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These are my six predictions for retail in 2020.

Prediction #1: Stores will evolve into places to experience products.

Stores will evolve from places to buy products to places to experience products. The Apple store is a great example, where trained staff help you experience the products and learn how to use them. Costco has their version of this with in-store sampling to let you to experience the food. Visual search will be important for fashion. Just take a picture of what you want and find similar items. Pinterest saw their search increase by 140% after implementing visual search. Augmented reality will make it easy to try before you buy. Toyota’s deploying augmented reality to test drive cars. Target, Lowe’s, and Amazon are all looking to augmented reality to address their 25% online return rates.

Prediction #2: Consumers’ expectations will continue to accelerate.

Consumers’ expectations for speed and convenience will continue to accelerate. Amazon Go’s “grab and go” concept will raise consumers’ expectations for both speed and convenience. Already, 51% of e-Commerce retailers are offering same-day shipping. Amazon again is upping the game with free one day shipping. Robotic process automation will be another area where retailers can increase speed and reduce operational costs. Gartner predicts that robotics will reduce operational costs by as much as 30% by 2024.

Prediction #3: There will be a vicious fight for the last mile.

There’ll be a vicious fight for the last mile. There’s already intense competition for that last mile. Delivery, in-store pickup, self-driving delivery cars, drones, and 3D printing all competing for that last mile. In-store pickup’s already been tried by more than two-thirds of Americans and half of them find it faster than delivery. On top of the convenience, Target’s found that their costs have dropped 90% when customers utilize in-store pickup. More digital stores will go physical. High online acquisition costs are driving direct-to-consumer manufacturers to open physical stores. Warby Parker, for example, originally an online-only store, now has more than a hundred stores. Nike announced it will stop selling on Amazon as they push shoppers to their new experiential stores. Walgreens is testing store-to-door drone delivery in Virginia.

Prediction #4: Socially responsible shopping will influence purchase decisions

Socially responsible shopping will influence purchase decisions. Cruelty-free products, for example, are growing at 30% annually. Ethical and value-based brands like the Impossible Burger will continue to be the unicorns. Socially-responsible shopping will follow the path of socially-responsible investing, which was introduced in the 90s and is now over $12 trillion in assets under management and is still growing at 20% annually. There’s a big opportunity for the retailer that leads this trend. The second-hand market will continue to grow. It is projected to reach $50 billion by 2023. Generation Z just refuses to pay full price for apparel, and we see that resale apparel is growing 21 times faster than new.

Prediction #5: AI will be your new shopkeeper.

AI will be your new shopkeeper. AI will know you and what you want. Just as the old shopkeeper knew about your family and even your pets, AI will understand you, your personal health objectives, preferences, and even requests the retailer to carry new products that it predicts you will like. AI will make brands compete for every one of your transactions. Machine-to-machine negotiation will result in a win-win-win for the shopper, the retailer, and the brand. Stores will come alive and will sense and respond to shoppers. Facial recognition, sensing traffic patterns, out of stocks, the digital shelf edge will become pervasive.

Prediction #6: Retailers will compete on health.

Retailers will compete on health. As people take control of their health, food choices will change from traditional to nutritional. Mobile apps with wearables, AI, and digital assistants will guide you in making healthier food choices. Kroger already has a President of Health, and their tagline is “Food is medicine,” and they’ve began to take food prescriptions from doctors.

So those are my six predictions for 2020, it will be an exciting year!


Ken Ouimet

Founder and Executive Chairman of Strategic Planning