Retail 2021: Five Things We’re Watching

If a lesson could be learned from 2020, it’s the future cannot be predicted. The ability to react quickly to new challenges is critical to success. Retailers were hit especially hard with this realization over the past year. Those that survived quickly adapted to e-commerce, added or expanded curbside pick-up service and addressed safety concerns in their physical stores. Our BRR team also shifted to adapt to the needs of our retail clients. Our flexibility and innovative thinking allowed us to guide several retailers through these challenges – and do so quickly.

Now, many are asking “what will 2021 bring?” Our in-house Retail Innovation Team has been keeping a close eye on emerging trends and we’re watching the retail sector closely. Based on our combined experience, here are the top five things we think will shape the retail world over the next year.

Store-in-Store Opportunities
Though the store-within-a-store trend is nothing new, we see a continued increase in this trend as retailers are pairing like-minded (and some unlikely) brands to attract new customers. In 2021 there will be an influx of store-in-store opportunities, especially for retailers working through bankruptcy. Barneys New York, which filed for bankruptcy in late 2019, is finding new life as the “Barneys at Saks” in-store experience inside Saks’ new flagship store in New York City. The retailer promises to rotate merchandise and bring in new partnerships.

This trend provides an opportunity for brands that were not able to weather the pandemic at their brick-and-mortar stores, but still have loyal customers. Pop-up stores provide a strong market for struggling brands which want to open physical locations without the long-term financial commitment of maintaining their own stores. These models create a win/win as it expands the customer base and increases foot traffic for both retailers.

Outdoor Retail
Retailers will look to other industries, such as the restaurant sector and street fairs, and adapt with outdoor pop-up locations. As cities maintain restrictions on indoor gatherings and enforce social distancing, heading outdoors provides an opportunity for struggling brands to engage with their customer base in a safe way. Retailers will look to engage the streetscape and help revitalize the urban environment by bringing life to empty roads and sidewalks while also creating a sense of community with local flare. We predict that this trend will continue, especially as we approach warmer weather, into other urban markets and include fresh designs with unique brand partnerships.

New Opportunities for Landlords
Most landlords are dealing with the aftermath of closed retail shops. Many are looking for new business opportunities to keep themselves alive. Landlords are purchasing bankrupt retail brands to fill their properties. For example, Simon Property Group has formed a new company to create “an innovative business with the potential to disrupt various aspects of the retail industry”. While Simon has not disclosed which companies it will merge with, it is looking at many sectors including traditional retail.

With vacancies high, many landlords may rethink their types of tenants and consider Micro fulfillment, last mile delivery and even food halls to fill spaces that were previously dedicated to retail only stores. Multiple brands will be housed under one roof to create mixed-used spaces which cater to specific communities and their needs.

Experiential Retail
Consumer spending on experiences will continue, but evolve into spending their dollars on activities in the comfort of their own home thru digital and social platforms (social commerce). The ‘phygital’ (buzz word of 2021) customer experience is the blending of physical and digital retail environments. Retailers are looking to connect the online/offline experience so they can choose what works for them. Technology is playing a bigger and bigger part in the shopping experience whether customers are in a physical store or not. Retailers will look to this combination to create seamless experiences for their shoppers and create an immersive experience for the everyday. Augmented reality (think trying on clothes from the comfort of home), mobile apps to pick up merchandise and endless contactless shopping options will continue to rise, but the physical store will still be critical for the touch and feel interaction we crave.

Corporate Responsibility
Consumers are looking to retailers to be more transparent about their corporate values and ethics. This can be done through marketing campaigns, philanthropic initiatives and how they build and operate their brick-and-mortar stores. Sustainability will take a front seat in 2021 and many big name brands are stepping up to the challenge. For example, Amazon has committed to be net-zero carbon by 2040. Demonstrating sustainability not only in their operations, but also how they operate their business including distribution, corporate office and packaging. It’s all about building loyalty and trust for the brand.

To wrap up, 2020 changed the way people shop and procure their goods and that isn’t going away. 2021 will provide opportunities for retailers to continue to adapt and accelerate trends that have been coming to the market over the past several years. The retail industry has evolved to changes and consumer trends for decades. In 2021 and beyond, technology and adaptation of retail spaces will be the true keys to success.

About the Author:

Megan Whitman, AIA, IIDA, LEED AP ID+C, is a Vice President in our Kansas City office and has been with BRR for 14 years. She leads a team of designers working on projects for the firm’s grocery and retail markets. Megan is a top-notch client manager, exceeding expectations from project to project and delivering innovative design solutions which meet our clients’ needs. She currently leads a large, nationwide program for a national retailer, working in concert with the clients’ team on the multi-faceted and complex program. She is instrumental in the firm’s Retail Innovation efforts and helps research and implement innovative retail solutions for our clients. Email her.