The retail industry is under constant change. New trends and technology continue to disrupt the industry, and retailers are fighting to remain competitive and maintain – and grow - their market share. In recent years, the industry has been significantly impacted by online retail and digital only brands, however, are we starting to see the resurgence of bricks and mortar and a re-defined store format as a critical part of an extended customer journey?

BearingPoint recently attended the National Retail Federation’s Big Show in New York. The show welcomes nearly 40,000 attendees, including 16,000 retailers over 3 days with a focus on showcasing the latest innovative retail trends and concept stores. We have summarised our findings here…

Bricks and Mortar retailers remain under pressure

We have seen a shift away from bricks and mortar sales, and this is set to continue. As costs continue to rise, and footfall recedes, many retailers will face financial pressure. Moody’s has listed 17 at risk retailers for 2020 including J.C Penney, J. Crew and Ascena Retail Group. Retailers globally are increasingly appreciating the wider role a physical store plays, for example: NEXT are actively planning to keep 120 ‘loss-making’ stores open to facilitate and drive online[1] penetration through recognising their importance to bolstering the overall customer offer.

Ecommerce will not replace bricks and mortar…but it will drive retailer’s growth

Overall, it is estimated that 16% of sales are made online. What is often overlooked, is that consumers still value the store as an important part of their customer journeys. This leaves the retailer with a series of challenges:

  • Retail stores have an important part to play in most customer journeys, yet the customer often choses to buy online, so store sales are declining
  • Customers are demanding faster fulfilment, often next day and same day delivery, meaning that stocks needs to be within close proximity to the customer to satisfy demand and reduce lead time
  • Increased online sales result in more returns, customers expect convenient drop-off points where they can return goods free of hassle

The role of the store must evolve in order to remain current and to satisfy consumer needs.

Looking ahead for 2020

The 3 distinct retail trends that BearingPoint observed at the NRF 2020 were:

  1. Data driven retail
  2. Store experience
  3. CSR and Sustainability

The fundamental link between each of these 3 trends is that retailers are putting the customer at the heart of their businesses and striving to build long-term relationships. Many retail strategies plan to close unprofitable outlets and re-invest in experiential locations and advertising budgets which ultimately sees stores take on the role of a marketing tool, providing tailored events and experiences for customers.

One example of an experiential store includes the Chanel beauty workshop in New York which encourages customers to engage in product testing. Chanel aims to highlight their image of accessibility without creating pressure for people to purchase a product on the premise that they have tested it, directly challenging the perceived taboo of trying before buying in cosmetics.

Nordstrom incorporated a shoe bar inside the store design which serves as a space for customers to enjoy a drink whilst trying on shoes. Waiting times to try on shoes are converted into an enjoyable new experience for the customer. Additionally, Nordstrom’s Burberry pop up space is designed to encourage customers to post their experience on social networks to create user-generated content which is commercially efficient and effective. Finally, Nordstrom offers a ‘touch-up’ personalised service which is a service where clothing can be tailored to fit the individual and in turn allows retailers to reconnect with customer and expand their customer base.

What key themes are we seeing?

Sustainability is the new black

According to an IBM study (January 2020), 1/3 of consumers will stop buying products if they lose confidence in a brand. Trust, transparency and traceability are increasingly becoming crucial criteria for the consumer making purchasing choices. Purpose-driven consumers seek products and services aligned with their values, and this is noticeable on a large scale as a growing percentage of consumers wish to live more sustainably.

Lush is a brand which targets purpose-driven consumers using a commitment to sustainability issues both on its product offerings and internal operations. This is executed through producing toiletries and cosmetics in solid form without packaging to limit use of plastic, as well as restricting water consumption by making solid shampoos, saving 450,000 litres of water per year. Tacking single-use plastic, the bags offered in store are made of 100% recycled paper.

The emphasis on sustainability in the retail space is illuminated through the following statistic: ‘56% of consumers are willing to pay 35% more for sustainable brands.’ This trend poses a significant opportunity for retailers. Consumers are willing to spend on ethical brands, particularly the younger generations who believe in a real impact from brand engagement, 46% of 18-24-year-olds compared with 21% of those aged 65+. The concern for environmental impact is supported by the ‘Make Friday Green Again’ anti Black Friday movement, which is dedicated to responsible consumption, with 79% of those surveyed believing that Black Friday encourages overconsumption.

As the logic and practicalities of the circular economy have become increasingly favoured, re-commerce is growing 21 times faster than traditional retail. It is estimated that by 2028, second-hand goods sales revenue will overtake fast fashion as 64% of women say they have bought or want to buy second-hand clothes, demonstrating that the psychological barrier of buying second-hand textiles is falling.

Digital Native Vertical Brands (DNVB): a model of unified commerce?

Brands such as Glossier and Casper are not broadly known to the general public, yet these players are radically reshaping the market standards and rethinking the entire value chain. DNVBs exist in a favourable environment with the reign of social networks and mobile phones, targeting a mature market for internet shopping. In 2019 Glossier turned over more than $100 million in revenue, existing online before introducing pop-up stores in the US, as well as a flagship store in New York at the end of 2018, further confirmation that a physical space has a valuable role to play.

