The past decade has seen challenge after challenge thrown at the retail sector. From the rapid rise of the internet and omnichannel to the proliferation of smart technology, this chaotic norm has pushed retailers across categories to come up with clever solutions to increase profits and brand awareness, even as they’ve had their backs to the wall thanks to the growth of competition and the domination of corporate titans like Amazon and Alibaba.
In 2020, retail faced its biggest obstacle yet in the form of COVID-19. As the pandemic rapidly (and devastatingly) changed an entire planet’s way of life, sales fell dramatically nearly across the board, only to see a rise at the end of the year as people spent the money they’d otherwise have spent on travel — stranding retailers with sold-out product catalogues and an inability to replenish stock quickly enough thanks to hopelessly clogged global shipping and distribution channels. (Retail NZ data shows that 73 per cent of retailers are struggling to import the goods they need.)
So what will 2021 and beyond hold for the retail industry as businesses continue to adapt to a new and ever-changing paradigm? Here are our top six retail trends to watch for in a post-COVID world.
Arguably the biggest business lesson of COVID is that modern-day retail success is synonymous with flexibility and adaptability. When the pandemic hit, businesses across the world were forced to shut their doors at a moment’s notice and shift their operations online — and as major cities and large swaths of the world have rolled in and out of lockdowns, they've discovered the benefits (and necessity) of flexible business models and channel-agnostic retailing.
The most successful retailers have been those with strong existing ecommerce channels, as well as businesses able to quickly adapt to a new world in which in-person shopping fluctuates from non-existent to normal at any given time — a tricky balance when fixed costs remain the same.
In 2021, we can expect to see the definition of flexibility within retail expand from operations into physical footprints. Pop-up stores and modular solutions (like our Sustainable House of Westpac design) will become more common as retailers look to optimise their financial standing whilst still finding ways to connect with customers in person — and as they build up their defences in an ‘expect the unexpected’ landscape.
Valuable tools for survival in the face of challenge and uncertainty, flexible physical shops give retailers the ability to modulate their operations according to changing needs and circumstances. If another pandemic or other unforeseen event occurs, retailers can shutter their stores and shift online with minimal disruption to business.
Flexible store design also affords considerable advantages for landlords, who are reliant on consistent tenancies and so have keenly felt the destructive economic effects of COVID. By using modular, adaptable design solutions and offering flexible leases, landlords can attract a revolving carousel of tenants and generate a new form of ‘consistency’ more in line with our new and mercurial status quo.
Experiential retail is far from new, but it’s more important than ever, with COVID having accelerated the prevalence and importance of ecommerce. Moving forward, customers will demand seamless shopping experiences no matter the retailer — so if you want to entice people off the internet and into your physical space, you must offer them something they simply can’t find elsewhere.
Hyper-experiential retail dovetails nicely with the idea of flexible store design, allowing retailers to constantly modernise their in-person offerings and continually dream up new ways to get customers in the door. The aim is to fully immerse people in the shopping experience — to surround them with sensory elements that meld to form unique, memorable brand encounters.
Think in-store makeovers at Mecca, UK retailer Farfetch’s ‘store of the future’ (which uses online data to personalise shoppers’ in-store experiences), inventive brand pop-ups like Goop’s Tokyo kitchen and café; it’s all about generating interest and awareness via modern, intriguing ‘retailtainment’.
Small businesses have long had to contend with corporate giants like Amazon, but COVID-19 greatly magnified the resource disparity and power gap between the two. While Amazon’s ecommerce sales increased 47 per cent YOY in the second quarter of 2020 alone, Retail NZ survey data shows that 10,000 businesses across the country were at risk of failure as of September 2020.
And while many of these SMEs unfortunately may not pull through, others have received critical boosts from a trend that retailers should look to capitalise on into 2021 and beyond: shopping local.
As the devastating impact of COVID-19 on retail made itself clear, communities came together to support their local businesses and help them stay afloat, bypassing overseas brands where possible in favour of smaller, more vulnerable retailers with whom they felt a personal connection. As more people work from home and increasingly rely on their regional, town, and city centres, local shops will continue to reap the benefits — providing a sorely needed lift for the economy.
