Management One 2021 Market Outlook: 5 Key Themes for Retail
By Mike Alic - President, Management One
Based on our analysis of Management One clients and our conversations with Retail Experts and other analysts of retail and the economy, we’ve pulled together five key themes we believe our clients should keep in mind regarding the year ahead.
1. There’s no going backward in assortment planning.
Yes, as the vaccine rolls out and the virus recedes, life will return to a new normal, but the new normal will not be identical to the pre-Covid normal. Some of the new consumer habits and tastes that developed during Covid will persist. Retailers need to consider carefully whether and how their assortments still match their customers’ needs and desires, and how they need to evolve. We believe people will at some point want to get dressed to go out again (see below), but that doesn’t mean a simple return to the past. Now is the time to invest in categories that reflect changing lifestyles. It is time to take calculated risks and then measure performance.
2. There’s no going backward in marketing and sales channels.
The share gains seen by e-commerce are not going to be reversed. Even people who like to shop in person have seen the efficiency benefits of shopping online. The secret weapon for independent retailers is marrying brick and mortar with online, and doing it with a personal touch. Now is not the time to ease up on figuring out e-commerce: stick with it and keep learning and marketing. In addition, a CRM system is now an important part of your technology stack. It will play a central role in selling to your clients and uncovering future prospects. And if you haven’t explored selling via live events on social media platforms, you need at least to investigate. We have seen businesses go from $0 to over $5 million in revenue in less than three years using social media for 90% of their business.
3. Messaging and branding are key.
In a digitally-led world, how you present yourself and the stories you tell - via your store, your website, your e-mails, your social media channels - are critical. Customers need to know not just what products you carry, but who you are and what you are passionate about. It was reported that 42% of customers shopped with a new retailer for holiday 2020. This represents both a threat and an opportunity. Your digital footprint is your new storefront and your window to the world.
4. 2021 will be a tale of two halves.
The first half of the year we anticipate will be marked by consumer hesitancy as vaccine manufacturing and distribution will take time to get rolling, and the economy may see a dip, especially if a new round of economic stimulus stalls in Congress. By the second half of 2021, with vaccinations well advanced and greater clarity on government policy, we expect to see robust growth in consumer spending. Much of this growth will go to services - restaurants, travel, gyms, etc. - but retail goods, especially fashion-oriented apparel, footwear, and accessories, should benefit, too. People are itching to get out, and they’ll want to dress up to do so. (That said, we believe that retailers of goods that boomed in 2020 - for example, equipment for solo outdoor sports - should not count on the same growth rates in 2021.) All of this means that careful, quantitatively driven merchandise planning is critical.
5. Build adaptability into your business.
All four points above may require you to think and act differently in your business. That skill - the ability to absorb new information, devise a new plan, and take action quickly - is critical for all businesses at all times, but especially for retail in 2021. Consider hiring people with backgrounds different from your own, question your first response to important questions, look outside your four walls, consider third-party apps and outside services that can plug into your business and help it evolve. Above all, stay open to possibilities, and be ready to move and change.