By Joe Farrell, VP of international operations at PFS.
Amidst ongoing political turbulence and the continued transformation of the modern high street, 2019 was a challenging year for retail to say the least. Brexit uncertainty, combined with the growing customer demand for sustainability and superior levels of customer service, has put substantial pressure on embattled retailers.
But the outlook for retailers is not entirely bleak. ECommerce sales continue to drive retail forward, with recent reports suggesting sectors such as Health & Beauty continuing to see growth despite challenges in the marketplace.
Here, we reflect on four key trends and challenges the retail industry has faced over the last year, how these have impacted the industry, and the learnings that can be taken into 2020.
1. Brexit uncertainties have put pressure on consumer buying behaviour and cross border trading
Brexit along with fears of a no-deal departure from the EU have certainly had a significant impact on the retail industry in 2019. Thanks to a fall in demand earlier this year from shoppers in light of ongoing economic uncertainty, retailers were forced to reduce prices in order to entice shoppers prior to peak season trading. According to the BRC-Nielsen Shop Price Index, prices dipped for a sixth month in a row this November, putting even more of a squeeze on online retailers to tighten up processes and boost operational efficiency.
In addition, following the delay of Brexit, not once but twice this year, at the end of March and then again ahead of peak season trading, many online retailers chose to stockpile goods in anticipation of stricter border controls, potential new tariffs and the associated paperwork. This caused increased pressure for retailers whose warehouses were already likely to be full to the brim ahead of Christmas.
To overcome this challenge, without the need for permanent investment, temporary distribution solutions will become crucial to reach customers across seas despite potential supply chain disruptions. Moving forward into the new year, having flexibility when it comes to online order fulfilment will be crucial not only to ensure consumer demand is met, but also to help brands remain profitable amongst further economic unsteadiness.
2. Social commerce has grown in popularity
The way brands interact with shoppers is constantly changing and 2019 has certainly witnessed a rise in online brands utilising social platforms in order to not only reach their customers, but offer a new and convenient shopping platform.
Earlier in the year, Instagram unveiled a new feature that makes it possible for consumer to shop without leaving the app. This feature, which had previously only been available in the US, has now been introduced in the UK, Australia, Brazil, Canada, France, Germany, Italy and Spain – a clear indication that social commerce is on the rise.
The real test however, for brands adopting social media to sell their products, is ensuring the fulfilment of the order matches the speed and convenience in which they are bought. How quickly the item is delivered, how easy it is to return, and the level of customer service along the way can make a lasting impression on customers and will be the key to social commerce success. For emerging brands, partnering with distribution providers is often a cost-efficient way of keeping up with the latest customer delivery expectations.
E-tailers who provide the optimum customer experience from the initial tap of the ‘Buy now’ button, to delivery and beyond, can expect to see a retention of customers, a reduction of end-to-end service costs, and overall customer satisfaction. With the number of social media users worldwide now at 3.484 billion and growing at a rate of 9% year-on-year, this is a platform brands simple cannot afford to ignore going into 2020.
3. Sustainability is a top concern for consumers
This year sustainability has been a key focus for retailer across all industries, with many high-profile retailers leading the way to combat environmental issues. H&M is just one example – recognising that current packaging initiatives just weren’t enough, this fashion giant set two goals for recycling packaging. First, all packaging will be designed to be reusable, recyclable or compostable by 2025. Second, their packaging will be composed of 100% recycled or sustainably sourced materials by 2030.
Thanks to the increase of readily available information, consumers are more educated than ever before when it comes to the impact of the entire retail supply chain on the environment. This sense of urgency around preserving the environment will only continue to grow in 2020, putting increased pressure on retailers to ensure all fulfilment processes are as sustainable and efficient as possible.
To boost sustainability in 2020, online retailers must be constantly re-evaluating the distribution chain. From sustainable packaging solutions such as air-tight flexible packaging that eliminate the need for an outer box – to distributed packaging models that eliminate a number of packaging steps in the supply chain. Opting for automated technology such as cloud-based order picking solutions can also help to boost distribution efficiency by increasing accuracy, and minimising waste.
4. Omnichannel has become the new standard
According to the Europe TOP500 Report 2019, fast free and convenient collection, delivery and returns are becoming the new standard for shoppers. In fact, findings from the report revealed that department stores offered more flexible delivery, collection and returns promises in 2019, with 88% offering click and collect services and more than half (54%) enabling shoppers to name their delivery day.
As consumer expectations continue to grow in 2020, retailers that help shoppers to buy in the way that is most convenient for them, will be the ones that stand out in today’s highly saturated eCommerce market. This means enabling customers to shop via a range of platforms including, in-store, online, on their phone or via an app and then being able to collect, and return either in-store or through a channel that suits them.
Whilst success is far from guaranteed for 2020, online brands that follow an innovative approach – from point of sale to delivery and beyond – will be best placed for future success. Ensuring lessons are learnt from the previous year, taking these learnings forward and adapting to market change are essential for retailers not only to survive, but to thrive in years ahead.
 EUROPE TOP500 REPORT 2019 - 2019 retailx.net, distributed by InternetRetailing.net