But it’s up to retailers themselves to keep the ‘shop local’ momentum going.
“People have a tendency to comparison-shop in order to pinpoint where they can get reasonably priced best-in-class products that fit their needs, so simply being local is unlikely to cut it,” says Context architect and retail expert Natalie Snowden. “Instead, retailers should look to form strong community connections — to build personal relationships with customers that will give them the edge when it comes time for those customers to make purchases.”
This could mean any number of things when it comes to retail design, such as hosting in-store events that bring people together (perhaps highlighting local artisans) or allow them to try products before they buy, stocking a thoughtfully curated selection of local products and wares not available elsewhere, offering personalised in-store discounts based on shopping history, integrating valuable services directly related to your product offering (like United States direct-to-consumer eyewear brand Warby Parker, which employs in-store optometrists), or simply configuring your physical store in a way that entices and inspires.
The biggest names in the retail world — from Nike to BMW to Disney — conjure instantaneous images of their visual and brand identities. Strong graphics are key pieces of retail design and have always been essential to success, but in a time when in-person operations are anything but guaranteed, businesses will need to put even more thought into showcasing what makes them different on their online platforms.
Positive customer experiences with retail brands increasingly depend on the quality of the flow from online to digital and beyond, generating an even greater need for your brand image to be well-executed and consistent across all platforms. The idea is to fully stitch together your brand identity across every medium you market or sell on — to merge online with offline and create such a strong visual personality that customers instantly engage based off your look alone.
This means investing in a visual and graphics strategy — making yourself recognisable and distinguishing yourself from competition through the medium of the web. It means nailing your marketing to your target audience, the way cult beauty brand Glossier has to millennials and minimalists or New Zealand shoe sensation Allbirds has to sneaker lovers and sustainability advocates.
Generally conceptualised and created by branding experts and graphic designers, visual identities encompass everything from your logo and your brand colours to your marketing collateral and product photography, and they have quantifiable impacts on your profits, with 93 per cent of consumers citing visual content as a key factor in their purchasing decisions.
In-store retail layouts have historically been geared toward theft prevention, a methodology that traditionally trades exceptional customer experiences for almost customer-phobic design elements. But as ecommerce grows and retailers are forced to get creative in order to get shoppers into their physical spaces, design centred around trusting the customer and offering them a personalised, peaceful in-store experience will become more and more prevalent.
Take mega-popular fashion retailer Glassons, for instance, who in 2015 implemented a complete overhaul of their store design, moving from an entirely open space (providing clear lines of sight from employees and security personnel to shoppers) to more of a walk-in wardrobe vibe, with tall shelving units that provide customers with a sense of quiet and privacy and separate the store into more easily distinguishable merchandise sections.
It’s about trading the ‘look but don’t touch’ mentality of traditional retailing for a full immersion in and engagement with the brand.
While many of our smaller and more well-known retailers move largely online — Kiwi staple The Warehouse Group announced six store closures in 2020 amidst a COVID-instigated shift to agile working and a smaller physical footprint — we’re also seeing an intriguing trend by way of the luxury market.
Several of the world’s prestige names in fashion — Yves Saint Laurent, Balenciaga, and Alexander McQueen among them — have announced plans to open their first-ever storefronts in New Zealand, setting the stage for an entirely new retail experience for Kiwis.
“The interesting element here is that international brands now feel the time is right to enter New Zealand and that there will be a market for their products,” says Murray Jervis, Principal and Head of Retail and Interiors at Context. “This points to Auckland in particular as a rising international city, attracting people from all over the world who will demand these types of goods and services.”
Aside from their renown, these brands have one particular thing in common: their physical presences maintain a consistent aesthetic regardless of location. So what does this mean for their shops in New Zealand?
“Most overseas luxury brands are extremely protective of their brand presence, identity, and customer experience,” Jervis notes. “What this means is that we’re unlikely to see a New Zealand ‘version’ of a luxury brand; instead, we’ll experience the same look, quality, and fit-out we might see in other cosmopolitan hubs. For architects and designers, this means taking the global design standards and brand aspirations of a particular retailer and seamlessly ensuring they meet the New Zealand Building Code.”