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8 Retail Trends and Predictions for 2021

Salesforce industry experts share how to get ready for the future of retail in the next twelve months.

Man in a suit helping customers in a retail store
[@VISUALSPECTRUM/Stocksy United]

This is our sixth annual Salesforce Predicts series, where our global subject matter experts predict where retail and commerce are headed for the year.

Over the last 12 months, organizations were really scrappy, and now it’s time to lean into automation, scale, and efficiency to harden much of the innovation that has been held together by baling wire and masking tape. 2020 unraveled many of our retail trends and predictions entirely — and taught us important lessons about the resilience of retailers. 

Among the many eye-opening moments that happened as a direct result of the pandemic, digital shopping saw an unprecedented 50% year-over-year (YOY) increase in revenue over the holidays. And those retailers with creative pickup options – curbside, in-store, drive-through – grew more than 60% higher than those that didn’t during the last five days before Christmas. Meanwhile, shoppers turned to social media for more than just inspiration: purchases from a social channel referral skyrocketed 104%. And we’re just getting started. 

Given the massive disruption and changing consumer expectations due to COVID, retailers are looking to accelerate digital transformation. In fact, based on our research of 500 retail leaders last summer, 76% plan to increase technology spend, and 44% plan to increase their human resources.

I’ve asked our Salesforce thought leaders to put together observations from an expectation-shattering year and their best ideas about what it all means for retail industry trends. Among the common themes: the continued rise of digital, a shift in the role of brick-and-mortar locations, the rise of loyalty, and the value of experience. Here’s what they had to say. 

1. Shopping at the edge endures — and expands

Anna Rosenman, vice president Marketing, Commerce Cloud, and Experience Cloud

When we launched our State of Commerce Report, we saw that 66% of high performers in retail had replaced aspects of the physical shopping experience with digital. More than 70% also experimented with live chat, video, livestreaming, and social shopping. At Salesforce, we call this phenomenon “shopping at the edge.” 

Looking ahead, with 88% of high performers reporting that they are investing even more in digital experiences, we expect to see commerce become prevalent in newer channels, such as online gaming. We will also see businesses that previously were highly reliant on in-person selling embrace digital as a means of reaching existing and new audiences.

Retailers with creative pickup options – curbside, in-store, drive-through – grew more than 60% higher than those that didn’t during the last five days before Christmas.

Anna Rosenman, vice president Marketing, Commerce Cloud, and Experience Cloud

In addition, I believe that in 2021 the post-purchase digital experience — from convenient payments to embedded service and loyalty — will become priorities as brands work to keep their customers. Additionally, the data captured beyond the buy button will enhance the broader customer journey. This first-party data will help retailers better segment and personalize marketing to capture new audiences, deliver a more intelligent commerce experience, and increase the lifetime value of customers.

2. Coherent storytelling will win the social commerce game

Vinod Kumar, product management director, Commerce Intelligence

As Anna Rosenman mentions above, the biggest takeaway from 2020 was increased universal comfort with online shopping for almost everything. Capabilities that were considered nice-to-have just a few months ago suddenly became essential for survival. “Contactless” and “curbside” come to mind.

Brands that deliver great products with amazing experiences on social, anchored by coherent storytelling and a narrative that’s consistent with their brand ethos, will win.

Vinod Kumar, product management director, Commerce Intelligence

The big revelation was social commerce. While TikTok’ers were chasing their 30 seconds of fame shuffle-dancing to siren jams, all the major social “walled gardens” rolled out some form of commerce capability. Social commerce coming into its own during 2021 may not be a prediction per se. According to CivicScience, the percentage of U.S. adults who have purchased products directly on social media has nearly doubled over the past two years — from 13% in Q4 2018 to 25% in Q3 2020.

My prediction is that coherence is the one key difference between winners and losers in the upcoming retail gold rush to social; the difference between fad chasers and tastemakers.

Brands that deliver great products with amazing experiences on social, anchored by coherent storytelling and a narrative that’s consistent with their brand ethos, will win. Those that jump in with random acts of content, won’t.

3. Physical experiences will snap back, but digital will remain the priority

Matt Marcotte, senior vice president, Industry Go-To-Market

2020 was a year of forced change — building new muscles, trying new channels, and replacing physical contact with digital connection. It accelerated change that was already on the horizon, but its artificial nature will result in some snapback once we are able to go back out in the world. We’re also likely to see an even greater reliance on technology to make our lives easier, more convenient, and frictionless. But physical experiences are still critical. Touch is a powerful factor in creating emotional connection — and the one sense that has been most repressed during the pandemic. 

