What are the big things to look out for in 2020?
By Ben Sillitoe
Predicting what is in store for retail is becoming an increasingly difficult task. One just has to look at how things panned out at the end of 2019 to understand the challenge of guessing industry performance.
IMRG’S very own forecasts for online retail during Black Friday week were arguably as subdued as they have ever been for a peak trading period, but the reality was that sales at the time jumped by 11.7% – and the feel-good factor remained throughout November.
What impact that had on sales in December and the direct build-up to Christmas is anyone’s guess, but the moral of the story is that retail is full of surprises. And that was emphasised further by fashion retailer Joules – a star performer of recent years – issuing a profit warning in January, off the back of an internal eComm malfunction.
So, against our better judgment, perhaps, we’ve dusted down the crystal ball to gaze at the year ahead. It seems the done thing to offer start-of-decade predictions, so we sought out insight from our members to understand what to look out for at the onset of the 2020s.
Events, dear boy
One thing we can all be pretty sure about is 2020 will be the year the UK officially starts the exit process from the European Union (EU). Prime minister Boris Johnson’s stonking majority in last December’s General Election has seen to that, much to the delight of Leavers and the continuing despair of many Remainers.
Although the process is set to take several years to complete, the wheels of the Brexit bus will soon be very much in motion – and it will affect business in many ways.
Tom Williams, head of eCommerce at online solutions provider Maginus, which announced in December it had been acquired by private equity firm Black Dragon Capital, says the “B-word” will have a significant impact on retail headlines, “as it will influence change all along the supply chain”.
“Taxation, logistics and suppliers will all be affected, so retailers will have to deal with these new fluctuations, which could impact price and availability, and therefore consumer satisfaction,” he adds.
On the subject of business levies, Richard Asquith, vice president for global indirect tax at Avalara, a software company helping retailers with tax compliance issues, draws attention to “four quick fixes” to business-to-business VAT rules on EU cross-border transactions, agreed by EU member states from the start of 2020.
“These changes will help reduce some compliance obligations for businesses operating cross-border supply chains,” he comments.
“It will, however, place new administrative requirements on them to ensure they can continue to enjoy VAT simplifications, such as zero-rating on intra-community supplies.”
Daniel Ennor, chief commercial officer at GFS, a delivery technology company, predicts 2020 will be the year we see “Brexit frustration finally boil over in the world of commerce”.
“Unable to wait any longer for government direction, more businesses and retailers will focus on international expansion and will seek ways to simplify cross-border delivery, as borderless trading within the EU ceases,” he notes, adding that he expects a growing number of retailers to expand their presence on marketplaces, notably US-based ones.
This year is also an Olympic and Paralympic year, and the summer will see Europe’s best football teams battling it out across the continent in a European Championship tournament, culminating in semi-finals and a final in London.
The UK’s most astute brands will be doing all they can to capitalise commercially on a bumper summer of sport.
Robin Martin, CEO of Intelligent Reach, which helps optimise and enrich retailer’s product data feeds, comments: “It’s the start of the year and with the Olympics on the horizon, retailers are reviewing their strategies to find opportunities to grow sales. This insight is provided by data and analytics – a retailer’s best friend.”
It’s the environment, stupid
As suggested on these pages, last year, and as evidenced in the raft of retailers putting a greater focus on their environmental impact, consumers’ mindset around the sustainability credentials of the products they buy is undertaking a sea change.
Alecxa Julia Cristobal, marketing content writer at AsiaPay, an electronic payment provider, states: “With the environmental debate that’s becoming a worldwide crisis, retailers are called to have sustainable advocacy in their business plan.”
While, arguably, this should always have been an important part of any retail business plan, drastic action is now being taken in some quarters. Some of the largest fashion businesses in the sector, H&M and Farfetch for example, are adding reused and recycled products to their inventories, and there are multiple campaigns calling on people to reduce the volume of items they buy in light of the carbon footprint created.
Against this backdrop, Matthew Robinson, Co-CEO of NetDespatch, the Royal Mail-owned shipping and parcel data management platform for carriers, predicts the delivery industry will be asked to look at how it can become more environmentally sustainable.
