Forrester: Five predictions for retail 2021

Retailers will invest more in logistics than any other line item in 2021 and mall operators will entirely reinvent themselves and their business operations. 

Those are two of the key takeaways from Forrester’s Predictions 2021: Retail report, which noted that as retailers, brand manufacturers and “ecosystem players” (such as mall operators) navigate the next wave(s) of the global pandemic in 2021, they will have to determine whether they are in survival, adaptive or growth mode — and chart paths from there.

Below are Forrester’s predictions for 2021.

  • Logistics will dominate retail investments.

In 2021, expect to see retailers and brands investing heavily in everything from micro-fulfillment centers and dark stores (and kitchens) to subscription models, drop-shipping, and amped-up loyalty programs to lock in customers and better predict demand.

• Mall operators will reinvent themselves.

Faced with traditional tenant bankruptcies, extra capacity, and long-term social distancing requirements, the savviest mall operators will see a renaissance in 2021 — but with new business models and purpose in place. Those lockers, pick-up points, dark stores, and kitchens that retailers need? Mall operators have the space. All those online orders that retail tenants fulfill in-store? Mall operators will take a slice of those revenues, just like they do for in-mall purchases.

“We predict mall operators will change tenant fee agreements to include online sales that involve in-mall fulfillment, such as “buy online, pick up in-store,” on top of traditional in-store sales,” the report stated.  “And mall operators will attempt to take more control of their destinies (and their customers’ mall experience) by acquiring parts of their tenant portfolio, such as Simon Property Group and partners buying mall stalwarts such as Brooks Brothers and Forever 21.”

  • Brand manufacturers will take control of their destiny.

To take back the distribution reins, the savviest brand manufacturers will proactively remaster their supply chains, entirely revamp their distribution partner network, and harness AI-based retail planning.

And we’ll see more direct-to-consumer investment to improve margins and develop direct relationships with their customers for the long term. It won’t be easy to uncouple from decades-long wholesale partner relationships or much more strategically manage the siren song of high-volume online marketplaces, but these are the brands that ultimately will control their future and flourish.

  • Contactless and deferred payments will break more than 50 years of U.S. consumer payment habits.

Alongside a growing number of contactless transaction options, including new “cashierless” options in grocery stores, U.S. consumers are increasingly using contactless methods to pay in-store.  U.S. consumer use of deferred (installment) payments will also rise significantly in 2021.

• Regulators and courts will tackle consumer protection, marketplaces, and privacy.

In the U.S., states and courts will formally investigate the implications of Section 230 of the Communications Decency Act, including both marketplace selling practices and broader consumer protections, according to Forrester.

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