5 things the retail industry needs to focus on in 2020

We break down the key focuses we believe retailers should keep front of mind as we move into the new year.

5 things the retail industry needs to focus on in 2020

2020 has been a challenging year for retail on the whole. Companies such as Forever 21 and Barneys undertook bankruptcy proceedings in the US and the UK. Jack Wills and Karen Millen were snapped up just before they went into administration by bigger groups. In the end, according to Coresight Research, 9,300 stores will have closed their doors in 2019 in the US alone.

However, some retailers are managing to stay strong in challenging times. Some companies saw fantastic performance in 2019 - whether they’re emerging brands like AllBirds and Boohoo Group or global giants like Zara and Amazon.

To avoid a repeat of the retail disasters of 2019, what can others learn from these businesses to kick start growth in 2020 and beyond?

Product

The starting point for success in retail is getting the crucial component right - the product. This is absolutely key, and retailers need to make sure they have the right product, for the right customer at the right time. However, this eluded some retailers in 2019 and became the basis for failure.

Companies like Zara have managed to create a data-driven supply chain which is highly linked to their success. It enables them to understand consumer wants and trends and quickly react to them. Many companies have increased their SKU numbers at an alarming rate in an attempt to chase sales and in turn, have created a near-impossible task for themselves with little understanding of what the consumer wants. Their Pareto curve has ended up heavily skewed negatively, and the result has been constant discounting.

We track sales prices from over 150 brands/retailers for Mallzee Insights and in 2019 over 50% of products were discounted at some point in their life cycle, a sign that many companies are continuing to showcase poor stock management skills and invest in products that don’t succeed with consumers.

Sustainability

2019 was the year that the climate crisis was brought front and centre of not just retail but of global consciousness, with groups like Extinction Rebellion bringing major cities to a standstill and climate change advocate Greta Thurnberg being named Time Person of The Year, and drawing President Trump’s ire via late-night Tweets. A lot of attention quickly moved to fashion retail with this focus on the climate crisis and how could one of the most polluting sectors in the world become more sustainable.

Patagonia is a leader in this field, selling recycled products and investing in the environment through purchases. Primark, the UK fast-fashion retailer, though has put a strong emphasis on their environmental credentials with their flagship store in Birmingham featuring their approach to sustainable sourcing heavily across the walls.

Focusing on a more sustainable approach doesn’t just make better business sense for retailers in 2020 due to the consumers deepening focus on a brand’s sustainable credentials, but it’s also needed for the planet and quickly.

Brand story

The success of businesses like Allbirds, Everlane and Away is partly down to their fantastic product but would they have achieved their mass consumer success if they didn’t craft a brand story that connected to consumers and told it in such a manner that it couldn’t be ignored?

This ability to tell a story is much easier for new brands, but it’s something that larger incumbents can’t ignore if they want to keep their market position. In 2020 and beyond the story of a brand is equally as important as the product itself!

Optimise marketing performance

Modern marketing all comes down to a deep understanding of the target consumer to enable a bond to be created between them and your brand. If you don’t know who the consumer is, how can you really connect to them in a meaningful manner? Using digital tools this is becoming easier and easier, although retail egos often get in the way and ensure that whilst people claim they know the customer - they really don’t. This can result in wasted marketing spend due to the wrong targeting of the product to the consumer.

Store control

For many years the go-to growth strategy for retail businesses has been to open more and more stores, while this approach might have achieved results for many with a steep decline in offline shopping this has now caused huge problems for many retailers who signed up for poor locations and high rents - all in the search for growth. Companies in 2020 need to look at their store program in a lot more depth, with online sales growing how does offline/online sit together to deliver the most profitable outcome for their business? Answering this question is not easy and potentially needs to rethink how companies think of stores and what they provide for their brand.

There is no doubt 2019 is one of the darkest in retail in recent years, even with the notable successes highlighted. For the sector to bounce back in 2020, traditional retailers need to think smarter and tackling these five areas and learning from the businesses highlighted, wouldn’t be a bad place to start.


Mallzee Insights helps retailers improve profitability through product testing, our unique approach to data collection helps brands and retailers understand what’s going to work for their audience before they commit to large stock orders, in turn driving gross margin improvement of between 3-6%. With over 4m products tested to date and over 600m customer opinions on them, Mallzee Insights is the largest dataset of consumer fashion opinion in the UK.

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Heather Darwent

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