RetailDive.com, January 6, 2020
From the evolution of pure-play e-commerce to the purpose of brick and mortar, the Retail Dive team serves up their predictions for 2020. By Kaarin Vembar, Ben Unglesbee, Cara Salpini, Daphne Howland, Caroline Jansen
The on-again, off-again, maybe-on-again of tariffs that got on retailers’ last nerve in 2019 serve as a neat metaphor for the industry as a whole — in retail, things are complicated, swiftly changing and sometimes contradictory.
The U.S. consumer, for example, seems confident, yet remains picky. Stores need e-commerce, yet e-commerce needs stores. It’s complicating the business from merchandising to fulfillment, shaking up the c-suite, and landing ill-prepared or debt-heavy retailers in the financial dust.
That 2020 is an election year will only make an already complex environment more bewildering. Here is a look ahead to 10 of the trends Retail Dive is watching most closely.
1. Pure-play retail is less “pure”
We’ve witnessed the grand entrance of direct-to-consumer brands over the years, but now they’re solidly here, introducing the next stage of growth (or reckoning) for digital natives. Some of the most popular direct-to-consumer (DTC) brands achieved unicorn status in 2019, indicating a $1 billion valuation and their status as a hard-to-ignore presence in their markets. At the same time, signs of a DTC shakeout have emerged, with some brands, including Wayfair and Chewy, posting large losses even as sales rise. As these brands grow up, more successful expansion, and risk of failure, are on the horizon.
In their rise, DTC brands have continued to learn from traditional retailers, first by recognizing the potential in e-commerce and now by opening up physical stores to complement it. Brick and mortar is now a key part of their strategies, with footprints that vary from a handful of stores for brands like Everlane, to Casper’s plans for 200. In many cases, the brands have come to see brick and mortar as an essential piece of the puzzle, though with very different goals for the spaces than other retail sectors have had during their times of expansion.
In turn, DTC brands have taught pure-play physical retailers that the e-commerce experience is just as essential to their strategy as storefronts are. That’s led to a blurring of channels and even stalwart brick-and-mortar retailers like Costco finally building out e-commerce. It’s also primed consumers to look directly to brands for product, rather than to the retailers they often sell through. That’s perhaps best evidenced by Nike’s commitment to its Direct strategy, which came to a head with the November announcement that it would stop selling on Amazon.
2. Executive teams shift
Last year saw the highest number of CEO departures through November since Challenger, Gray & Christmas started tracking the numbers in 2002. The firm’s November report recorded that 1,480 CEOs had left their posts up to that point in 2019, 12% more than during the same timeframe the prior year and just four short of the previous full-year record, from 2008.
