The top retail trends of 2020

As the year of disruption draws to a close, Alexandra Leonards identifies the top retail trends of the past 12 months and explores what they mean for the industry next year.

A dramatic shift to e-commerce

Arguably the prevailing trend of 2020 – a year in which the COVID 19 pandemic has upended lifestyles and the retail industry- has been the remarkable move toward online shopping.

“As a result of the pandemic and two prolonged periods of forced closure, retail has changed significantly in the past ten months,” says Kyle Monk, director of retail insights and analytics at the British Retail Consortium (BRC) “The most remarkable feature of shopping in 2020 was the digital shift; the majority of purchases were made online, while town and city centres lay destitute.”

Online retail association IMRG has seen a huge displacement of in-store sales to e-commerce since the advent of the pandemic.

“We know this because it was the multichannel retailers that have seen the biggest uplift, by some distance,” says Andy Mulcahy, strategy and insight director at IMRG. “Online growth overall for 2020 looks like it will [be up] 35 per cent, whereas growth for 2019 was just 6.7 per cent, so it’s up a factor of five or six.”

Although the pandemic proved difficult for most businesses, retailers with well-established digital products and stores which had systems in place to react quickly to fluctuating demand were able to meet the challenge head on.

But with a rapid decline in footfall, many retailers without online stores, or with a limited digital offering, suffered immensely this year.

Even the likes of popular budget retailer Primark, which has no plans to develop a digital store, saw huge losses of £430 million during the autumn period alone.

It’s likely e-commerce growth will continue next year. Perhaps at a slower pace, but if 2020 has shown us anything, it’s that retailers must get their digital offering right.

“When we get into 2021, the economic impact will likely get far more real so online won’t see growth to the same extent as it did in 2020, but growth will still be on a much increased base,” says IMRG’s Andy Mulcahy. “The extent to which people revert to old behaviours once, if, the pandemic gets under control is a big unknown. Will people go back to offices in numbers, or continue to work from home? Will people shop and go out more locally than they did before?

“The difficult thing now is to plan for a year that features Brexit on day one, will probably be half-affected by COVID still, possibly might be free for half of it, and could well see economic impacts that outstrip those seen from the market crash in 2008.”

Closure of brick-and-mortar stores

It has also been a year characterised by a slow but steady disappearance of well-known brands from an increasingly fragile High Street.

The online shift has been make or break for many of the nation’s favourite retailers.

Last week saw Philip Green’s Arcadia Group, which owns TopShop, TopMan, Dorothy Perkins, and Burton, forced into administration. While well-loved department store Debenhams, which has been around for more than 200 years, was pushed into liquidation earlier this month.

We’re yet to find out if the historic retailer will be rescued by a last-minute bid made by Fraser Group’s Mike Ashley earlier this week.

After a tough year Peacocks and Jaeger also slipped into administration in November.

Last month chief executives from 60 retail stores, including Marks and Spencer, Dixon’s Carphone, and River Island, backed a warning from the BRC about damage to the High Street If lockdown was extended over the Christmas trading period.

Although the government has given the green light to open retail doors in some areas of the UK in time for the festive season, we’re yet to see whether this will be enough reverse the damage to British high streets.

“While the end may be in sight with a vaccine, the next year will continue to be extremely challenging for the industry,” says the BRC’s Kyle Monk. “To ease the burden and save countless jobs and retail firms from collapsing, the Government must urgently consider extending the rent moratorium beyond January and should extend targeted business rates relief from April 2021."

The pandemic has highlighted how important it is for retailers, if they have not already, to adapt to the online shift by establishing a sound multichannel offering.

Changing consumer behaviour

The pandemic also saw a big change in what customers were buying, with the fashion industry particularly struggling.

“There was also a shift in what items were popular - the move to work from home meant sales were consistently strong for office equipment and home furnishings, but the social restrictions meant fashion sales suffered month after month,” says Kyle Monk, BRC.

While a lot of other categories saw strong growth, like beer, wine, spirits, electrics, home, garden, and beauty, some of which saw triple digit growth at some point in the year, the apparel market didn’t do as well.

“Clothing retailers have not seen that uplift though, so they have had a tough year; what they do in 2021 to rebuild is an important question as it’s a huge part of retail,” says Andy Mulcahy, IMRG.

The growing popularity of ‘indie’ businesses

Independent and local stores are set for a £3.5 billion boost in the build up to Christmas, according to research by Starling Bank and the British Independent Retailers Association.

The study also found that 43 per cent of people surveyed wanted to support independent businesses and the community due to the impact of the pandemic.

The rise in demand for these smaller businesses also coincides with independent shops increasing their digital footprint to fill the footfall gap caused by the COVID-19 crisis.

Research by ShopAppy.com found that more UK shoppers are shifting towards buying online from local High Street businesses over major national retailers, and that more and more SME retailers were joining the platform over the course of 2020.

Technology and the omnichannel experience

To remain relevant and engaging in an ever-changing retail space, where customer behaviour is less and less easy to predict, and ultimately to secure their place on and off the High Street, retailers must now perfect both their in-store and online customer experience.

Retailers are responding to disruption by adapting their brick-and-mortar stores to replicate the ease of online shopping with innovative technologies, while at the same time reworking their e-commerce platforms to incorporate the more personal qualities of an in-store experience.

Research by Zebra Technologies has shown that since the advent of COVID-19, decision-makers in the retail space have seen an increase in the need for convenience and efficiency. This is clearly demonstrated by the significant rise in shoppers’ usage of mobile ordering and smart checkout solutions.

The technology manufacturer also found that mobile ordering, from smartphones and tablets, has experienced “tremendous growth” and proved instrumental to helping maintain social distancing and adherence to local guidelines.

Consumers are now using their mobile phones to scan QR codes in-store and have items delivered to their door.

Augmented reality is also fast becoming a popular technology for both online and offline stores.

As the UK begins to roll out the coronavirus vaccine, retailers must not yet breathe a sigh of relief. The full extent of the damage to the high-street is still unclear, and the economic fallout is ongoing. Next year will not be easy.

But the retail survivors will be the businesses that continue to re-think and hone their strategies, products, and services, embracing digital transformation while ensuring customers feel they have a personal experience whether in store or online. Those that fail to adapt could face some unwanted consequences.

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