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Executive Summary

2020: A Year of enhanced customization and sustainability

In 2020, the retail industry will be shaped by emerging technologies that will change the way consumers interact with brands, while retailers will collaborate more than ever with tech startups to future-proof their businesses.

The consumer is at the center of technological innovation, as retailers struggle to keep the attention of hyper-connected consumers and to keep up with fast-changing expectations. Retailers will increasingly rely on augmented reality (AR) and virtual reality (VR) to enhance the customer experience, while improved automation will boost supply chain efficiency. With the steady increase in competition, large retailers and brands are increasingly recognizing the enormous potential offered by highly specialized startups. Enterprises will continue to invest in startup technologies to sharpen their competitive edge.

We’ve highlighted the top 10 tech startup trends for 2020 that we believe will enable retail to become stronger and better equipped to meet fast-changing consumer demand, to better understand consumer behavior and to create increasingly customized offerings.

1. Autonomous robots will gain traction in last-mile delivery

Investment in autonomous last-mile delivery solutions will increase in 2020, with large industry player acquisitions and partnerships, as well as venture capital investment. The need to improve delivery efficiency and reduce logistics costs will power the development of more advanced and cost-effective aerial delivery drones and ground delivery solutions.

More robots will be trained to recognize objects by their semantic (natural language) labels, giving them a sense of what things are, in real-time, as well as being able to interact with customers. MIT engineers, for example, created a navigation method that enables robots to plan out a route using semantic terms, such as “front door” or “garage,” rather than coordinates on a map.

With further advancements and lower costs, we expect to see wider adoption of robotic and drone last-mile delivery solutions. We also expect AI to play a larger role in streamlining delivery operations in 2020 to reduce distribution costs and streamline last-mile delivery. Startups and larger, more established retailers are developing solutions for autonomous-based last-mile delivery, including:

Source: Company reports/Coresight Research

Aerial delivery drones will finally see more use, led by Amazon, UPS, Uber, and Google’s Wing. Major retailers are also investing in drone technology for last-mile delivery.

Source: Company reports/Coresight Research

2. Data privacy will require a more conscientious and collaborative approach as retailers walk a tightrope between data privacy and personalization

The introduction of the EU’s General Data Protection Regulations (GDPR) and the California Consumer Privacy Act (CCPA) are ushering in a new era for retailers. Most companies do not track the data they collect or where it’s stored, which worked well before but may not work with the new regulations. This increases the risk of privacy violations, regulatory action, security incidents and customer backlash.

Retailers will have to implement new policies to comply with the new regulations and most importantly support the new policies with technologies that safeguard customer data while also ensuring it can be leveraged for useful insights.

Enterprises across the world are increasing investment in data compliance, privacy and governance: The data privacy market is forecast to be worth $158 billion by 2024, according to Market Research Engine.

In 2020, we expect to see more retailers and brands introduce data privacy practices in collaboration with startups.

These are some companies to watch:

Source: Company reports/Coresight Research

The increased limitations on harvesting consumer data also mean contextual marketing—which thrives on consumer engagement based on real-time behavior—will have to shift data collection to be less invasive. We expect more solution providers to offer more data collection tools to comply with these new requirements while also delivering results.

Anagog, an Israeli startup, uses smartphone sensors that offer retailers insights into customer activities, whereabouts and context. By building customer behavior profiles, Anagog’s Edge-AI technology helps retailers better understand the customer’s lifestyle and routines, in real-time. Then, it provides highly personalized and contextual offers. Its AI engine runs on the mobile device itself, enhancing user privacy because there’s no need to transmit data to a central server, so no private data leaves the phone without the customer’s permission. Skoda is one of its main clients.

3. E-commerce growth will drive adoption of robotics in logistics

In 2020, robotics will significantly enhance the speed and efficiency of operations, boosting productivity, enhancing the consumer experience and delivering more accurate and reliable results. Sales of logistics robotics (the most significant application in retail) increased 53% year over year to $3.7 billion in 2018 (latest), according to the International Federation of Robotics.

