Never have so many shutters been pulled down across retail stores in the US and UK as they did in 2020. A report by Coresight Research puts the number at 8,741. The death knoll continues to ring in 2021 as analysts predict a 14% increase in the rate of retail store closures.
The same report predicts 4,000 new stores will open in the US in 2021. Buoyed by vaccination programs and fiscal incentives, the economy is bouncing back, and consumers are eager to spend. The National Retail Federation (NRF), the largest retail trade association, anticipates annual retail sales will grow between 10.5% and 13.5% in 2021.
New challenges as well as several pathbreaking innovations, new business models, and technological advances dominate the retail industry.
The five key trends in play are:
1. The old gives way to new stores and formats
New stores are moving away from traditional formats to focus on new experiences, optimized floor plans, creative branding, and increased automation. The “phygital” will rule the future, with offline stores offering the conveniences of online shopping such as contact-less checkouts or virtual tryouts.
Payless, the footwear retailer, opened its first concept store in March 2021, providing an immersive, omnichannel experience to its customers with features like interactive touch screens and augmented reality-driven foot measurement charts. Another example is the GLAMlab, a virtual, in-store, try-on tool by Ulta, the beauty products company.
2. Immersive experiences will redefine customer engagement
Walmart conducted a shoppable live stream in May 2021 featuring social media celebrities in the fashion space. In February 2021, Nike invited its customers to virtually ‘hike’ through a digital Smith Rock State Park in Oregon at Nike’s NYC House of Innovation. Juxtaposing augmented reality, virtual reality, IoT, robotics, and extended reality, retailers are crafting new design elements into their stores that provide unique, interactive experiences. Navigation apps, electronic shelf beacons, AI-powered voice recognition, or robotic shop assistants will soon become prevalent.
3. Subscription business models will provide sustainable revenue and loyalty
The pandemic proved to be a catalyst for subscription-based businesses. Research by Paysafe found that 27% of consumers expect their subscription payments to increase in 2021. It is a win-win situation for both retailers and customers. It offers consistency, predictability, and value for money. Non-retailers are also adopting the subscription model, as is evident from American Airlines’ new initiative to deliver their onboard wine directly to subscriber homes. Ralph Lauren’s ‘The Lauren Look’ is a rental subscription service for fashionwear. Customer loyalty and personalization will get a boost with this model.
4. Supply chain agility remains the topmost priority
From shortage of toilet paper to the short supply of microchips, the pandemic has brought unusual stories of disruption highlighting the importance of an agile supply chain. The supply chain is now a strategic function. Enterprises need to strategize on alternate sources, counter the impact of economic nationalism, and rework their supply chain processes to build a unified solution. The goal is to provide real-time visibility, traceability, enhance demand sensing, and micro fulfilments.
5. Cybersecurity is a must for business continuity and brand reputation
Retailers are relying heavily on the use of connected devices and sensors, creating vulnerabilities. The industry has access to massive customer data making it a lucrative target for cybercriminals. A single data breach can be very damaging. Investing in a robust cybersecurity strategy is essential in a landscape that is continuously witnessing new cyberthreats.
Retailers must build the necessary digital capabilities to be ready for the future. They need to be agile, data-driven, scalable, and innovative. Cloud is the inevitable destination for ensuring efficiency, cost variability, and scalability. Monolithic services must give way to microservices and APIs. Headless architecture can provide the means to adapt quickly to the changing demands of the market. AI and automation must be infused in every process to streamline operations and leverage insights for data-driven decision-making.
The collaboration between Amazon Web Services and Infosys brings several competencies that can help retail businesses respond quickly to market dynamics and innovate at scale. Infosys Cobalt is an Enterprise Cloud Suite with the backing of the largest enterprise cloud community. Infosys Cobalt, along with AWS, has over 14,000 business, engineering, and knowledge assets and 200+ market-ready industry solutions. For example, Extended Store by Infosys is an easily deployable, personalized self-checkout on consumer mobile devices for “Scan and Go” on AWS cloud.
Amazon Forecast, Amazon Personalize, and Amazon Connect provide pathways to AI and ML without requiring ML expertise, accelerating the digital transformation journey of retailers. Amazon Personalize delivers curated and relevant customer experiences. Amazon Connect can create personalized customer interactions leveraging data from CRM and other systems, improving the customer experience. Together, AWS and Infosys can help retailers differentiate themselves to survive the new normal and succeed.
About the Authors
Allison Ortiz is the AWS WW Partner Development Manager – Consumer, Retail and Logistics for Infosys
Ezhil Mani is the Infosys AVP on Consumer Retail and Logistics