CMO by Adobe talked to CMOs and commerce executives about the biggest trends anticipated in 2020.
Last-Mile Becomes A Competitive Differentiator
When consumers place an order today, “they assume they’re going to get it and get it quickly,” said Gary Specter, vice president and head of global commercial business at Adobe. Whether it’s buy-online-pickup-in-store (BOPUS), micro-fulfillment centers, in-store lockers, or new distribution partnerships, looking ahead companies will create more decentralized models, experts said.
“This started as a problem most acute for grocers that is quickly gaining mindshare as retailers across markets like general merchandise and apparel realize the massive potential for broad application," said Mark Diehl, market development director and retail expert at Dematic, which provides logistics solutions. “We predict remote, rural distribution centers will become an increasingly outdated model, with a new focus on solving e-commerce pain points with solutions near the end consumer.”
BOPUS was cited as the most valuable aspect of the retail shopping experience for more than 40% of consumers surveyed for a February 2019 report from iVend Retail. Some brands are also partnering with retailers to drop-ship items ordered online or in stores directly to customers—a trend Lydia Park Luis, CEO of Jack Rogers, said she’s eyeing.
“Drop-ship in wholesale is growing with ‘mono-brand’ stores like J. Crew and Anthropologie opening marketplaces on their sites,” Park said.
Recent investments in better inventory management systems and processes also will make this transition easier, said Vic Drabicky, founder and CEO of New York-based agency January Digital. Still, it may require some brick-and-mortar makeovers.
“Companies [will] need to think of stores as distribution centers and warehouses—even going as far as to equip locations with pick-and-fulfillment functionality—while maintaining the appearance of having adequately stocked shelves,” said Toni Thompson, president of RRD Retail Solutions. “Additionally, we’ll see retailers shift floor plans so that pickup and return areas are upfront or even follow a drive-through model, eliminating the need for a customer to have to walk through the full store just to return an item.”
Reverse Logistics Gets Real
Speaking of returns, many companies are struggling with the volume of products consumers are sending back.
“If you’re trying to grow your company, this is a big cost center,” Adobe's Specter said. “Companies will have to get creative about how to handle it.”
Amazon and Kohl’s, for example, have partnered up to create mini return centers to address this growing problem.
“There are millions of variables and problems that come with reverse logistics, but most of them come down to knowing what to do once items are returned,” Dematic’s Diehl said. “Some products could be returned to a finished goods warehouse, whereas defective merchandise could go to a location to be refurbished or recycled. Ideally, retailers want a way to process goods back into their supply chain quickly and as close to full price as possible.”
Some innovative solutions are emerging to help retailers with moving, testing, repairing, restocking, or disposing of products.
“In 2020, retailers who invest in technology to optimize this process will see increased revenue and, perhaps most importantly, an improved customer experience,” Diehl said.
Many retailers, including Macy’s, Warby Parker, and Ikea, have rolled out augmented reality tools to give customers a better sense of a product before they hit “buy” online. “AR can help shoppers make more informed purchase decisions and help retailers rein in the product return phenomenon," Specter said.
Customers Will Vote With Their Values
According to Forrester analysts in the firm’s Predictions 2020: Retail report, customers actively research and buy products with corporate values in mind, from choosing products that are environmentally friendly and locally made to understanding corporate values around what they do and don’t produce and sell. The question is whether brands will invest enough to digitize their supply chain to balance cost, lead times, and sustainable production practices.”
That’s top of mind for cosmetic brand CoverFX CEO Emily Culp.
“We are proactively sharing with consumers where we source our ingredients, making sure that they know that we are cruelty free, vegan, and—most importantly—high-performance, too,” Culp said.
Customers want to align their values with a brand’s purpose, added Mousumi Behari, strategy practice lead at Avionos.
“And if they can help someone else in the process, even better,” Behari said. “Bucketfeet, for example, has artists design the shoes and gives back to the artist community. Reformation creates sustainable clothing that reduces waste for the environment, setting itself apart from other apparel retailers."
Cross-Border Commerce Drives Growth
The convergence of new payment technologies, the ability to accept foreign currencies, and a robust logistics provider network has opened up a world of opportunity for retailers.
“Since giant marketplaces like Amazon [Business] and AliExpress are expanding their presence in dozens of countries, other retail companies need to understand that their consumer market is the world, not just their country,” said Andre Boaventura, CMO for Brazilian fintech EBANX. "Over the next few years, retail will face logistics, payment, and tax barriers, but those companies who persist and find models to sell globally will get the biggest piece of the pie.”
By 2020, the total addressable market for any retailer should be the globe, he added. Looking further out, cross-border shopping will make up 17% of e-commerce in 2023, according to Forrester.
“Technology now allows companies to branch out,” Adobe’s Specter said. “If I were opening up a commerce store, I would see cross border e-commerce as a great way to grow.”