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Future of Retail: 10 Trends for a Transforming World

March 25, 2021

Zia Daniell WigderSVP, Content

Nicole PerrinPrincipal Analyst

Brick-and-mortar shifts positive in 2021, while ecommerce growth continues• Growth rates for brick-and-mortar sales

will look much improved in comparison to declines in 2020.

• Ecommerce will remain healthy, but it’s important to note that growth rates will not look as strong, given the 2020 boom.

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Ecommerce sales in 2021 will inch closer to $1 trillion, with spending spanning categories• Total US ecommerce sales in 2021 will

surpass $900 billion.

• We’re seeing some post-pandemic trends emerging.

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The top 10 US retailers by ecommerce sales are constantly changing• Amazon retains the top spot by a huge

margin.

• Target joined the top 10 for the first time in early 2020—it’s since moved from No. 8 to No. 7 and most recently to No. 6.

• Others like Macy’s have fallen off the list.

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Three underlying themes will drive the top 10 trends of retail in 2021• Pandemic drives social and economic uncertainty: Consumer behavior will

normalize by H2 2021 with vaccines now rolling out nationwide.

• The reimagining of digital and physical retail: Brick-and-mortar’s forced adaptation to digital-first, frictionless, and contactless experiences will reshape physical retail going forward.

• Power brands redefine the landscape: The best-known digital retailers will continue to gain share, while top brands will move aggressively into D2C models and digital experiences.

No. 1: Click-and-Collect Momentum Will Drive Market Share Gains for Big-Box Retailers• Click-and-collect purchases

skyrocketed during 2020, with sales spiking by 107%.

• Walmart, Target, The Home Depot, and Best Buy have advanced click-and-collect operations that will drive market share gains as the behavior continues in 2021.

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No. 2: Frictionless ‘Stores of the Future’ Will Land and Expand• The pandemic has driven huge interest

in frictionless on-premise store technologies such as mobile payments, QR codes, and digital signage.

• Emerging frictionless store concepts like Amazon Go, Amazon Fresh Grocery, and Starbucks Pickup will roll out more widely in 2021.

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No. 3: Grocery Ecommerce Gains Will Evolve from Trial to Habit Formation• The pandemic drove a 42.6% increase

in new digital grocery buyers in 2020.

• Going forward, grocery’s ability to sustain strong growth will depend more on habit formation. Some consumers will revert to in-store shopping only, but others will buy online more often.

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No. 4: Global Ecommerce Will Continue to Surge; Latin America Is Now the Fastest Growing Region• The pandemic ecommerce bump was far

from a US-centric phenomenon.

• For the first time since we created this forecast, Latin America has appeared as the fastest growing region rather than Asia-Pacific.

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No. 5: Retail Media Trio Will Disrupt the Duopoly’s Digital Ad Market Dominance• Ecommerce channel advertising is

expected to jump 30% in 2021.

• Amazon—already No. 3 in the digital ad market—will be joined by Walmart and Instacart as key players in retail media. Consumer purchase data provides strong ad targeting and measurement, and Walmart and Instacart have the advantage of huge footprints of offline purchase data.

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No. 6: Media and Commerce Will Converge as Checkout Attaches to Shoppable Content• Social commerce is the best example of

media-commerce convergence, with purchase incidence growing from 13% to 25% over the past two years.

• Instagram Checkout has helped make conversions easier, and other media platforms are introducing their own checkout experiences.

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No. 7: The Rise of TikTok Continues• Adults in the US are spending more

time with TikTok per day than they are on Instagram and Snapchat.

• Add in younger consumers to adults, and brands are now at a point where they can’t ignore the platform.

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No. 8: D2C Startups Riding Ecommerce Wave Will Hit Stiffer Competition from Established Brands• Some D2C startups have had an easier

year in 2020 amid the ecommerce boom.

• But the ecosystem is growing more competitive with new brands emerging every day, plus established brands like Nike, adidas, Lululemon, and Levi’s making a big push into D2C sales.

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No. 9: Premium Subscriptions Will Drive Cross-Channel Loyalty for Leading Retail Brands • Top retail brands all want their own

version of Amazon Prime to drive brand loyalty and recurring revenue models.

• Walmart+ and Apple One are the next big subscription bundles. Walmart+ isn’t a zero-sum competitor with Prime–there is room for both.

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No. 10: ‘Buy Now, Pay Later’ Options Got a Bump During the Pandemic• A variety of players now offer solutions

in this space, including Affirm, Afterpay, Klarna, Sezzle, Splitit and Quadpay.

• The pandemic saw big bumps up in active customers for some providers like Afterpay.

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Top 10 Trends that Will Shape Retail in 20211. Click-and-collect momentum will drive gains for big-box retailers.2. Frictionless “stores of the future” will land and expand. 3. Grocery ecommerce gains will evolve from trial to habit formation.4. Ecommerce around the globe will continue to thrive.5. Retail media trio will disrupt the duopoly’s digital ad market dominance.6. Media and commerce will converge as checkout attaches to shoppable content.7. TikTok’s rise continues as per-minute usage surpasses others.8. D2C brands will hit stiffer competition from established brands.9. Premium subscriptions will drive cross-channel loyalty for leading retail brands. 10. “Buy now, pay later” adoption is continuing to increase.

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