Warehouses are central to supply chain management, and some of the most exciting innovations in the field focus on making them smarter. Innovations in robotics are optimizing and automating the storage, packing, and flow of goods within warehouses, making the flow of goods more efficient. Amazon has greatly benefited from robotics, lowering operating costs by 20% in recent years and creating a 50% gain in warehouse space due to more efficient use, according to Business Insider.

Source: Wolfe Research

Retailers are already implementing robotics in daily operations, often in collaboration with technology firms.

These are some companies to watch in 2020:

Source: Company reports/Coresight Research

4. Retailers will push the consumerization of healthcare, especially as it relates to aging

Retailers will increasingly push into healthcare products and services in 2020 and beyond. products and services that address the health effects of aging. Retailers are already integrating healthcare products and services into their businesses, which not only helps diversify revenue streams but also offers new ways to attract shoppers to the store.

Both CVS and Walgreens are planning to remodel stores over the next few years to create more room for healthcare products and in-store clinics. Other examples include:

Source: Company reports/Coresight Research

2020 will likely see more activity in this space as the majority of millennials cross into their thirties and start families of their own. Startups innovating around fertility and reproductive health have raised a lot of venture capital. Here are some examples:

Source: Company reports/Coresight Research

5. Environmental concerns will drive a proliferation of sustainable fashion initiatives and partnerships

More companies will focus on sustainability as consumers increasingly embrace environmental issues and look to brands to follow suit. We’ll see more sustainable products, services and processes.

The apparel industry is now said to be the second-largest polluter in the world, beset by energy-intensive processes, high water consumption, use of non-renewable resources and general excess. In the last 15 years, the industry has doubled production, but the average length of time an article of clothing is worn before being discarded plummeted 40%.

According to global non-profit organization BSR, 93% of global consumers want to see more of the brands they buy from support environmental issues, and three of four teenagers want to buy more sustainable products. Many retailers are already working on sustainability initiatives.

To cut waste, some companies have introduced initiatives focused on recycling and reuse:

Source: Company reports/Coresight Research

Startups will continue to disrupt the industry with innovative, sustainably based approaches to retail manufacturing.

Some startups to watch include:

Source: Company reports/Coresight Research

6. Reality tech will continue to blur the line between digital experiences and the real world

Retailers will increasingly rely on extended reality to engage customers browsing products. Virtual models of the human form, either created through 3D technology or otherwise, will progressively guide purchasing decisions. Innovative practices will continue to disrupt the industry with various approaches to retail operations, including:

Source: Company reports/Coresight Research

In 2020, the extended reality space will allow more consumers to share their VR shopping experience with friends. A growing number of companies will create 3D environments and experiences to establish increased immersion spaces. Real estate and travel already use 360-degree videos, and we think they will become more prevalent in retail in 2020.

Collaborations between technology companies and brands and retailers will intensify in 2020.

Here are some existing collaborations:

Source: Company reports/Coresight Research

7. 5G will be rolled out commercially, boosting digital retail

5G technology, the fifth generation of mobile connectivity, is expected to bring faster speed, higher capacity, greater responsiveness and better dependability. This major upgrade in the network will allow companies to improve e-commerce operations and increase the efficiency of in-store technology, generating higher sales conversion.

The advent of 5G in 2020 will reduce barriers to entry, as processes shift to the cloud and smartphones are able to serve as AR devices. This will greatly boost AR technologies and further increase pressure on brick-and-mortar retailers to keep consumers coming back with experiential benefits.

The widespread use of 5G technology will also enable shoppers to browse websites faster, shop on the go more seamlessly and engage in more personalized online experiences. Adobe says there is a relationship between connection speed and online conversion, and predicts increased network speeds will generate an additional $12 billion per year for US online retailers by 2021.

Source: Adobe Analytics

The introduction of 5G networks will allow e-commerce apps to use more data intense programs using AI and machine learning, as well as a higher reliance on AR and VR.

5G connectivity will also enable new applications such as tactile Internet, the ability to emulate the sensation of touch through connected devices, potentially creating features such as shoppers being able to feel fabrics through a connected device.

House of Holland fashion designer Henry Holland worked with UK network Three to create “a living room of the future,” offering an immersive experience at the network’s central London store on Oxford Street. The new set-up includes mindfulness experiences offered through 5G connections, a spaceship gaming battle and a shopping experience.

