- Retail ecommerce sales jumped from 11.0% of total retail sales in 2019 to 14.4% in 2020. Will they be able to sustain these gains in 2021 as some consumers revert back to brick-and-mortar shopping?
- US retail sales will grow 2.3% in 2021.
- Do you work in the Ecommerce and Retail industry? Get business insights on the latest tech innovations, market trends, and your competitors with data-driven research.
When consumers started spending more time at home during the pandemic, many turned to new shopping behaviors, including buy online, pick-up in-store (BOPUS), contactless payments, and especially online shopping.
As a result, retailers have had to update their operational, merchandising, and marketing strategies accordingly—and this realignment will have a lasting impact on the future of retail.
In our Future of Retail 2021 report, Insider Intelligence takes a look at the trends influencing the retail industry, and shares which ones are expected to stick around post-pandemic.
Here are some key retail stats to know:
Retail trends forecast for 2021
We expect to see signs of progress for the US economy in 2021. This year, US retail sales are poised to grow 2.3% to $5.630 trillion.
Ecommerce sales will grow only 6.1% in 2021. That’s a relatively smaller percentage when compared to its 2020 growth rate of 32.4%. However, this doesn’t necessarily suggest that ecommerce is declining, but rather that retail companies will have to sustain inflated 2020 levels as buying habits normalize.
A comparison of our most recent ecommerce forecast from September 2020 with our pre-pandemic forecast from January 2020 suggests that there could be a longer-term acceleration of the market. We now expect that ecommerce will reach $952.76 billion in 2022, similar to what we had initially expected in 2023.
Retail trends for direct-to-consumer brands
While direct-to-consumer (D2C) brands have been a shining star for ecommerce in recent years, low barriers to entry have caused many competitors to step into the ring and forced marketers to rethink once-effective social media marketing strategies.
Prominent companies like Peloton, Chewy, and Glossier have gone above and beyond with their marketing tactics to win over customers despite the D2C disruption.
To remain competitive, legacy retailers are ramping up their D2C offerings as well; Nike is a prime example of a power brand that has leveraged a D2C strategy, as these sales were expected to account for 33.1% of the company’s revenue in 2020.
As more retail sales take place online, disruptor brands will have to use additional first-party data, secure strong customer relationships, and expand their margins in order to keep up with more established companies.
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How click and collect is impacting retail
Even before the pandemic, click and collect, also referred to as BOPUS, was a growing retail industry trend among US consumers who enjoyed the ease and cost-savings of purchasing items online and picking them up at their convenience.
The pandemic quickly turned this behavior from an option into a necessity, especially for essential goods and groceries. Logistics networks faced the challenge of supporting the influx of ecommerce demand, amid shipping delays and scarcity of online delivery windows.
Click and collect and curbside pickup became the key for these companies to get retail orders in the hands of millions of consumers. Click and collect rose from 18% in February 2020 to a high of 22% in June 2020—a level that was sustained through October.
Post-pandemic, these habits will likely stick. According to July 2020 data from GlobalData, when asked which behaviors consumers expect to do more often once things have returned to normal, 68.2% of US adults said curbside pickup and 59.6% said in-store pickup.
Digital fitness will be trending in retail
Connected fitness is one of the most popular trends to come out of the pandemic. This is due in part to social media, which made fitness something to share—whether it be for accountability purposes or for consumers to just show off their dedication to their workouts.
Leading power brands—including Nike, Lululemon, Peloton, and Apple—were especially successful during this time due to their aspirational sentiment, loyal followers, high quality content, superior digital technology, and community-oriented approach.
Peloton has been extremely profitable during the pandemic, but even more impressive are the company’s usage metrics that show that people are making good use of this product. Over the yearlong period ending on September 30, 2020, total connected fitness subscriptions doubled from 563,000 to 1.3 million, while the average monthly workouts per subscriber increased from 11.7 to 20.7.
What’s more, nearly two-thirds (64%) of digital fitness subscribers said they intend to maintain their subscriptions post-pandemic, according to an April 2020 survey from The Harris Poll.
Buy now, pay later is trending amongst retailers
Amid job loss and the cancellation of in-person events, customers have become more cautious and strategic about their retail spending, and have gone so far as to try out alternative forms of financing.
Buy now, pay later (BNPL) has emerged as a budget-friendly financing alternative that breaks payments out into more digestible installments. A July 2020 survey conducted by The Motley Fool via Pollfish revealed that the top reasons US consumers used BNPL was to avoid credit card interest (39.4%), or to better fit purchases into their budgets (38.4%).
Jon Chang, global head of shopping growth marketing at payments solutions provider Klarna, shared that BNPL performed especially well in the beginning of the pandemic in categories like beauty, home decor, athleisure, and home fitness. As more brands begin to offer this option, and more consumers gravitate towards it, we’ll see a surge in demand for purchases where installment plans make sense, like clothing and accessories.
In fact, sales of apparel are expected to rebound as people return to the office, go out to restaurants, and attend seasonal events such as weddings. Consumers will also be itching to take big trips, and will need to find new ways to finance this. Retailers will be incentivized to leverage BNPL solutions, in order to reap the benefits of this promising market.