The most important change in the rules of the retail game has been marked by two simultaneous revolutions: the consumer revolution and the technological revolution.
The new decade will carry on with the big trends, but the battle will become more sophisticated and only the competitors that are quick to adopt strategies relating with both trends will be able compete well over the coming years.
2020 is not only the start of a new year but also the start of a new decade, a decade that leaves behind the prior ten years marked by a very profound transformation for retail and, especially, for the fashion industry. Over the last decade, the sector has undergone an unprecedented digitalization process and has put almost its entire value chain up for review: from the product to production, and even changes in distribution and a certain “reinventing” of marketing and sales strategies.
At the same time, as we have seen, the fashion industry has gone down a path of slowing sales and has embarked upon a process of change in terms of the relationship with the customer, who is much more demanding and active with how he or she relates with brands. This latter point has probably been the game changer that has most affected fashion in terms of its go-to-market strategy and on a technological level, creating new approaches to customer experience.
Ten years ago, we saw the explosion of e-commerce and the threat of the retail apocalypse that went along with said explosion, as well as the global expansion of many new players like Amazon and Alibaba that have really shaken up the market. Today, with the shadow of that threat still lurking due to the economic downturn and the strengthening of new competitors and platforms that have made the industry rethink its strategies, fashion must continue to innovate and improve its processes so as to be able to prepare properly for the next decade.
What trends will predominate in the industry over the next few years? Below, some of the keys that will mark the future of fashion and retail during the new decade are listed.
Next generation costumer
The customer has been the great protagonist of the last decade and will continue to be so over the coming years. Despite the fact that this trend is nothing new and the retail industry has been laying the foundations for a new relationship for years –one that is much more dynamic and closer with the consumer–, the new decade will bring even more dynamism and a great impact from customer feedback on different levels. In terms of marketing, the retail industry will seek new ways that go beyond the tried and tested social media platforms to establish relationships with customers based on dynamizing its own channels and calls to actiondependent upon smart data and customization.
The recalibration of the point of sale
Physical shops will continue to be reviewed, with a trend towards smaller, more agile formats in terms of the sales area, while also having a larger warehouse to allow the physical shop to become a true distribution center for omnichannel sales.
After several years marked by technological hypein the most visible part of the store, the new decade will be marked, for retailers, by a true techreinvention that will be in the less-visible part of the physical point of sale for the consumer. Advanced Analytics technologies, dynamic inventory management to achieve a single stock pool, mobile payments, and self-checkouts are just a few of the technologies that will most help Retailers as they reinvent the point of sale. Some of these technologies (those based on data) will be able to tell the seller what needs to be done to reach the daily sales goal, as well as what value the next sales receipt should have, what products should be sent, and how many people must be served. This will be technology geared towards decision making, and it will have a true impact on sales.
The power of prediction
Data is the new gold in the 21st century and, not in vain, Harvard Business Review pointed out some years ago that Data Science is the most desirable discipline in the world. The advancement of a digital presence in companies, the omnipresent mobile firstdesign, the social networks, and the cloud are creating a new data ecosystem within the retail industry characterized by great volume and much variety. The data itself cannot provide valuable insightsto help grow businesses; instead, there is an algorithm behind that data to analyze behaviors and establish a view of the future for the retailer, as well as to help with decision making. Data will be increasingly subjected to quantification, prediction, and decision making. The technological solutions of the future that will help retailers will be those that really provide a solution and go beyond the notion of “data for data’s sake.”
Stock: Single stock pool and dynamic inventory
As omni-channelity advances –understood as a retailer’s single view of its different sales channels, product selection, and relationship with the customer–, inventory management will increase in complexity. Being able to have control over the behavior of sales is key to be able to properly handle inventory transfers, re-appropriation, back orders, and promotions at different points along the complex physical and digital distribution trails that retailers have. Likewise, having a solution that allows a dynamic element to be incorporated into inventory will be key to reacting to possible changes in sales trends – a phenomenon that is increasingly common in the sector.
Along with these five key trends, which are closely tied to the consolidation of retail industry digitally and in terms of innovation, there is an important additional movement that is starting to occupy the minds of sector executives: sustainability.
According to numerous reports, we are heading into a decade of a certain sustainability that is no longer a concern of only large-scale companies and which includes all fashion and retail companies. To this end, retailers will have to increase their commitment to climate action while continuing to innovate and digitalize their corebusiness.