Nokia will power Swedish telecom Telia’s 5G network at the new Mall of Tripla shopping center in Helsinki, part of the city’s smart city project. The 5G network will deliver next-generation connectivity throughout the three-block urban shopping mall and business center, enabling retailers to implement novel retail applications and lifestyle experiences.

8. Voice tech development will become more brand oriented

The expansion of virtual assistants such as Amazon’s Alexa, Apple’s Siri and Google Assistant are changing the way we interface with the digital world. In 2020 retailers will use audio tech more: Innovation in audio advertising, sonic logos and branded podcasts are a few of the options available.

Harrods uses a podcast to bolster its digital presence, engaging potential customers to explore what luxury means today. Although part of its digital growth strategy, it also expands the company’s potential customer base.
Lululemon runs audio ads varying between 15 and 30 seconds in length via Amazon Alexa (to users who don’t subscribe to ad-free Prime).

NPR and Edison Research’s Smart Audio Report shows the number of devices in homes increased 78% in 2018 from the prior year, while Adobe’s latest State of Voice Assistants report indicates 32% of consumers now own a smart speaker, up from 14% in January 2018.

Source: NPR/Edison Research

Despite its growth, voice assistant technology is still a largely untapped resource with tremendous potential. A recent study by OC&C Strategy Consultants forecasts global voice commerce sales to rise to about $40 billion by 2022 from just $2 billion today.

2020 will see an expansion of voice shopping in the retail sector.

Mmuze is extending voice shopping to grocery retailers, allowing them to compete directly with Amazon’s Alexa voice-based grocery shopping. The Israel-based conversational artificial intelligence company offers online grocery retailers a platform that provides a natural conversational experience. Mmuze’s platform-agnostic solutions already power cross-channel commerce for leading online retail brands, including ASOS, Perry Ellis and US Polo.
Nike’s digital performance expert Nike Coach uses Google Assistant to chat with shoppers to help them find sneakers. It also uses Apple’s Siri voice assistant to tighten and release laces on Nike’s new Adapt Huarache sneakers, while Nike’s FitAdapt software and Nike Adapt app also turn the shoes into another voice-controlled Internet of Things device.
1-800 Flowers became one of the first retailers to use Samsung’s Bixby to enable voice shopping, and to pay with Samsung Pay, in early 2019.

9. Banking-as-a-service (BaaS) and digital payment solutions will see exceptional growth

Digital banking will finally take off in the west, catching up with a trend that started in China years ago. Digital payment solutions will primarily focus on:

Enabling phone or smartwatch purchases.
Establishing ecosystems that unlock customer insights and forge loyalty by providing convenience, value and security.
Implementing facial recognition.
Allowing for more seamless, convenient, fast, and secure transactions.

Retailers are gradually adopting digital payment systems: 7-Eleven, Target and Costco all introduced mobile wallets as payment options in 2018.

Source: Company reports/Coresight Research

BaaS companies such as Marqeta, GreenDot and Metabank will disrupt retail with services such as advance pay for employees, co-branded debit cards and other innovative payment methods.

Source: Company reports/Coresight Research

Digital payment solutions have found a powerful strategic partner in the automobile industry. Auto manufacturers are dropping digital wallets into cars, which then fuels further changes in consumer behavior.

Honda Motor introduced Honda Dream Drive, which uses the car’s onboard infotainment display to enable payments at drive-through restaurants, gas stations, smart parking lots and grocery stores. BMW, Ford Motor, General Motors, Hyundai and Volkswagen have also announced they will offer in-car payment technology.

These integrated wallets will greatly facilitate transactions, radically changing behavior and engagement. They will also facilitate retailers’ ability to gather data, understand behavior and create a one-to-one relationship, especially when combined with analytics, AI and geolocation.

10. On-demand customization and 3D printing will lead a boom in personalized products

2020 will see a greater push for mass customization, underpinned by digital design and automation. Hyper-connected consumers, keen on instant gratification, are driving the shift from mass manufacturing to scaled personalized production, making personalization the top success factor for customer and prospect engagement. Retailers can produce a richer variety of goods based on consumers’ individual design tastes with the same efficiency as mass production, allowing every shopper to become a market of one.

