By Ian McGarrigle, chairman, World Retail Congress, using data from the World Retail Congress: The Retail World 2020: End of Year Report
The big retail story of 2020 was without doubt the massive acceleration of the move to online, as locked-down consumers around the world turned to digital channels. But looking back over the year, how should we view what actually changed and how should retailers ensure they continue the momentum behind their e-commerce? Nick Everitt, director of advisory, EMEA, Edge by Ascential shares their latest data and insights to provide a picture of the year the world shopped online, looking at what are the learnings from that for the year ahead and some themes on how retail will evolve in the coming months and years.
The past 12 months have been a year when bricks and mortar e-commerce gained significant share, as retailers were forced to increase capacity overnight as demand switched from stores to online.
As consumers worldwide flocked to e-commerce in 2020, we saw online retail move further beyond its traditional focus on functional shopping events and greater interaction. One component was a renewed effort in shopping festivals, resulting in the festivalisation of retail in the fourth-quarter peak.
The festivalisation of shopping
Global shopping events were more popular than ever before and perhaps provide a blueprint for how consumers will predominantly make more non-essential purchases such as apparel and beauty moving forwards.
Amazon’s Prime Day was postponed from June to October as a result of the pandemic, and despite the delay and a much shorter run in, was still the biggest Prime Day ever – achieving sales of over $10bn, whilst sales from third-party sellers were 60 per cent higher than last year.
Alibaba’s Single’s Day also broke records, with sales exceeding $74bn (up to 26 per cent versus the same period a year ago). This year’s event was extended to 11 days reflecting the shift seen in other markets towards a more prolonged promotional calendar, while JD.com also posted record results for its event with GMV of $41bn (up 33%).
International brands took centre-stage across Alibaba’s event, with 31,000 overseas brands participating, benefitting from the significant demand from Chinese consumers unable to travel. US brands led the way, generating sales of $5.4bn between them – the largest contribution of any overseas market.
Apparel and beauty brands posted particularly strong results, with Adidas, Nike, L’Oreal and Estee Lauder all achieving sales of over $14.9m.
We also saw significant growth this year of Black Friday and Cyber Monday’s events, with Adobe estimating that online spending on Black Friday in the US grew 22 per cent to hit a new record.
However, it is the growth of Single’s Day in China which shows the scale and power of coordinated online-first events. As Alibaba continues to evolve the festival, we will see more brands partnering to drive their digital transformation in the world’s largest ecommerce market.
Amazon Prime Day 2020
- Took place over two days (13-14 October) across 19 countries
- Generated an estimated $10.4bn of sales, up 45% from $7.2bn in 2019
- This was the biggest Prime Day ever
Alibaba Single’s Day/Global Shopping Festival
- Originally a 1 day festival this year it was extended to 11 days
- Achieved GMV sales of $74bn up 25% vs the same timeframe in 2019, attracting 800 million consumers
- 31,000 overseas brands took part with US brands generating sales of $5.4bn
JD.com Single’s Day 2020
- Event was also extended to 11 days from 1-11 November
- Achieved sales of $41bn up 33% on the 2019 event
- Across 24 hours in November GMV increased by more than 140%
In addition to these hugely popular shopping festivals setting a precedent for shopping in 2021 and beyond, Ian McGarrigle, Chairman, World Retail Congress looks at three other key trends making their mark on the global retail landscape.
The diversification of the luxury market
Digitally enabled purchases will represent up to 50% of sales in 2025. This poses a question on the role and purpose of the physical store in the customer’s retail journey.
If stores become simple parts of the brand’s relationship to customers, chances are that luxury brands will be stronger in negotiating with retailers.
In 2020, 57% of luxury customers are 35 or younger – they embrace a new set of values – inclusion, activism, sustainability that imply adaptation from brands and retailers. Three impactful ways in which global luxury brands diversified into fresh millennial-rich territories are as follows:
• Balenciaga shows its collection in a video game and launched collectible items
• Dior launched a homewear line
• Gucci launched a film festival GucciFest featuring Harry Styles, Billie Eilish and more
In diversifying these luxury brands are seeking to broaden their audience and future-proof themselves by going beyond hospitality: luxury is not waiting for customers to come to it but is going to where they are.
The rise in ‘virtual’ shopping
Many retailers are now working hard to create more personal e-commerce experiences, as store closures and social distancing rules impact store traffic. Three recent examples are:
• Selfridges pivoted toward virtual personal shopping appointments
• Burberry partnered with Tencent to blend in-store shopping with online interaction at a new Shenzhen store
• AR innovations abound with Meitu’s virtual makeup tool, Fision’s body-scanning app that recreates a dressing room experience at home.
With audiences of social media platforms only continuing to rise during the pandemic, retailers are becoming wise to the huge ecommerce opportunities that lie within for shopping.
The growth of e-commerce integration in social media
- TikTok recently partnered with Shopify allowing users to purchase items through the app
- DroppTV – the first ever shoppable streaming video platform launched in Sept allowing artists and brands to create virtual pop up shops within music videos
Agility is key in today’s retail world and being able to quickly adapt responsively is what will set the successful apart from the not so successful over the coming post-pandemic months ahead.