2021 Ecosystem Predictions — Less is More
The first trend I anticipate for 2021 in e-commerce and retail is that delivery will be unlike anything you’ve ever seen. Adopting the innovation happening right this moment in delivery will become a leading competitive advantage for companies and dramatically change purchasing behavior for consumers. Take the elephant in the room, Amazon. I often make the analogy, to some incredulous team members, that Amazon is simply the Sears Roebuck catalog of the fifties and sixties, but totally reimagined. Even though the purchasing process has roughly remained the same, and the logistics are similar, the way customers interact with delivery has been transformed. Once upon a time, you placed an order by phone from the catalog, which would be delivered to a warehouse near you, akin to an Amazon garage. Door to door delivery will undergo a similar change. Like the milkman coming to your home or receiving the early morning paper, I think you’re going to see this existing routine become unrecognizable in neighborhoods and locations near you. A great example of this concept at play is a fantastic start-up based in Fayetteville, AR. EasyBins, that does precisely that: customers purchase groceries in the evening for morning delivery to your home. Whether you live in an urban or rural setting, you are going to continue to see delivery differentiate businesses.
Evolution of Physical Retail Space
Over the last few years, the concept of shopping malls has shifted. Many commercial retail locations have lost anchor tenants to bankruptcies, resulting in a cascade effect of revenue loss for smaller tenants. So what should retail look like today? Do operators change how consumers view “shopping”, becoming more experiential? Are the spaces modified to become apartments, condos, or office complexes? In fact, car dealerships and movie theaters are facing the same challenges as retail, and Covid-19 has simply magnified these issues. A hundred years ago, Henry Ford sold one type of car, and after a long “option-filled” road, we seem to have shifted back. A month ago, the Hummer EV was released with one color option and style; it was sold out in ten minutes. Customers were buying this car online sight unseen, and they preferred it delivered to their home. By the way, there is limited practicality in delivering 100,000 Hummer EVs to various car dealerships throughout a region. Movie theatres, another great example, are presented with the same challenges as real estate. Viewers can now host watch parties in their own homes, with fully integrated sound systems, streaming high quality A/V. Conceptualizing the shift in how we innovate in the real estate industry is going to be pretty dramatic. I anticipate that this will impact retail in ways we don’t even fully understand today as the industries acknowledging and adapting to this shift will continue to grow.
Gigs are on the Rise
The gig economy is here to stay. Thankfully, this is the world in which I live, here in Northwest Arkansas, with the company I co-founded, Field Agent. Historically, when we look at the pre-manufacturing era, workers tended to be migratory as farmers and day laborers moving from job to job.This changed dramatically with the advent of the Industrial Revolution. It seems, however, that we have come full circle, with the majority of manufacturing now outside of the U.S., the service economy enables people to be sole-proprietors again. In addition to the dynamics around manufacturing, the changes in demographics and expectations around work continue to influence my industry. A new generation of the labor force wants to work when they want, as long as they want, and in many cases, for the wage they want. Uber is certainly a poster child of this trend but now as more people have flexibility working remotely, I think we will continue to see an increase in freelancers. Most importantly, people will begin to see this as a viable career path. In-house employees like systems engineers, designers or developers will embrace the nomadic lifestyle by becoming sole proprietors.
Location is Key
As part of the gig economy trend, movement of highly skilled workers from city centers to the suburbs, which has already impacted Northwest Arkansas, will continue to expand. People are searching for areas like Northwest Arkansas, where you can have a fantastic cost of living and not compromise your quality of life – things like Broadway-quality shows, a great university, and competitive employment opportunities. The pendulum will move further in our direction in 2021. Even with the threat of Covid-19 lessening due to the rollout of the vaccines, people will not go back to working in an office every single day like they used to or be bound by a physical location. The benefit for an area like Northwest Arkansas is it will help us from a recruiting standpoint. We will see this dramatically change company culture across various industries, which will significantly impact several sectors, like commercial real estate. At Field Agent, Marc Yount, our President, always says that it’s relatively straightforward to work remotely and even manage your team remotely, but leading and driving culture is difficult. This will most certainly impact how we support and succeed as leaders in 2021.
Deselection is the New King
On the retail side, “deselection” will be the new king. The onslaught of all these inventory and supply chain issues will result in manufacturers beginning to reduce SKUs and get back to the basics. It won’t be as extreme as the one color Hummer EV, but we will no longer see 20 different sizes of Aspirin or BandAids, etc. You’re going to see a major deselection process start to take shape, with retail carrying a much smaller, less variable selection of products, ensuring improved stock and lower pricing by reduced manufacturing costs, especially on consumables. We will see the entire retail world begin to make those changes on the shelf, and it will have huge effects on consumers and businesses alike.
About Rick West
Rick West is the husband of one, father of 3, grandaddy of two and a friend to many. He is an experienced CEO and co-founder of multiple start-ups with emphasis in technology, innovation and CPG. As a leader in the Retail Industry for seventeen years in the United States, Hong Kong and Thailand he has been an Entrepreneur for over sixteen years in the U.S. and currently serves as a speaker and mentor within the business community and research industry.