Consumers also want apparel that represents who they are and the fact that they share everything online, offering a potential goldmine of information for designers who can adjust production to match what customers actually desire. For manufacturers, the challenge is in catering to the demand for personalization at a faster pace and on a greater scale.

Lectra, a fashion retail software company, has created two solutions to meet demand for faster turnaround on personalized items. Cutting room 4.0 combines a cloud-based data hub that connects product development offices with a single-ply cutting machine that offers a 360-degree view of the whole process to create a full cutting line with systems able to communicate with each other. Its Fashion On Demand technology is designed as a comprehensive personalization solution with a 360-degree view of the process to streamline multiple production processes and manage complex individual demands.

Personalization of specific clothing items offers a unique one-of-a-kind look for the customer’s wardrobe while also extending the lifetime of the piece.

Source: Company reports/Coresight Research

For more on what’s coming in retail in 2020, see the Coresight Research report Retail 2020: 10 Trends for China E-Commerce and Retail 2020: Five Forces, 10 Trends in Global Retail.

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Executive Summary

Introduction: 10 Trends for 2020

In 2020, evolving consumer preferences, shifting retail models and improved technical capabilities will drive change in global retailing. In this report, we identify five forces and 10 trends that will help reshape the future of retail in the year ahead.

We have been watching some of these forces—such as sustainability and alternative retail models—for some time. While they are not new, what is new is that they have reached new stages of maturity: We see 2020 as a potential inflection point for some of these medium-term or slow-burning forces in retail.

These are our five forces and 10 trends:

Retail 2020: Five Forces and 10 Trends in Global Retail by Coresight Research

Plus Four Rollovers from 2019

We also note four trends that we identified for 2019 that we expect to continue to be highly relevant in 2020:

Expect to see more spectacular retail, with brand-building flagshp stores.
Physical retail will see more fast retail, with short leases and more pop-up stores.
Expect more frictionless retail: Retailers will turn to technologies that remove the traditional pain points of brick-and-mortar retail.
Artificial intelligence will remain retailers’ go-to technology.

1. “Alt. Retail” Entrenches and Matures

Alternative retail models such as rental, resale and service-driven formats are moving retail beyond its traditional focus of selling (new) products. Collectively, we term these “alt. retail.” In 2020, we expect these models not only to expand their reach to more consumers, but also to mature. In particular, we expect to see these two trends:

Subscription and Rental Models Will Move Closer to Maturity

In 2020, we expect rental and subscription models to reach a new level of maturity. That could mean consolidation of the market through a shakeout, mergers and acquisitions, or retailers that are currently dabbling in subscription or rental to exit. High customer acquisition costs related to customer churn, investments in scaling up, and the costs associated with fulfillment call into question the sustainability of subscription models in particular.

Subscription is already seeing signs of difficulty. In the meal-kits subscription sector, unprofitable Blue Apron has seen sales growth turn deeply negative. And in beauty, Birchbox investors saw their stakes wiped out when the company put itself up for sale in 2018. Given specialist players operating subscriptions at scale have encountered problems, we think retailers that add a subscription service to their regular offerings are likely to confront similar difficulties.

We have seen a number of established apparel retailers launch rental services, but we retain some skepticism that legacy firms will be able to “tack on” a new rental business successfully without major investment in logistics and supply chain. The rental model is fundamentally different than traditional retail—and will require meaningful investment in operations that may, in the end, never scale up.

Given the complexity and cost, we believe it’s more likely established retailers will partner with established rental firms instead of trying to develop their own rental models in house. These partnerships could see rental specialists provide services on a white-label basis for retailers or serve as marketplaces that enable brands and retailers to tap rental demand.

Source: Company reports

Brands and Retailers Will Deepen Connections Through Services

Physical retail is no longer simply about moving product: Today, evolved brands view the store as a marketing channel for brand building. And services are one part of that brand building.

The boundary between retailers and service providers will become even more blurred in 2020. This is about more than legacy retailers adding in-store experiences and leisure services to regain relevance and tap shopper demand for “experiential retail.” The change is about strong brands and monobrand retailers in categories such as apparel, sportswear and beauty cementing their resonance with consumers by moving into adjacent markets.

