5 Challenges Retailers Will Face in 2021 and How to Avoid Them

Take the steps to address these challenges before they derail your customer experiences.

Written by Philip Jackson
Published on Mar. 26, 2021
5 Challenges Retailers Will Face in 2021 and How to Avoid Them
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The decline of shopping at brick-and-mortar stores has led to a rise in online purchases and the proliferation of e-commerce platforms. As a result, we have witnessed companies beginning to scrutinize their digital experiences and siphon funds toward that effort.

But through our research and recent work with top brands, we must preach caution: Budgets are tight, and you can’t afford any mistakes.

Avoid hiccups by checking out our list of the top five problems your brand will face in 2021, and take the steps to address them before they derail your customer experiences.

Related ReadingE-Commerce Trends Changing How We Shop


The Return to in-Store Shopping

Maintaining a digital presence has become a minimum during the pandemic, as in-store shopping was largely put on hiatus. And it is becoming clear that these changes are here to stay: According to an October report from the United Nations, 53 percent of those surveyed plan to continue their COVID-driven habits after the pandemic. But that’s not to say that consumers aren’t ready to shop in-store as well: Expect to see many returning throughout the rest of the year.

Businesses have a tremendous opportunity in this digital commerce landscape. While the cost of acquisition is high, retailers are able to mitigate much of that amount by investing in wholesale, retail and other omnichannel areas of focus. A dollar here saves hundreds down the line.

The first step you should take to address this situation is to sync the online and in-store shopping experiences so that, no matter how customers interact with you, they are part of a concerted effort to secure and retain business. Your customers’ expectations and preferences are changing. Does your existing e-commerce solution allow you to keep up with their demands and channels? A strong CX and commerce strategy will help you understand your customer acquisition channels, guiding them between the channels that are best suited to meet their needs.


Every Interaction Is Digital Now

Even in-person interactions do so under a “digital veneer”: The ability for customers to identify products online to pick up in-store guides each interaction.

This presents many benefits in perfecting the customer journey over time. Because customers are alternating between online and offline, any data collected paints a more complete picture of what your customer journey looks like, and the digital aspect means you can really drill down to what makes these customers tick. Gathering first-party data allows you to segment your customers and market more effectively, drive loyalty and lower your cost for customer acquisition.

But the real hurdle is that customers have been conditioned by the “Prime effect” — the fact that Amazon makes it super easy to not only order but receive your items quickly, and usually for free. It’s nearly impossible for any other company to keep up with their own e-commerce offerings or interfaces, which have all begun to resemble one another.

We recommend evolving your experiences to seamlessly extend your offline business into the online world. We recently found success with this strategy when working with Cost Plus World Market on presenting a robust, remote holiday shopping experience in the middle of the pandemic. The resulting digital product was engaging and full of holiday cheer, and the experience garnered customer praise across social media.


Experiential Spending Is Evolving

The pandemic drove customers inside and paused many planned in-person experiences. As a result, spending on digital goods skyrocketed in 2020 to more than $860 billion — a 44 percent increase over 2019, according to Digital Commerce 360. Spending went up on home items for the kitchen, bedroom and bathroom. Much of this remains in flux, as those starved for travel might resume spending soon, which could redirect disposable income away from domestic spending. Higher unemployment numbers have also had a big impact on spending, as people are prioritizing essentials.

Take comfort in the fact that there are still plenty of pandemic-proof categories that will continue to grow regardless of how this shakes out. Other than home, these include beauty, fitness, health and wellness. At the same time, digital goods, services and subscriptions are grabbing a larger share of the wallet.

Our process is guided by our latest research report “New Essentials,” which details the areas that consumers are prioritizing so brands can understand how consumers are making product and service decisions.

Consumer perceptions of importance, priority and necessity have been redefined. Brands that respond to the shift in these sensibilities will be poised to earn their loyalty. We help clients simplify and modernize their complex legacy platforms to improve their ability to adapt to changing customer needs and deliver a unified, modern customer experience that increases conversions and brand loyalty.


The Privacy Wars Rage

Facebook, Apple and Google are embroiled in a war over the future of privacy. Apple is in the process of changing the default privacy settings in iOS so consumers have more control over what they are sharing and don’t have to go through the extra step of opting out. Google has wandered into the fray, committing to changing its defaults for third-party cookie web tracking.

The fallout is apparent: Retailers are already seeing noticeable effects on revenue. Advertising networks are already seeing dropoff, causing attribution issues for marketers looking to track ROI and spending. They are no longer able to precisely target consumers and collect the kind of data that would inform future efforts. Without those analytics to guide their efforts, they are pulling ads and, ultimately, dollars from these social media networks.

Consumers, though, are thrilled with these changes. No longer will intrusive, creepy ads appear for products they had just purchased or recently viewed.

At Rightpoint, our work is specifically targeted to appease consumers while maintaining privacy. Our Commerce Strategic Engagement Group (SEG) can help determine your digital maturity, define a road map for growth and balance investments in e-commerce. They collect relevant data points that focus on customer retention, then define key indicators, like lifetime value (LTV), to help brands effectively manage their spend. The goal is to ensure no dollar is wasted.


Social Commerce Will Explode in 2021

Thanks to shifting consumer behavior, the number of channels that brands and retailers must focus on is growing larger every day. There’s no telling precisely when a consumer will be making a purchase decision, so brands are enabling consumers to make frictionless, impulse-driven purchases wherever they are.

Social media networks have become marketplaces worthy of investment, though the ideal amount is unknown for the moment because the corresponding metrics and analytics remain opaque. As a result, companies are hedging investments — particularly given the changes to privacy outlined above and the potential of facing a lower average order value (AOV).

Our aim is to guide brands in understanding the value of their social media as an organic tool for acquisition. To that end, our insights-driven analytical offerings present all the relevant data in one place to better guide which channels are worth the investment.

By taking steps to address each of the focus areas above, your brand can protect your customer experiences and position itself for success in 2021.

Before You Go Somewhere BoringHow Will Customer Experience Evolve in 2021?

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