Rocked It! Revisiting Our 8 Retail And Retail Technology Predictions To Watch Out For In 2021
In January of 2021, I set out to make some retail predictions that were not slam dunks, but hopefully provided unexpected insights into the future of retail and retail technology. Let’s see how my 2021 retail and retail technology predictions did.
5.5 Out Of 8 (68%) On 2021 Retail Predictions
✅ 2021 Retail Spending Will Outpace Top End Estimates As Stores Scramble To Recapture Profitable Shoppers - YES! Retail is growing at its fastest pace in 30 years. Estimates kept increasing throughout the year and blew past early 2021 predictions by a large margin.
❓5G Gets Real And Accelerates IoT Adoption By Order Of Magnitude - Chip shortages delayed the biggest 5G rollouts, but if you invested in Qualcomm you did quite well. IoT is being adopted at the fastest rate in history and is transforming supply chain, logistics, and sales.
✅ The “New Normal” Means A Faster Pace Of Retail Technology Rollout - Retail technology investment is up 3x YoY. Supply chain, logistics, robot delivery, inventory management, predictive data, AR, NFTs, and so much more are becoming common place. What an exciting time!
❌ Retail Technology Finally Empowers The Retail Sales Associate Customers Deserve - While new tools were delivered this year, retailers were more focused on supply chain shortages and eCommerce than in-store sales reps. Will this happen in 2022? Maybe not.
✅ Local Stores Will Become Broadcasters And Narrowcasters - We saw social shopping streaming from Neiman Marcus, Nordstroms, Walmart, and many others. Social shopping exploded on Intagram, TikTok and even Twitter.
✅ Major Retailers Will Start Providing Payment Services Directly - This may have been the biggest prediction win because this was one wasn’t on most pundits radar. Buy Now Pay Later blew up in 2021, Amazon is fighting back against credit card fees, Walmart got into insurance and AMC is now taking crypto. Next up, banking for the underbanked.
❌ Amazon Will Make A Big Move In Brick-And-Mortar. What Will It Be? - While Amazon expanded Amazon Go to 3x larger footprints and announced a department store concept, overall it hasn’t made any groundbreaking move, and its physical retail business is shrinking year-over-year - not a good look as they lost eCommerce share to physical retailers. Will Amazon wake up in 2022 or stay sleepy to avoid regulation?
✅ A New Model Of Restaurant Group Snatches Up Empty Storefronts At Scale - Covid drove revolutionary delivery growth and a new wave of virtual restaurant rose to take partial share of existing restaurant kitchens with created demand from social media stars like MrBeast. TikTok opening up hundreds of its own restaurants? You better believe it.
So looking back, I am pretty proud of my 2021 predictions. I didn’t cherry pick no brainers like supply chain infrastructure, and instead took some big swings. Hopefully, they guided your vision for the future. I am looking forward to my next ones for 2022. Coming soon…
Read more below for detailed analyses on each prediction. Check out our 2022 Retail And Retail Technology Predictions.
✅ Retail Prediction 1: 2021 Retail Spending Will Outpace Top End Estimates As Stores Scramble To Recapture Profitable Shoppers
Big sub-predictions from this one:
✅ Retail will beat top end projections for growth
✅ Holiday spending will start much earlier than Black Friday
✅ Physical retail sales growth will outpace eCommerce on a dollar basis.
Nailed it.
Retail grew the fastest on a 2-year basis in 30 years, as service spending shifted to goods. Forget eMarketer’s predictions of 2.3% growth in 2021. NRF upped its initial predictions every quarter, to 6.5% in February and then 10.5-13.5% in June and holiday spending growth set spending records yet again.
NRF holiday projections were for 11.5% YoY growth, handily beating the last 20 years growth rates of 2-5% and last year’s 8.2%. Holiday spending began much earlier as predicted, with sales starting early in October, which made Black Friday relatively flat year-over-year.
And perhaps the most shocking prediction was that brick-and-mortar would grow faster than eCommerce on a dollar basis. Sure enough, that’s the case and then some. At Target, brick-and-mortar is growing 5x more on a dollar basis than eCommerce. But that’s also because brick-and-mortar is much bigger. What was really shocking was that in Q3 2021 brick-and-mortar grew faster on a percentage basis for the first time since 2008!
❓Retail Prediction 2: 5G Gets Real And Accelerates IoT Adoption By Order Of Magnitude
❌ 5G rollouts would exceed expectations
✅ IoT would have an order of magnitude acceleration
IoT became more ubiquitous in 2021, but 5G wasn’t as much a driver as expected. Chip shortages delayed bigger rollouts including Walgreens ambitious project to light up 9,000 stores. But IoT had its biggest year ever. Cameras are increasingly ubiquitous and cashierless checkout is being expanded to larger format stores. Inventory robots are more common and we saw the beginning of autonomous robots for delivery at greater scale.
✅ Retail Prediction 3: The “New Normal” Means A Faster Pace Of Retail Technology Rollout
The pace of retail technology delivery is faster than ever. In every dimension, retailers and brands are expanding capabilities faster than ever. In marketing, social selling, shoppable video, NFTs and advanced customer data capture were key technology areas that were advanced. In operations, cashierless checkout grew, contactless payment was universally adopted, buy now pay later saw billion dollar growth, RFID continued record adoption, and supply chain and logistics management became more advanced. Across every area of the business, technology underpinned a rapid transformation of greater customer value and increased efficiency.
