the value of international trade in services to rise from $6.1 trillion in 2019 to $8.0 trillion by 2025 – accelerated by the adoption of new technology and remote working practices.

“A growing digital economy requires a digital payments infrastructure and as more banks and countries adopt local and cross-border real-time payment systems, I predict that payments will continue to clear and settle faster in 2021,” says Scott Johnson, head of product, Western Union Business Solutions.

“We’ll also see payments become more embedded in the business processes they serve, making the process of initiating payments faster and easier for end customers.”

Johnson thinks that we can expect to see a broad range of new business models redefine the possibilities for cross-border transactions, with developments such as 5G and fibre broadband further supercharging this.

He adds: “The industries and global markets that adapt fastest to enabling seamless cross-border digital payments will be the first to recover, and ultimately thrive, economically.”


Another key trend flagged by industry experts is a growth in subscription services across the retail market.

“From craft beer to make-up, 2021 will see subscription services continue to develop as consumers look for the convenience and dependability that comes from having products and services arrive at their door on a recurring basis, especially when this is enabled by a price reduction or free delivery,” says Wayne Snyder, Blue Yonder.

“Subscription-based services will provide retailers with more supply chain and revenue predictability, but also the opportunity to upsell and build customer loyalty over the longer term.”

Permanent shift in customer behaviour

Keeping up with the customer has never been an easy task. But it seems that this will only become tougher next year, with experts now saying there will be an “irreversible change” to customer behaviour as a result of the pandemic.

“Before the pandemic even struck, consumers were leaving their homes less often to make purchases for reasons of convenience – think of the success of Amazon, Deliveroo, Uber Eats and supermarket delivery services,” says Brad Christian, global chief customer officer, Conversity. “The arrival of Covid-19 and the fact that we’ve spent a lot more time at home has accelerated this trend.”

He says that accepting this “cocooning” is a permanent shift is key to future success.

“Many people will still want to go out to a bricks-and-mortar store, of course, but the dynamic has changed, and brands will have to adapt their strategies to suit,” he explains. “This will mean focusing more heavily on the experiential aspect of the physical store, in order to truly differentiate from competitors.”

David Grimes, chief executive of Sorted, which works with ASOS, Missguided and Farfetch, says that next year customers will have much more autonomy and control over the delivery experience.

“With delivery now firmly in the spotlight, customers will continue to demand flexible and convenient delivery options to suit their needs, lives and expectations,” says Grimes. “This will now be offered as the industry standard.”

He adds: “In 2021, forward thinking retailers will ensure consumers have more control over their purchases by providing more options - such as fast delivery, a specific day or timeslot, ship from store or a convenient click and collect location.”

Communication will also be vital, with customers expecting to track their parcels in real-time.

“With retailers balancing peak level volumes paired with the inevitable supply chain and delivery disruption, adopting automate tracking and post-purchase communications will be the key to reducing customer contacts while increasing brand engagement and consumer confidence,” explains Grimes.

The rise of bot operators

As a consequence of the shift to e-commerce, it’s likely we will see more and more online bots nabbing the latest luxury goods or gaming equipment.

‘Bot operators’ use automated tools to buy products online before anyone else.

Andy Still, chief technology officer at Netacea, says that bot operators are already expanding their scope.

“Even if 2021 sees COVID in retreat, its effect in shifting retail further from offline to online is irreversible,” he says. “People just won’t want to queue for bargains if they don’t have to.

“That is especially interesting for those selling luxury limited-edition goods, or those with extremely high demand and limited supply—recently we’ve seen graphics cards and new consoles sell out and listed immediately on auction sites for hugely inflated amounts.”

He says that luxury brands are looking to the success that trainers have had in creating co-branded limited editions and wondering if they can do the same.

“And they can, but just like the lines of dedicated “sneakerheads” have moved from outside stores to online queuing, their best way to make the most revenue will be e-commerce,” says Still. “And that’s where the experience of the sneaker industry will be most valuable.

He adds: “Sneakerbots, the automated tools used to buy products online before anyone else, are becoming all-purpose “sniperbots”.”

Apparently, users no longer need much technical know-how, and the bots are sold as a service to anyone interested.

“The frustration that genuine consumers displayed when they couldn’t purchase what they wanted in 2020 will repeat in 2021, only with more goods being bought from under them, and more types of goods,” he explains. “2021 will either see brands start to tackle this problem, or a consumer backlash.”

Augmented reality

The pandemic, much like with other technologies, has fast-tracked the long-awaited arrival of about augmented reality (AR) in the retail space.

According to Kooomo, what might have once been considered a “nice to have” feature for online stores, is fast becoming a must-have in the wake of the pandemic.

The global e-commerce platform points out that the try in-store, buy-online tactic hasn’t been available to consumers for much of 2020, meaning that the digital doors must now open for products that have traditionally been deemed ‘something you couldn’t buy before you see it in person’.

Experts at the online platform have said they expect to see retailers increasingly introduce the technology into their e-commerce strategies next year, including virtual changing rooms for fashion brands, try-on apps for cosmetics, and 3D placement for furniture and interior design.

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