We have seen a glut of aspirational sportswear brands broaden their offerings—think TorySport offering fitness classes, Lululemon moving into the restaurant business, SweatyBetty hosting wellness discussions and NIKE organizing fitness events. We see opportunities for this trend to trickle down to less elevated brands and to transfer across to brands in other sectors from beauty to food to home goods.

Source: Coresight Research

2. Inclusivity Moves from Marketing to Product

Brands’ and retailers’ pursuit of greater inclusivity is no longer about just marketing: we’ll see it will manifest in product offerings in 2020. We see this playing out in both luxury and the mass market:

Luxury Moves from Exclusivity to Inclusivity

Luxury is transforming from a culture of exclusivity and uniqueness to one of inclusivity, transparency and egalitarianism. We are seeing this play out not only in marketing but in the types of products being launched by luxury houses. Social values expressed through luxury products now include gender equality, size inclusion, design diversity and selection of ambassadors—although the exclusivity associated with a high price remains.

Diversity is represented in sizes. Online platform 11 Honoré and direct-to-consumer brand Reformation are only two examples of brands pursuing plus-size luxury shoppers.

Gender diversity is in evidence, too, with a number of high-end luxury designers, such as Chanel and Salvatore Ferragamo, designing unisex clothes and products.

In cultural terms, inclusivity includes the moves into streetwear by luxury brands to connect with a younger and more diverse customer base, grooming the next generation of loyal luxury customers. In 2020, we expect luxury brands to continue taking style inspiration from streetwear and skateboard trends, and to incorporate more sporty and casual urban aesthetics into designs.

Source: Bain & Co.

Expect More Inclusive Products in the Mass Market, Too

In 2020, more mass-market brands and retailers will see inclusion not as a marketing add-on, but as shaping the product offering. We envisage growth in niche and tailored segments within apparel and beauty.

Adaptive apparel—clothing and footwear designed for those with disabilities—is one such opportunity. Kohl’s, Target, ASOS and Marks & Spencer have launched dedicated offerings for consumers with disabilities. We expect more retailers to join them in 2020.

Larger women, once marginalized, are now courted by designers, retailers and brands—and plus-size offerings are moving beyond the core apparel staples of jeans, tops and dresses. We have seen companies build out offerings in sportswear, intimates and bridal dresses. These and other niche areas present opportunities for retailers to cater to a still-underserved consumer segment, and capture share in a market that we estimate will be worth around $32 billion in the US in 2020.

In beauty, companies are building out niche categories around life-stage and “age inclusivity,” for example, a new segment in skincare for menopausal women. A 2019 survey by AARP found 70% of women aged 40 and older want more beauty and personal grooming products tailored to perimenopausal or menopausal women, showing there is unmet demand from this demographic.

Source: Coresight Research

3. Western Retailers Nudge Closer to China’s Retail Models

China leads the world in digitalized retailing, in Alibaba’s “New Retail” model and beyond. Tencent’s WeChat app provides an all-in-one engagement and commerce tool while Alibaba makes online retailing spectacular through its Singles’ Day event. We see these trends and other elements of “New Retail” permeating the West, including through the following two trends:

The Battle to be the West’s Super App

WeChat is China’s super app, enabling instant messaging, posting photos of what users are up to for their contacts to see, making audio and video calls, engagement with brands through WeChat stores, digital payments, sending gifts—and more. In 2020, we expect social platforms in the West to move closer to this model, with social and communications platforms moving closer to the super-app model.

Facebook looks to have a headstart, supported by its ownership of WhatsApp and Instagram. These brands have both been adding features to enable social commerce: WhatsApp now offers a catalog or storefront feature and Instagram now includes a checkout function. Facebook has launched Facebook Pay across its platforms. Meanwhile, Alphabet-owned YouTube has launched shoppable ads.

When Coresight Research surveyed US consumers in November, some 61% of social media users said they use social media platforms as part of the shopping process. In descending order, Facebook, Instagram, YouTube and Pinterest are the top platforms used as part of the shopping journey, according to our survey.