“Journey consolidation and smart routing for both delivery and returns, powered by artificial intelligence (AI), are promising more efficient, less polluting delivery options and we will likely see growing focus on this area as the year unfolds,” he says.
Joe Farrell, vice president of international operations at PFS, which offers fulfilment services to brands such as Asics, L’Oreal and Moleskine, doesn’t deny sustainability is an important focus point, but he says a priority for businesses this year is to shape their organisations and invest in technology so they can stay on top of any trends.
“Success in the next decade will be inherently tied to anticipating the changing preferences of consumers and delivering a personalised experience consistent with customers’ wants and needs,” he argues.
“Sustainability and health conscious products are two leading topics as we head into 2020, but the focus for shoppers five years from now will likely differ.”
Open doors of opportunity
Common retail parlance over the last decade has been “change”, and there are calls to continue the evolution as 2020 dawns. Most businesses seem aware of the changing landscape – be it in the form of consumer behaviour, new regulations, or additional competition – and headway is being made in reshaping their organisations accordingly.
One key element of retail change in 2020 relates to payments. The 14 September 2019 deadline for merchants across Europe to introduce the Strong Customer Authentication (SCA) requirement of the Second Payment Services Directive (PSD2) was extended by 18 months, and means retailers will be working to comply over the next 15 months in order to boost their consumers’ security.
Ralf Gladis, CEO at Computop, a payment services provider, calls the new regulation “a powerful shot in the arm for retailers for 2020”, as it potentially removes payment authentication from banks, placing it back at the point of purchase with enrolled retailers who can move to make the checkout easier and more secure.
“What’s also important about SCA, particularly for consumers who like to shop with a mobile, is the focus on using biometric authentication during log-in,” he adds, suggesting that biometric authentication will bring various benefits to retailers and consumers alike.
Joanna Bedward, eCommerce product manager for global payments provider, Elavon Europe, calls the latest version of 3D Secure “a massive improvement”.
“It actually takes account of shoppers buying from a mobile, and will be much better for reducing fraud without losing customers at the checkout,” she explains.
It’s not just payments technology that is evolving – there’s innovation across retail. Stephen Hill, senior eCommerce consultant at Vaimo, an omnichannel agency, predicts more growth in 2020 for retail subscription services, selling on social media, and mobile payments.
“Very soon mobile payments will become the norm – and entering card details will feel archaic,” he states.
Malcolm Berg, UK sales director at Stored Value Solutions, a gift card processing and programme management firm, expects the UK’s “love affair” with online shopping to continue in 2020, driven by sales made on mobile devices, with the winners likely to be “the brands offering the most seamless digital journeys, including physical-to-digital gift cards and the strongest social media profiles.”
Jason Fagan, marketing manager at eCommerce platform Kooomo, predicts growth in brands selling direct to consumers, and thus reducing the need for retail channels. Citing Nike as a prime example of this movement, he says: “We have witnessed a growth in this way of doing business over the years but now it’s solidly here.”
Maginus’s Williams and Matthew Furneaux, global commercial director at Loqate – a GBG solution, are among the industry folk expecting big things for voice-enabled technology in 2020. Williams says it will “become adopted more widely and now is the time to put the foundations in place, so when it takes off, retailers don’t miss out”, while Furneaux adds that “voice technology and the promise of widely adopted conversational commerce will create a new wave of eCommerce opportunity”.
Brendan Murray, content marketing manager at Akeneo, an open source product information management company, offers a holistic view: “As customers continue to head to new channels, powering newfound popularity in social commerce, voice-activated shopping, and virtual reality, for example, making consistent and compelling omnichannel experiences a must-have for B2B and B2C sellers alike.”
Retailers don’t really make new year’s resolutions; there’s no real delineation from one year to the next – it’s simply a constant slog to sell as much as possible and continue to engage consumers in the most relevant ways. That’s always the target no matter what new technology or events emerge, and many of our members suggest that relevancy increasingly centres on blurring the boundaries between online and physical shopping.
But as we’ve noted, some seismic events are on the horizon in 2020. The most successful retailers will take all this into account and have the agility to deal with whatever the year throws at them to keep their 2020 vision intact.