Retail trends for 2021 you need to be aware of
- Retailers need to embrace Agile so they can innovate and adapt to change faster
- Digital advertising will increase in 2021, but further lockdowns could bring more risk
- Average cost-per-click for digital ads recovered slightly in Q3 2020 (though down 11% year-on-year) and looks to increase again in 2021
- Sustainability isn’t just a buzzword. Customers are more positive about brands that care about sustainability
- This is shown by the rise of smaller, “ethical” retail brands
- Retailers who don’t treat key staff fairly can expect serious push back from customers
In part 1 of our retail trends for 2021 series we looked at CX innovation, increasing use of subscription models and how big data can help retailers to optimize their offerings to customers.
In this article we will look at how retailers need to adopt agile processes, ethical values and how digital advertising spend could recover across ASEAN in 2021.
Adoption of Agile
The pandemic has been nothing short of a nightmare for retailers.
This isn’t just because retail locations may have been closed, due to lockdowns. COVID has had implications across the board. From delivery delays, staff shortages and supply chain constraints…Retail has had to deal with a constantly changing landscape.
For retailers to thrive in 2021, something needs to change. Retailers need to increase their level of business agility.
Retailers who have weathered the pandemic best all have Agile business practices. This has helped them to rapidly pivot their operations so they are in a position to embrace the “new normal”.
Adopting Agile processes will help retailers become more customer-centric and operate more efficiently in almost all areas of their business.
Embracing Agile will also help retailers to quickly deploy technical changes to their websites and apps faster. This will help to respond to changing demands from customers.
Don’t forget people…
It’s important to note that this is not just a technical change. To become Agile, retailers need to change their culture and get buy-in from their staff at all levels of their operation.
Going Agile is also great for business continuity purposes. By being Agile you are better able to survive uncertainty and volatility. Two words which pretty much sum up the whole of 2020!
If you need some help adopting Agile practices, talk to us via [email protected].
The digital advertising space is volatile, but brings opportunities
The first thing to be cut during the pandemic for many retail businesses was advertising spend. This hit offline advertising very hard, but cuts were also made across all digital advertising channels.
Big retailers, like Amazon earlier in 2020, scaled back their ad spend. This brought about a drop of average CPCs (cost-per-click) across the retail sector.
However, conversion rates fell due to the atmosphere of general uncertainty among consumers.
Although more consumers than ever turned to eCommerce, they focused on essentials and scaled back their spending. This was especially apparent in early to mid 2020, when lockdown measures were instituted in most countries around the world.
In Q3 of 2020, general digital marketing and ad spend began to increase again. Inevitably big players such as Amazon returned.
Many retailers and the big players have now adjusted to the current situation. The slight cost-per-click recovery shows this. Early 2021 may see more turbulence in this space for many retailers, if there are further lockdowns. But lower cost-per-click also brings an opportunity for brave retailers looking to increase their ad spend to attract more customers.
Retailers in ASEAN could embrace the opportunity to increase their digital ad spend. But it should be noted that this is not without risk.
Ethical Values will remain important post-COVID
The pandemic has wreaked economic havoc. But it has also exposed social weaknesses and bad business practices that are hard to ignore.
Retail staff involved in stores and in the supply chain have proven to be the lifeblood of many retail businesses. They are at the front line and without them things would have been a lot worse.
The treatment of key staff by retailers has a massive effect on consumer purchasing decisions.
Edelman’s “Brand Trust and the Coronavirus Pandemic” report states that 78% of respondents think that “businesses have a responsibility to ensure their employees are protected from the virus in the workplace and do not spread the virus into the community”.
The cost of getting things wrong
Globally, 1 in 3 respondents stated “I have convinced other people to stop using a brand that I felt was not acting appropriately in response to the pandemic”. So 1 in 3 people, potentially, will stop using a brand if they do not match their values.
An example of how not to respond to the pandemic can be found in UK retailer Sports Direct. 30 minutes after the UK prime minister announced lockdown measures to the nation, Sports Direct announced that it would be keeping its stores open. This outraged employees and forced controversial CEO Mike Ashley to apologise and announce a U-turn.
Brands that treat their employees well and contribute during this difficult time will strengthen the bond they have with consumers.
This is particularly true in Asia.
Globally 37% of respondents to Edelman’s report agreed with the statement “I have recently started using a new brand because of the innovative or compassionate way they have responded to the virus outbreak.”
However in China this reached 82% agreement. In India it was 60% and in Korea it was 52%.
So retail brands need to act and communicate ethically in 2021 if they want to get consumers to trust them. Brand perception is a purchasing decision, which makes it part of the overall customer experience. And innovative experiences are a differentiator between brands, especially in a competitive space like retail.
How MAQE can help
MAQE has experience in helping organizations digitally transform while putting people at the heart of any transformation journey. We’ve been working Agile for many years, so we can help retail brands adapt to the “new normal”. Talk to us via [email protected] to find out more.