Source: Coresight Research

Shopping Festivals Will Further Distort Traditional Shopping Patterns

Existing shopping festivals are likely to get bigger, better, more entertaining and more engaging in 2020. Digital-first retailers will continue to take festivals into the “real world” with pop-ups, entertainment events, marketing campaigns and tie-ups with physical stores. For e-commerce retailers that focus more on functional shopping than fun shopping, shopping holidays are an opportunity to build relationships with customers in the real world.

The impact of bigger, more engaging shopping holidays will not only be a short-term boost for the retailers operating the festivals (and possibly a hit to their rivals), but we expect the gravitational pull of festivals to continue the incremental distortion of established shopping patterns. In the US, we have already seen the importance of the traditional holiday season diluted as consumers increasingly shop for the holidays year-round and as events such as Prime Day and Black Friday in July pull forward spending from the year-end peak.

The biggest retailers can create their own shopping holidays, and “own” them the way Amazon owns Prime Day and Alibaba owns Singles’ Day. We also see opportunities to grow existing events, such as Black Friday in July, which is still an emerging event in the US. And, retailers can piggyback on festivals making their way from one region to another: For example, Amazon launched on China e-commerce platform Pinduoduo for Black Friday in 2019—still an emerging event in China.

Source: Coresight Research

4. Supply-Side Technologies Will Make Retail Even Faster

New and emerging technology (or new and emerging applications of existing technology) will enable retailers to move faster and operate leaner. These are two trends we expect to see in this space:

5G To Make Retail Faster and More Connected

In 2020, 5G will make retail operations and supply chains faster, and support the migration of browsing and buying to mobile devices.

5G technology promises wireless speeds that rival a wired connection, with more capacity and greater responsiveness (lower latency). 5G will offer peak speeds of 10–20 gigabits per second, plus latency—the amount of time between the command and the related action—of less than 1 millisecond and the ability to connect one million devices per square kilometer (the equivalent of 0.39 square miles).

5G will have a significant impact on retail, improving and expanding existing applications and powering new use cases. Applying the technology to retail operations is expected to translate into additional revenue—particularly from e-commerce operations, in which the enhanced connectivity will lead to more straightforward online shopping journeys, but also from more extensive and efficient use of in-store technology, which should also support sale conversion.

Source: Adobe Analytics

Automation Becomes Entrenched Across the Supply Chain

Analytics, automation and robotics will become more prevalent in manufacturing, logistics and stores, as legacy firms continue to turn to new technologies to move faster and offer greater differentiation. Digitalizing the supply chain is not new, but we will see it at greater scale in 2020.

Manufacturing will become incrementally more automated and data driven, enabling and encouraging greater onshoring and near-shoring of production in industries such as apparel.

Robotics and artificial intelligence will further embed themselves in logistics operations, powering a further acceleration in distribution and delivering operational efficiencies. Advanced analytics will play an increasing role in anticipating and responding to demand across the retail supply chain.

Retailers will continue to embed technology in stores—but selectively. Robotics in stores has gone beyond gimmick-driven customer service-focused trials to focus on bottom-line gains such as in inventory management. And retailers—especially those in nondiscretionary categories such as grocery—will continue to turn to customer-facing technologies to reduce friction in the shopping process, especially at checkout.

Source: Coresight Research

5. Sustainability Concerns Will Prompt Incremental Reshaping of Consumer and Retailer Activity

We have seen sustainability grow in significance for a few years: it is a slow-burning trend that is incrementally impacting retail. In 2020, we expect awareness of sustainability—by companies and consumers—to continue to impact retail.

These are two of the ways we expect it to play out:

Sustainability Evolves To Become Sustainability + Transparency

In 2020, brands and retailers will provide more detail on the sourcing and composition of products than ever before, as sustainability evolves to become sustainability + transparency. Vague claims about supply chain sustainability will look increasingly insufficient in the eyes of consumers: sustainability will increasingly focus on disclosure.

Already, supply-chain transparency has moved firmly into the mass market, with Amazon publishing details of its private-label suppliers and H&M disclosing information on materials, production country, suppliers and factories for every product it offers.

The implication? Mass-market retailers looking to compete on these terms will need to be equipped with renewed confidence in their supply-chain partners, or risk disclosure backfiring. As mainstream retailers seek to increase disclosure among, they will be prompted to clean up their supply chains and consolidate with best-in-class suppliers.

