No part of retail ever truly stops changing, but some aspects are seeing larger, faster shifts than others, particularly due to the impact of the COVID-19 pandemic. The IDC FutureScape 2021 webinar took a close look at some of the biggest, most impactful developments retailers can expect in the coming years.
The overarching theme of the presentation was the need for retailers to keep up with shoppers’ demands. The average consumer has access to more choices and greater convenience than ever before, and truly standing out in the tech-heavy retail landscape will only become more challenging in the coming years. Three of the biggest trends predicted by IDC include:
- Grocery’s omnichannel boom isn’t going anywhere: Many analysts have noted that shoppers just needed a taste of omnichannel convenience to make it the norm, and IDC’s research supported this projection — with grocery forecast to experience the biggest shift of all;
- Retailers and suppliers will become closer allies: Demand for relevant products that are backed by proof of real corporate responsibility is reaching a point where neither suppliers nor retailers can deliver on this promise alone, making greater collaboration commonplace; and
- Large retailers will take AI development into their own hands: Retail’s biggest players offer in-house omnichannel services smaller rivals can’t compete with, and IDC expects acquisition-powered AI development to be the next frontier where they cement their lead.
Demand for Pickup and Curbside Will Define Grocery Store Designs
Unsurprisingly, IDC found that the pandemic had a massive effect on the average consumer’s online shopping habits:
- The average shopper increased the percent of time spent shopping online by 90% in 2020;
- More than 70% of shoppers said that they will continue to shop online more than in the past even after COVID concerns fade; and
- Contactless and flexible fulfillment options including delivery, curbside pickup, contactless payments and flexible returns would make shoppers more loyal to the retailer offering them.
IDC expects grocery to be transformed by consumers’ appetite for omnichannel convenience, projecting that by 2023, 75% of online grocery orders (representing 15% of all grocery sales) will be picked up curbside or in-store. While many retailers have developed ways to safely deliver perishables, the speed and convenience of pickup will give these omnichannel transactions a significant edge.
Additionally, grocery retailers are expected to increase their investments in on-site pickup or nearby microfulfillment centers by 35% to keep up with demand, forcing retailers to rethink the standard store layout with BOPIS and curbside journeys in mind.
“The bottom line is consumer shopping habits have been altered and new habits have been formed, and this has already and will continue to shape retail priorities,” said Leslie Hand, VP for IDC Retail Insights during the webinar. “Part of the redesign of the store is all about finding the right balance of consumer pickup locations where inventory exists, where we store it and where and how fulfillment happens.”
Retailers and Suppliers Will Deepen Relationships to Build Shopper Loyalty
Shoppers’ interest in sustainability and the social impact of the products they buy has been on the rise in recent years, and it’s only going to grow stronger in the future. This, combined with the growing interest in using big data to make out-of-stocks and other inventory problems a thing of the past, means retailers and suppliers will need to work together to offer an optimal experience.
By 2024, IDC expects that retailers will strengthen their partnerships with suppliers to improve supply chain transparency and reduce the environmental impact of operations by 30%. These efforts won’t just be good for the environment and workers along the supply chain — they also are expected to increase consumer trust by 50%.
“Consumers are increasingly conscious of the impact of their shopping decision on the environment and on society as a whole,” said Filippo Battaini, Head of IDC Retail Insights Europe. “As such, visibility and sustainability are becoming some of the top concern for retail executives when planning for supply chain operations. These increasing demands generate a need for greater collaboration between partners in the supply chain, which really becomes key to creating efficient supply chain operations that can support big data operations.”
Startup Acquisitions Will Keep Cutting-Edge Retailers Ahead of the Pack
Artificial intelligence is becoming a standard part of retail operations, but few companies have the resources necessary to develop their own capabilities in this area. This may change by 2023, when more retailers begin acquiring AI solution providers to build their competitive advantage in this area — a practice that IDC believes can speed up the growth of proprietary AI tech by 5% to 10%.
Acquisitions will be key to overcoming one of the largest challenges faced by retailers that have the budget for internal AI development but lack in-house expertise. Bringing existing startups onboard can give these retailers the resources they need to drive further enhancements and stay ahead of the overall curve.
“Retail is well understood to be kind of one of the primary use cases of AI technology, and we think that as retailers look out across the available landscape one of the key issues holding them back from investing more deeply is availability of talent and internal cultural processes,” said Jon Duke, Research VP at IDC Retail Insights. “The other thing we talk about is this looming intelligence divide that’s very similar to the digital divide that we see today. When we think about the intelligence divide there are going to be the those who are out in front, and they will create some clear separation between the majority themselves and the majority of retailers who are still picking up speed.”