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The world of retail is moving at a break-neck pace in 2021 as a myriad of disruptive forces coalesce at this time. The industry is traversing through huge structural changes as the customer journey evolves rapidly with the seismic shift to the online channel.
Here are the themes for our 10 Retail Trends for 2021:
The accelerated shift towards the online channel since social distancing took hold in March has not been surprising. Nevertheless, the shift has led retailers having to transform operations in a matter of weeks – not years – to cope with online practically doubling in some categories such as Homewares.
This is seeing retailers fast track digital integration, using innovation to come up with cunning ways to leverage existing stores to support online sales. For example, Dunelm quickly introduced a contact-free ‘deliver-to-car’ click and collect alternative, while partnerships with third parties such as Deliveroo and Aldi continue to provide a lifeline to those dabbling in e-commerce.
A greater focus indoors has seen home categories outperform in recent months. But continued elevated levels of demand for home furnishings is unsustainable, given that the housing market continues to be dogged by low supply going into the new year.
When shoppers do venture out, they appear to be avoiding historically crowded places, with consumers re-discovering local and out-of-town shopping. In 2020, footfall in city centres was at around half the level of 2019 throughout the summer months as consumers avoided public transport.
With such unsustainable levels of footfall, retailers are reducing their reliance on costly stores. H&M is set to close 250 stores worldwide in 2021, while luxury label Aspinal of London is looking to shutter all its UK stores to move the brand online.
Retailers that are keeping the lights on in shops will be looking at rent reductions, as physical stores fundamentally generate less revenue. As stores move to turnover-based rents, the rebalance of power between retailers and landlords shifts in favour of the former.
Such cost cutting underlines a strong focus on balance sheets to ensure retailers do not burn through cash over the coming months. Unfortunately, fallout in the form of redundancies and administrations is inevitable. Also, the pressure on working capital remains severe. But it also provides an opportunity for M&A activity and retail partnerships.
With the UK’s departure of the European Union (EU), supply chain disruption is also likely to occur with elevated costs (especially for the food and drink sector) and new administration procedures.
Throughout 2021 as industry restructuring unfolds, there will be many opportunities for retailers to watch out for:
Harnessing these opportunities effectively requires a deep understanding of all the key factors.
Be sure to reserve your copy now
Our ‘Outlook for UK Retail 2021 Report’ explores these opportunities and many other issues, delving into the necessary detail to help retailers (and retail-related industries) successfully navigate through these unprecedented times.
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