By 2023, 75% of organisations will offer subscription services

Subscription has become a popular service in many sectors including food, media, luxury and now even clothing. For example, ‘Rent the Runway’ is a high-end rental company which has accumulated 6 million customers and is valued at over $1 billion. ‘Rent the Runway’ is even in partnership with the W Hotel, offering 4 items to be delivered to a hotel room for $69.

‘Phy-gital’ partnerships – tech giants and traditional retailers are collaborating

Existing distributors must not want to fall behind, so many partnerships between tech giants and retailers have been established to offer new services, optimise fulfilment and access new data. One example of this is the partnership between Walmart and Google. Groceries from Walmart can now be verbally ordered through Google Assistant with commonly ordered items automatically selected based on your previous preferences, such as ‘add milk’ selecting your preferred type, size and brand.

Technology is leading the way

As with all industries, technology is playing a huge role in shaping the retail industry and how customers interact with brands. Those retailers who embrace technology to meet the demands of their customer base will see the benefits, but what are the prevailing technology trends?

Visibility enabling sustainability

The application of automatic identification technology is not a new phenomenon, RFID has been positioned as a key enabler of stock visibility for years however with reducing costs, and an increasing set of business benefits, traceability and visibility of product has never been such a hot topic. Blockchain, for example, creates provenance transparency for an individual item, which in turn will tackle the €400bn of counterfeit goods which are sold each year, a big issue for product brands. Increasing levels of visibility creates clarity for measuring, driving and communicating sustainability ambitions which are becoming more and more important for ‘purpose-driven’ consumers.

Bringing product to life

Customers are increasingly able to experience and test physical products virtually; from personalised digital avatars on websites which can try clothes on, dressing room mirrors which can adjust the colour of an item to save multiple try-ons, through to augmented reality enabling products to be visualised in their potential future surroundings, such as a sofa in a living room. As well as the enhanced product and brand experiences customers are getting from application of new technology, it can reduce operating costs too, for example where computer generated images are used instead of traditional, expensive, photography and videography.

AI facilitated commerce

Artificial intelligence has a wide range of applications and implications throughout a customer’s retail journey. Operationally, it can be used to better analyse data and customer buying behaviours to project sales and position inventory accordingly which in turn reduces storage requirements, fulfilment costs and increases operational efficiency. On a relationship level, AI can create personalised, yet entirely automated, customer interactions to drive loyalty and brand engagement by utilising transactional data and enriching it with macro-economic inputs, basket abandonment logic or even social networks.

Devices delivering digital direction

Wearable tech has been a growing segment for retail customers, however, there are growing opportunities within the retailer itself to leverage new technology too. We may not be too far away from a distribution colleague being guided to a pick location by smart-glasses to pick a set of earbuds which can translate languages for the wearer. Technology continues to get smarter and smaller and will improve efficiency and safety as well as customer experience.

Digital Twins and simulation

The digital twin is a virtual representation of an asset, which can be in the form of a physical product or a process. The technology records the real-time performance of an asset and its deviations from its optimal performance – creating a repository or a “twin” of the asset in the virtual world. It comprises of three key elements: physical assets in the real world, virtual assets in the virtual world, and the link for data flow between the real and virtual world. As well as live monitoring a Digital Twin can be used to scenario model different situations, enabling a response or course of action to be tested and its implications understood.

Under-pinning retail ambitions with new technology, or new ways of applying existing technology, influences existing customer behaviour and creates new opportunities for customer to engage with retailers in different ways. On this theme, there are four key areas we expect to gain momentum in 2020.

  1. Unified Commerce will intensify – Customers continue to interact with brands and products across channels and platforms, creating complexity yet expecting simplicity.
  2. Retailer disintermediation as a main risk – Customer demands are driving businesses to look for new partnerships to give greater accessibility to product and service capability.
  3. A new paradigm in customer relationships – Customer convenience was traditionally fulfilment focused; now they increasingly seek more opportunities for frictionless commerce.
  4. New technologies as a true growth factor – Voice assistant devices are set to hit 8bn by 2023 – customers are demanding new ways of accessing and transacting.


Overall, the NRF show offered the team valuable insight into the latest technologies entering the retail space over the coming year. The introduction of increasingly advanced technology offers the potential for stores to introduce automated checkouts, smart shopping trolleys and tags as well as the use of AI and Robotics to gather customer data. When advanced technology is combined with experiential stores and an over-arching emphasis on sustainable practice, the future of retail is set to undergo more radical transformation.


The changing face of the Retail Industry

The retail industry is under constant change. New trends and technology continue to disrupt the industry, and retailers are fighting to remain competitive and maintain – and grow - their market share. In recent years, the industry has been significantly impacted by online retail and digital only brands, however, are we starting to see the resurgence of bricks and mortar and a re-defined store format as a critical part of an extended customer journey?

The changing face of the Retail Industry

This insight discusses the latest trends within the Retail industry, and how these may change the face of the industry as we know it. Which Retailers are ahead of the curve?

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