No one knew what to expect last year when the world economy abruptly came to a halt. As brands chart a path toward the post-COVID state (predicted for later this summer), they're sure to make good use of lessons learned, with a little 20/20 hindsight.
Below are my predictions for what industry leaders should keep in mind:
Embrace the Outdoor Shopping Model
The physical footprint of retail is shifting as retailers reimagine how to meet the consumers where they are, physically and emotionally. With 32% of consumers admitting to feeling unsafe visiting shopping malls, mall traffic and dwell time has suffered. One solution is focusing on the non-traditional shopping environment: the outdoor shopping center. Outdoor shopping corridors, mostly represented by premium outlets like Tanger, have an increased demand for space. As of last summer, 95% of Tanger's total occupied stores had reopened, as S&P Global Market Intelligence reported. We predict that more retailers will switch to this model.
Reinventing the Retail Footprint
Most consumers have retreated to submarkets leaving retailers to explore alternative options to using their property more effectively. Brands are expanding their reach with small-format stores, cross-promoting their products and services in showrooms. Many are leveraging smaller footprints into 'touch and feel' locations that seamlessly blend online browsing to in-store purchasing. Showfield's recently opened a flagship in Miami Beach, successfully integrating an experiential sensory event with its contactless browsing app, Magic Wand, to enhance consumers' shopping experience. We anticipate other brands will follow suit.
Reallocation of Properties
The shopping mall as we know it may have a different look and feel post-COVID. With big-box retail reallocating existing space into localized fulfillment centers, others explore free-standing properties that provide ample space for curbside pick-up and drive-thru amenities. Macy's reported doubling-down on experimenting with off-mall, smaller store formats for Bloomingdale's and its namesake while also reimagining their larger leases into fulfillment centers.
Social Commerce Solutions
We predict that brand marketers will continue to use shoppable features on social media platforms like Facebook and Instagram to maintain a daily connection with their consumers. Last summer, the U.S adoption of social commerce was slow at best. The pandemic has seen 51% of adults increase their time spent on social networks, and analysts reported a 44.5% increase in retail sales online in early 2020. Social commerce solutions are widely used as consumer engagement initiatives but are also being adopted into backend operations. Brands are adopting FaceTime to conduct personal shopping sessions, and Microsoft Teams helps retailers streamline store processes, facilitate contactless shopping experiences, and maintain connectivity across retail locations. The future impact of social commerce on retail sales' expects to reach $84.2 billion by 2024, accounting for 7.8% of U.S. retail e-commerce sales.
5G Network Expansion Will Drive the Future of Retail
The driving force behind social commerce and retail connectivity will rely heavily on the expansion rollout of the 5G network beyond mobile internet to IoT and other communication segments. CNET reported that 2020 5G mobile sales were nearly as strong as expected and are estimated to more than double to 600 million by the end of 2021. The retail industry has already seen the benefits of beacon and POS technologies in-store, and 5G's powerful computing will further retailers' real-time data collection to customize interactions with its customer base.