Despite the hesitancy of many consumers to venture back into brick-and-mortar stores in the waning weeks of 2020, the industry realized that physical shopping channels—while undeniably and forever altered—are indeed here to stay.

Recently, we were asked by several media analysts about the future of brick-and-mortar and key focus areas for retailers in 2021 and beyond. Retail experts Amanda Astrologo, Clay Parnell, and Heidi Csencsits provide their combined insights.

Top Trends Shaping Brick-and-Mortar Retail in 2021

  • Continued emphasis on health and safety for consumers and store teams. This is a given, but try to think beyond masks, wipes, and plexiglass and include messaging, branding, and customer experience.
  • Importance of omnichannel options for consumers and flawless execution of omnichannel processes throughout the buying and fulfillment journey.
  • Critical need for efficiency in inventory management—tighter assortment, improved productivity, enhanced demand management.
  • Making the best use of brick-and-mortar inventory. This includes continuing the trend of leveraging stores as ‘warehouses,’ determining the best use of labor, and enhancing store associate training to make all customer experiences seamless and unobstructed. The overall objectives must be increasing shopper satisfaction, ensuring consistency with the brand, and strengthening loyalty.

Technologies Having the Biggest Impact on Brick-and-Mortar Retail in 2021

  • Advanced analytics will have a huge impact. In particular, demand analytics to support improved inventory management and drive the ability to quickly and proactively manage product flow. Other key areas for analytics include merchandise financial planning, assortment planning, integrated POS, e-commerce, and customer analytics.
  • Technologies with an omnichannel focus – curbside, contactless, and mobile.
  • Delivery platforms, either in-house or partnerships. Good examples include Uber’s acquisition of Postmates and Target offering same day delivery in some markets.
  • Systems that support inventory management, particularly visibility and accuracy—these elements are critical in managing order fulfillment.

Key Initiatives Brick-and-Mortar Retailers Should be Planning for 2021

  • Deploy capabilities to support omnichannel experiences with the brand and rethink or overhaul channel strategy. Key focus areas should be where to deploy inventory and how to best serve consumer demand—assuming the continuation of highly volatile markets.
  • Related to the first point, evaluate and rethink store operations’ organizational structure, roles, and responsibilities to best support omnichannel capabilities and ensure seamless customer experiences.
  • Review assortment strategy and options—teams cannot continue to buy and deploy inventory in the same way.
  • Go deep into the supply chain and review inventory execution capabilities to ensure the ability to pivot quickly as needed.
  • Outline additional training or development needs for merchandising, store operations, and other impacted areas within the organization. Retailers have fundamentally changed across the board, and teams must be up to date on new ways of operating, thinking, and working together.

The Future of Brick-and-Mortar Retail

  • Many retailers are still in reactive mode, so those retailers that dedicate time and resources to be innovative and proactive will win. Key focus areas must start at fixing the foundation to support the omnichannel journey and ensure their teams are ready to take quick, decisive actions.
  • Brick-and-mortar is not going away, and retailers must realize some areas were quite over-stored even pre-COVID, particularly in specialty apparel. Some of the changes and evolution were already on many retailers’ radar or roadmaps, but these initiatives were accelerated with the pandemic and related disruptions.
  • Brick-and-mortars will have to evolve even further and faster. Micro order fulfillment and seamless customer experience will continue to be a focus. Leaders must determine how to be more flexible and change processes quickly without chaos. Not only are product needs changing quickly, but so are store staff and customer expectations.
  • All elements must work together, so taking the time to fully comprehend—and design business processes and systems to support—the life of an item throughout the entire customer journey will be key. And don’t forget: returns handling is also important.
  • Also, while retailers may not dramatically shift assortments, to ensure long term viability, many must determine how they can make themselves more “essential” to their consumers.
  • In addition, retailers should evaluate how they engage with their consumers—email, loyalty, promotions, and store experience. Beyond removing friction, they must determine how communications and messaging can be improved and focused to ensure it resonates with the right shoppers.
  • Finally, we cannot emphasize enough that store staff needs to be trained to excel and meet brand standards. This is especially true if a store also serves as a fulfillment center. Staffing approaches may need to change so as not to interfere with in-store customer traffic and experiences.
Clay Parnell, President & Managing Partner

Clay Parnell
President & Managing Partner

Amanda Astrologo, Partner
Heidi Csencsits, Senior Manager

Heidi Csencsits
Senior Manager

Contact Parker Avery