Imagine playing Fortnite and dressing your avatar in real-world designer gear through the game – and then being able to purchase those items for yourself from those designers as you play.

Matt Marcotte, senior vice president, Industry Go-To-Market

Brands need to divide their store strategy into two lanes: efficiency and experiential. Efficiency is about using stores as mini-distribution sites for buy-online-pick-up-in-store (BOPIS) and curbside pickup. Make the “last mile” easier for customers, and connect the digital shopper with product and services. Experiential is about creating a moment that inspires, excites, and takes the customer on a multisensory journey that builds brand affinity, advocacy, and amplification. Existing stores, pop-ups, brand collaborations, and events are some areas brands can focus on to create distinctly emotional experiences.

Despite this return to shopping in stores,digitally enabled” is still the way of the world, period. On average, we spend 12 hours a day connected to technology — essentially, most of our waking hours — which means that we are constantly influenced by our computers, digital screens, and mobile devices no matter where we are. Brands need to embrace this reality and build experiences that connect all touchpoints to complement each other without competing.

Imagine shopping in a store as your phone serves up information about a product you have been looking at online. You’re directed to the aisle where it’s located, making it easier for you to buy and enable your purchase. Now imagine playing Fortnite and dressing your avatar in real-world designer gear through the game – and then being able to purchase those items for yourself from those designers as you play. That type of synergy is the future, and the brands and retailers that can find ways to use technology to connect the customer experience will win.

4. Personalization is the new black

Alex Drinker, global leader, Retail Go-To-Market

2020 changed the retail industry forever. The massive surge in digital forced the industry to look at everything from its supply chain to its customer engagement tech stack. In almost every case, retailers found gaps in what they needed to serve this new digitally enabled consumer. This change in consumer behavior was, and will continue to be, a catalyst for the industry to improve upon all areas of the customer journey and to force some leaders to reevaluate traditional business models.

However, 2021 isn’t just going to be the year of the digital consumer. I believe it will be the year of a more informed, connected consumer who has higher expectations for personalization, service, and the ability to transact in every channel. Seventy-nine percent of consumers say the experience a company provides is as important as its products and services.

I expect that during 2021, brick and mortar will remain the most important channel for the majority of retailers. Conversely, for digitally native brands, the store will be a new growth channel.

Alex Drinker, global leader, Retail Go-To-Market

With that in mind, I expect that during 2021, brick and mortar will remain the most important channel for the majority of retailers. Conversely, for digitally native brands, the store will be a new growth channel. 

A little less than a third of all orders came from digital this holiday, more than double that of 2019. However, that means that two-thirds of all orders came from offline channels. I wouldn’t expect that number to change anytime soon. 

This means that omni-channel experiences must be personalized and seamless. And when brands build a new engagement channel, they will enable that channel to do anything a customer wants. For example, through an SMS conversation, a shopper might want to receive promotional offers and transact, but also reach back out to the retailer for help. Customers may not know what omni-channel means, but their behavior demands it from retailers.

Together, these factors mean that personalization will take on a whole new meaning. Consumers are willing to provide their personal information for a more curated experience. When we asked 10,000 consumers what made their favorite brands stand out, the top answer was catering to their unique needs. In order to meet those needs, I predict more retailers will have a well-defined artificial intelligence (AI) strategy to drive personalization at scale.

5. The last mile will be reimagined

JR Linne, global director, Retail Industries Solutions

The last mile will get a much needed tune-up. With the constraints on last mile coming to a head during the peak holiday 2020 season, retailers have started to reimagine ways to get their goods into the hands of customers. Courier services such as DoorDash and Grubhub expanding beyond food delivery, and Uber acquiring Postmates, mean that the reliance on traditional carriers will decrease as customer options become more diverse. I could even see retailers repurposing store headcount to a delivery mechanism themselves to ensure they own the customer experience to the very end.

That was a big lesson from the 2020 holiday shopping season, by the way. Safety concerns and overloaded shippers drove consumers to retailers with curbside, drive-through, and in-store pickup options. They were rewarded with a 49% increase in digital revenue on average YOY, and 54% digital revenue growth YOY in the five days leading up to Christmas. Retailers who didn’t offer these options saw only 28% average growth on average YOY, and 34% digital revenue growth YOY in the five days leading up to Christmas.