❌ Retail Prediction 4: Retail Technology Finally Empowers The Retail Sales Associate Customers Deserve
I was told by Ricardo Belmar that this prediction is one we keep on talking about but never comes. He thought I was being optimistic, and by and large he was right. Retailers were more focused on supply chain challenges and logistics than sales associate tools and education. When it came to sales associates, retailers instead faced labor shortages, forcing them to respond with greater hourly wages, enhanced benefits like college tuition and training programs. It’s hard to tell a patient to go to the gym and get stronger when they are hemorrhaging blood at historic rates.
The easy thing would be to push the prediction to 2023, but I am afraid Ricardo may be right. And like they say, “once bitten, twice shy.”
✅ Retail Prediction 5: Local Stores Will Become Broadcasters And Narrowcasters
2021 was the year that social shopping finally became real. Integrations from Shopify and other eCommerce platforms onto TikTok, Instagram and Snap. Tik Tok added affiliate link tracking for transaction tracking. The technology infrastructure has just begun to catch up to the hype.
And so retailers big and small responded, mostly testing the waters but doing so with real budgets and scale. Nordstrom launched it’s own shoppable video service on Nordstrom Live featuring store members, brand content and more. Walmart which had already done a shoppable Tik Tok, launched a social shopping channel on Twitter. Petco organized a pet fashion show on Facebook Live. Big and small, video content is being enabled throughout the store via collaborations with influencers and with tours by sales associates.
Why all the investment? Social shopping is projected to be $51.2 billion in the US this year.
✅ Retail Prediction 6: Major Retailers Will Start Providing Payment Services Directly
I predicted that “tea leaves point to big opportunities for retailers to vertically integrate payments into their operations and customer loyalty” and sure enough we saw a lot of movement in the space. Affirm, Klarna and Buy Now Pay Later has been integrated into retailers across the globe at a fiery pace. Providing integrated financing options is now table stakes to attract customers and increase conversion.
Walmart is providing new options for financing equipment, bundling cable and telco services and even getting into the health insurance game.
Crypto is now mass market too, with retailers like Home Depot, Starbucks, AMC and Burger King all accepting bitcoin, ethereum and other currencies.
And most telling of all is Amazon is fighting back against Visa and stopping taking Visa as payment in the UK. Yes, this is a lot about hard tactic negotiation of fees, but what’s driving that negotiation is a fundamental shift in who has power in the relationship as retailers have more options than ever and ownership of the customer and data is paramount.
❌ Retail Prediction 7: Amazon Will Make A Big Move In Brick-And-Mortar. What Will It Be?
Well, what could have been a wise business move may been untimely with additional scrutiny and anti-trust concerns heating up. Amazon took 19% of seller revenue in 2014 and now takes 34%. Of course, that’s from more value-added services like inventory, shipping and logistics.
Even though Amazon has lost eCommerce share to physical retailers in the pandemic and is back to its original pre-pandemic trajectory, the perception is that Amazon has unfairly profited from the pandemic and a monopolistic position.
And so Amazon was conservative again this year when it came to physical retail. It expanded AmazonGo to Amazon Fresh, a much larger format store, and to Hudson News in airport retail, where Amazon does not compete. It also announced a potential “department store” format, that looks to be more of an inventory clearance channel than a market capturing strategy. And the most exciting update to 4-star stores and Amazon books is a new way to checkout with your palm-print - hardly revolutionary in any way.
Amazon didn’t do anything big in 2021 and as a result, it’s physical retail sales continue to be the glaring line item that is showing negative growth. Will it be more aggressive in 2022? There remains a huge opportunity, but I am not sure the regulatory landscape has changed nor its appetite to go bigger in brick-and-mortar given it’s failings with Whole Foods.
✅ Retail Prediction 8: A New Model Of Restaurant Group Snatches Up Empty Storefronts At Scale
Covid has been an incredible catalyst for food delivery. Uber’s purchase of Postmates may go down as one of the best acquisitions of the modern era, potentially saving the ride sharing leader. When I walk into our local Sweetgreen in NYC, as much real estate is dedicated to pickup and delivery as those ordering in person. And the two open retail spaces across from our building will be occupied by “ghost kitchens,” restaurant spaces dedicated to only pickup and delivery. And so it is not surprising that ghost kitchens, which had seen some modest traction pre-covid have blown up nationwide - and there are several players and models that made waves.
In quick service restaurants, Wendy’s announced opening up 700 ghost kitchens. In grocery, Kroger began launching its own ghost kitchens, wisely creating production near ingredients and being able to better predict demand and utilize produce. And DoorDash even started competing with its network of restaurants with DoorDash Kitchens.
That said, the most interesting model is to use other restaurants’ existing kitchens as production. MrBeast Burger scaled to 1,000 locations in less than a year, by creating demand and sending it to existing kitchen partners, thereby helping monetize existing real estate and creating demand for struggling kitchens during Covid. The value is in generating customers through online engagement and that’s something MrBeast has been able to do and then some (check out his real world Squid Game which has 176 million views, more views than Squid Game itself).
And if demand is the name of the game, who better to enter the food delivery and ghost kitchen game than TikTok itself! TikTok is opening 1,000 such virtual kitchen locations with the same company behind MrBeast Burger, Virtual Dining Concepts. They will see what food is going viral and offer it directly. For example, baked feta pasta was the #1 searched food according to Google, and so that may be a part of the seasonally changed menu.
What’s fascinating here is that the physical world is being split up into the software equivalent of micro-services. Just as Walmart is splitting up its business as micros-services by offering delivery services for other retailers, a marketplace for brands, an advertising service for brands and agencies, etc., restaurants and restaurant groups are offering up kitchen capacity to third parties for production.
So sure enough, an entirely new virtual restaurant model is taking the world by storm and it is absolutely fascinating to contemplate how it will scale and change the way we think of local restaurants, kitchens and delivery.