Source: Coresight Research

Shoppers Will Turn to Aftercare and Closed-Loop Models

The only truly sustainable shopping behavior is to buy less and, in 2020, we expect more consumers to “walk the walk” by limiting purchases, if even only a little. Just as purchasing preworn apparel has quickly become more mainstream, so we see opportunities for the aftercare segment to grow in scale. In particular, we expect more shoppers to turn to service providers that can revive, mend and restore clothing, footwear and accessories.

Just as retailers have done with clothing recycling programs, resale platforms and a greater focus on sustainable materials, we expect to see retailers partner with service providers to offer apparel aftercare services (tying into our Alt. Retail trend for more service-focused retailing). And the aftercare market dovetails with the adjacent resale market, as shoppers seeking to sell higher-value apparel will see a return on investment in fixing minor problems or restoring luster.

We also expect to see closed-loop models gain in popularity, most notably in apparel. Subscription, membership or leasing programs that let customers return worn clothing for recycling in exchange for fresh garments tap demand for newness and offer a sustainability benefit. And these services will piggyback on growing consumer willingness to adopt “retail as a service” models, where they access products on a subscription basis rather than outright purchase.

Source: Coresight Research

And Four To Watch from 2019

We roll over four of our 10 trends from 2019 as we believe they will remain relevant in 2020.

Spectacular Retail

We expect the wave of “spectacular retail” formats to continue. Urban consumers will enjoy access to experience-rich flagship stores offering a huge choice of product and add-ons such as customization and personalization. The emergence of spectacular retail reflects single-brand retailers’ recognition that stores are as much about building the brand as they are about generating sales.

Fast Retail

We think brick-and-mortar retail will continue to become more flexible and faster-changing as retailers and shopping-center owners recognize the need to be more fleet of foot. The “fast retail” trend will manifest as shorter lease terms as retailers seek to avoid being locked in amid a quickening pace of change. We’ll see more pop-up stores—including from digital brands. We’ll also see greater collaboration between retailers, notably sharing space to create traffic-driving synergies, as well as large-stores seeking cotenants to repurpose extra space.

Frictionless Retail

Aiming for frictionless in-store transactions, retailers will turn to technologies that remove the traditional pain points of brick-and-mortar retail. At the vanguard of this shift will be the burgeoning segment of automated, checkout-free convenience stores.

AI Will Continue To Be Retailers’ Go-To Technology

AI will retain its position as the preeminent technological enabler in the retail industry. Retailers will continue to turn to AI—and vendors of services based on AI—to make better decisions on inventory and pricing; to communicate more efficiently and more effectively with customers; and, to personalize offerings. This is not simply about improving customer interactions and data management: AI offers real opportunities to increase operational efficiency through inventory management and price optimization.

For more on what’s coming in retail in 2020, see the Coresight Research reports Retail 2020: 10 Retail Tech Startup Trends and Retail 2020: 10 Trends for China E-commerce.

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Executive Summary

2020: A Year of enhanced customization and sustainability

1. Autonomous robots will gain traction in last-mile delivery

2. Data privacy will require a more conscientious and collaborative approach as retailers walk a tightrope between data privacy and personalization

3. E-commerce growth will drive adoption of robotics in logistics

4. Retailers will push the consumerization of healthcare, especially as it relates to aging

5. Environmental concerns will drive a proliferation of sustainable fashion initiatives and partnerships

6. Reality tech will continue to blur the line between digital experiences and the real world

7. 5G will be rolled out commercially, boosting digital retail

8. Voice tech development will become more brand oriented

9. Banking-as-a-service (BaaS) and digital payment solutions will see exceptional growth

10. On-demand customization and 3D printing will lead a boom in personalized products

Executive Summary

Introduction: 10 Trends for 2020

1. “Alt. Retail” Entrenches and Matures

2. Inclusivity Moves from Marketing to Product

3. Western Retailers Nudge Closer to China’s Retail Models

4. Supply-Side Technologies Will Make Retail Even Faster

5. Sustainability Concerns Will Prompt Incremental Reshaping of Consumer and Retailer Activity

And Four To Watch from 2019

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