By Clare Harris, Senior Vice President Proxima,

2020 has changed the state of play in every sector. But while many industries have had to deal with a relatively smooth shift to remote working, retail has faced an existential crisis.

The high street, already in rapid decline before the pandemic hit, is now left teetering on the edge as lockdown restrictions continue across the UK. The next few months will be tough for retailers and we unfortunately expect to see many more names fail before Spring when some semblance of normality might return.

It has become something of a truism that the pandemic has accelerated digital trends, but nowhere has the accelerated shift to digital media been more drastic than in the retail sector. Even retailers without a digital offering before the pandemic have had to quickly adopt some form of online click-and-collect service, while larger and more digitally adept players have brought in futuristic measures to continue to continue to engage their customer base through lockdown.

As all retailers have shifted online, the pandemic has created a need for true differentiation in the experience they are providing. The digital experience will therefore continue to be a key battleground as retailers fight for attention and share of wallet.

These are some of the dominant trends in digital retail that have emerged through 2020 and that we expect to shape the retail sector in the year ahead:

Digital in-store experience

Recreating the in-store experience online has been a key weapon in the digital retail arsenal, and we are seeing retailers use these as a tool for brand engagement and differentiation over competitors.

Levi’s for example have created a 360 virtual shop where customers can walk around in-store, interact with virtual staff and try on items over an avatar.

Charlotte Tilbury has similarly recently launched a virtual store where you can interact with a hologram of her in the store, pay for a virtual style consultation as you try on different items and offset this against the cost of your final purchase.

There is an interesting mingling of social media platforms and the in-store experience as retailers look to make shopping a social activity again. Snapchat has been a channel that retailers are leveraging to offer virtual fittings and integrate the social aspect of shopping.

This has also led to higher degree of personalisation in retail – with consultations being automated and more affordable, and more data on consumers allowing for tailored suggestions to be pushed toward customers.

Delivery and logistic evolution

Click-and-collect services have been a saviour for many retailers throughout this crisis and curb side pickup has allowed stores to continue to reach their customers while their physical stores are closed.

But this short-term trend is also leading to a wider reimagining of what a physical store can be. With warehouses and logistical processes stretched to the limit, physical shops are becoming a hub for logistical operations as well as a store. This will be a trend that is likely to last over the pandemic as retailers rethink the purpose of their bricks and mortar presence.

Although we have more time on our hands through lockdown, boredom has conversely made consumers more impatient than ever. Delivery and logistics therefore become a key differentiator for retailers. Next Day delivery and ease of returns will continue to become a central part of the customer proposition.

Collaboration

Collaboration has come to the fore as retailers look for new ways to expand their footprint and reach customers at a local level.

The John Lewis and Co-Op collaboration, which allows John Lewis customers to pick and return items to their local Co-Op, has been a very interesting example of this. With high streets largely empty and John Lewis’ means of customer engagement stifled, Co-Op has given it a footprint to both help its customers and continue to engage with them.

Grocers are similarly showing a willingness to engage with local retailers. Many of the larger supermarkets are hosting smaller localised retailers within their stores and offering them an opportunity to sell to customers.

Payments

With the retail experience taking place almost entirely over digital media, a smooth payments process has become crucial.

Retailers are increasingly seeing a link between ‘abandoned basket’ rates and laborious payments, with customers being dissuaded at the last minute by entering card details.

Retailers are therefore looking to expedite the payments process so as not to lose conversions at the final hurdle.

Apple Pay is driving this by facilitating purchases at the press of a button, and we expect this to become ubiquitous across retail platforms over the coming months.

Klarna and other consumer credit companies are continuing to dominate this space and offer greater flexibility in how and when consumers are purchasing goods. The payment process will continue to be a real battleground for retailers after the pandemic has subsided.

Looking ahead

It will be a difficult year ahead for retail, and those that are most savvy in how they utilise digital platforms and differentiate the online experience will prevail.