6. Loyalty will win big this year

Hilary Englert, director, Product Marketing

Customer loyalty will be redefined as the world emerges from the limitations required by COVID-19, and it will be more important than ever. According to McKinsey, since the pandemic reached the U.S., more than 73% of customers have adopted new shopping behaviors and more than 65% intend to stick with those changes

Brands that have capitalized on shifting trends in 2020 need to build on those new routines and loyalty as the world makes its next transition. That means building loyalty will be top of mind in 2021. While value, convenience, and availability were the critical factors in 2020 (I go back to the toilet paper saga), they’re now table stakes. Consumers will return to looking for connectedness with a brand, what it stands for, and its purpose. The experience that a brand provides through meaningful and relevant communications creates the authenticity that shoppers will crave. 

While their true spending power of Gen Z may not be recognized for a few years, their outsized influence will be seen not just in retail but in any industry ripe for disruption, including higher education, banking, and travel.

Adriana Bourgoin, chief customer officer, Commerce Cloud

Also, as categories re-emerge (e.g., formal wear for weddings and school supplies for on-campus learning), loyalty will be even more important for brands to become part of new routines and capture mindshare. Brands that remain relevant, consistent, and authentic are primed to grow.

One loyalty program I love is by Fanatics. I attended zero live sporting events last year, but as soon as I can get back into a stadium, I’ll want my favorite team’s apparel. Fanatics not only incentivizes me with savings, but creates meaningful fan experiences, bringing me closer to my passion. But it isn’t just about the buying or experiences; Fanatics has consistently given back in 2020 with their ALL IN Challenge to eliminate food insecurity. The brand’s authenticity and relevance is poised to drive loyalty as fans can get back to games.

7. Retail recovery might take longer than expected

Vinay Vaswani, retail industry business development lead, Salesforce EMEA

The view from my perch in Europe allows me to look at these trends from a global retail perspective. I realise that it’s been a frustrating year for Retail, and there is a lot of optimism on the vaccines bringing things back to normal soon. However, I believe that retailers should prepare for retail recovery to take a bit longer than expected around the world. 

The current retail situation is likely to continue through the first half of 2021, with more store closures and companies entering administration. We may see improvements after the summer or more realistically, in late 2021 and early 2022 as easing of lockdowns (and vaccinations) allow shoppers to come back into the stores. On the flip side, the potential for revenue growth might help to buoy the 2021 numbers.

Meanwhile, digital shopping will continue to grow in 2021, almost becoming the norm. We’re already seeing a permanent shift in consumer shopping behavior, especially in grocery. We should also expect more of:

  • Social commerce (through livestreaming and influencers)
  • Direct-to-consumer sales by consumer companies 
  • Innovations around augmented reality and virtual reality 

In terms of what that means for stores, I believe stores will continue to be very relevant – but their role will continue to change to support online shopping. The stores that do remain open will have more technology and tools to support online shopping (such as click and collect), or they will offer different in-store experiences, such as new layouts. Conversely, digital native brands will be likely to open brick-and-mortar locations. Retailers will have to adapt their stores while expanding their digital shopping capabilities at the same time.

8. Young consumers will reward uniqueness

Adriana Bourgoin, chief customer officer, Commerce Cloud

Consumers will continue to seek uniqueness, heritage, and sustainability. Expect retailers to respond with creative collaborations, such as The North Face X Gucci, limited productions, and recycle/resell/sustainability efforts to build loyalty. While some brands are standouts for early activism — most notably Patagonia, which has donated 1% of sales to the preservation and restoration of the natural environment since 1985 — 2021 will see more of this positioning, front and center.

Gen Z will solidify its position as a force for change. These digital natives brought their parents and grandparents into new shopping behaviors in 2020, and drove significant increases in digital sales for emerging categories, such as alcohol. While their true spending power may not be recognized for a few years, their outsized influence will be seen not just in retail but in any industry ripe for disruption, including higher education, banking, and travel.

The lines between creators, buyers, and sellers will continue to blur. Customized sneakers have already become the norm. Influencers regularly launch products in partnership with major brands such as Urban Decay’s new eye-shadow palette created with actress Camila Mendes. Marketplaces, such as Etsy — which grew by more than 100% by the third quarter of 2020 — and the introduction of ecommerce on social platforms have created a digital bazaar on a global scale. In 2021, expect to see more of this, but with greater adoption by professionals, such as beauty advisors and hair stylists, with corporate sponsorship.

Rob Garf is vice president of Industry Strategy and Insights and the chair of the Client Advisory Board for Retail at Salesforce. With 25 years of global retail experience as a practitioner (Lids, Marshalls, Hit or Miss), an industry analyst (AMR Research), a strategy consultant (IBM), and a software leader (Salesforce), he is no stranger to the industry and the challenges retailers face. His team currently develops industry research and advises senior executives globally on unified engagement strategies. Rob is also a frequent industry speaker and a member of NRF’s Digital Council.

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