The following article was written by Chris Walton and first appeared on Forbes.com on December 29th, 2020.
2020 was a just plain dog of a year. Fortunately, however, vaccines (plural) have now arrived, hope is once again on the horizon, and soon, quite soon, everyone will be able to venture out to crowded shopping malls again.
Ok, maybe that last statement was a bit much, but you get the point, and more on that later.
At this point, 2020 has almost come and gone, so there is no sense looking back, only forward. The past year gave the retail industry some of the most exciting headlines in its history — things like Walmart+, Nike cutting ties with its distributors, Amazon Fresh, Kohl’s and Sephora’s partnership, Instagram Shopping, PepsiCo launching Snacks.com, and the birth of DashMart, just to name a few.
Collectively, these headlines represent an exciting foundation upon which to build and one hell of a bedrock upon which to think about the future. No one knows what 2021 will hold in store (pun intended), but given what the world just went through, it is only fitting to have a little fun and to predict exactly what retail could look like again at this same time next year.
Here then are four fun-loving predictions about the year ahead:
#1 — Walmart gifts a free Sam’s Club membership with every Walmart+ subscription
On September 15th of this past year, Walmart made its Walmart+ subscription program available to all shoppers. For $98 per year, Walmart+ subscribers could enjoy benefits like unlimited free deliveries on thousands of items, gasoline discounts, and access to mobile Scan-&-Go shopping features both in-store and at the pump.
While the program is still barely three months old, early indications are that it could be a smashing success. In October, Piplsay Research surveyed over 20,000 Americans and found that 11% of them had already signed up for Walmart+ and that another 27% of those surveyed “may go for it soon.”
The degree of the program’s early success or failure, however, doesn’t really matter much for the context of this discussion.
What matters most is that, if one reads the timeline, Walmart+ is set to anniversary itself in the upcoming fall. Walmart is pot committed at this point, and come next September Walmart will need to show year-over-year subscriber growth.
Year 1 is easy. Year 2 is always hard.
So, don’t be surprised if sometime next year Walmart finds Amazon Prime-like religion and realizes that it has an incredibly valuable Sam’s Club bullet sitting in the chamber of its subscription gun. A basic Sam’s Club membership costs $45 per year, well within the range of sustainable economics against the cost of a Walmart+ subscription, and such a move would also likely attract a higher income demographic club shopper into the Walmart umbrella and also encourage those who may not have considered Walmart before to give it a second look.
Longer-term even, the backend intersection of mobile Scan-&-Go tech and Jet.com pricing algorithms, combined with club warehouse and supercenter fulfillment and order pickup, could also mean that Walmart+ holders could literally mix their carts for bulk vs. by item shopping all in one trip. No retailer has been able to make such a thing happen thus far, and the idea is also something that Target and Costco could never match. They just don’t have the infrastructure, and neither, frankly, does Amazon.
Make no mistake, Walmart+ is no copycat strategy. It is something Walmart, by way of its large Walmart and Sam’s Club store counts, its acquisition of TikTok, and its moves into healthcare, will make uniquely its own in 2021.
A free or discounted Sam’s Club membership will just be one of the early key pieces.
#2 — Kohl’s will debut the modern one-stop shop
Over the last few years, Kohl’s has taken a beating. It’s stock price today is less than half of what it was in 2019.
Despite Kohl’s CEO Michelle Gass’s masterful media claims of an “off-mall advantage” and announced partnerships with everyone and their brother, like Planet Fitness, Aldi, Weight Watchers, and even Amazon for returns, nothing of substance has ever materialized.
Kohl’s announcement of its planned partnership in as many as 850 doors with Sephora is something different. It is a foothold into beauty and traffic. Combine this with Kohl’s Amazon returns partnership and the other significant rumor this year that Kohl’s may soon put an Amazon grocery store of some shape and form inside of its four walls, and suddenly the world could be looking at Kohl’s as a smaller version of Target or Walmart, only with better brands and more conveniences.
The tactile aspects of grocery and beauty shopping and the relative ease of in-store return drop offs all jump to the top of the list in terms of what still drives people into physical locations to shop. Walmart and Target, for instance, can’t take Amazon returns. Similarly, Target’s Ulta partnership is only 100 stores large. And, if Amazon ends up putting any form of Go Grocery, aka its checkout-free experience, into a Kohl’s store, then Walmart and Target both could stand to lose on the quick fill-in trip from a convenience standpoint as well.
No doubt such a move would be a Herculean feat to pull off, considering all the dynamics and the partners involved, say nothing of what such a move could mean for Kohl’s insane high/low pricing strategy, but, if it can all come to fruition, it could be Kohl’s CEO Gass who ends up having the last laugh as she accepts the trophy for 2021 Retail CEO of the Year.
#3 — Amazon Go Grocery will get bigger
While the arrival of Amazon Fresh in Woodland Hills, CA was the most important retail headline of 2020, in many ways, the concept was also a little bit like kissing one’s sister.
Sure, it came with a fancy thing called a Dash Cart, so a small segment of customers could shop the store and pay without having to stand in line, but, for the most part, and as reiterated often by Amazon, the store still runs on a pretty “traditional” checkout experience.
In other words, Amazon Fresh is nothing like its Amazon Go or Amazon Go Grocery brethrens.
Amazon Go and Amazon Go Grocery, in contrast to Fresh, are both complete computer vision “Just Walk Out” marvels, meaning customers can come in, take whatever they want off the shelves, and just leave and pay electronically, much the same way one pays for an Uber or a Lyft. The assorted Go stores typically range in size from 1,500 to 10,000 square feet, which is a far cry from Amazon Fresh, which is in the 30,000 to 40,000 square foot range.
The only thing likely stopping Fresh from becoming more like Go Grocery is the pace of technological innovation. Computer vision still has its limitations — in size, sku counts, and processing speeds. 10,000 square feet may be the upper bounds of those limitations today, but Amazon also likely knows that it has something gold plated and likely will stop at nothing to continue to push the bounds of how big the concept can get.
In January 2018, Amazon opened its first Amazon Go store in Seattle, which was roughly 3,000 square feet. Just over two years later, it opened its first Amazon Go Grocery store, which was roughly 10,000 square feet. In two years, that translates to a threefold increase in what Amazon’s computer vision technology can handle.
Will 2021 bring another increase of a similar magnitude?
So, take 2021 and add a zero because that is how big Go Grocery will get next year — 20,210 square feet.
#4 — A shopping mall becomes shoppable online
This final prediction was sent in by an ostrich who had sense enough in 2020 to pull his head out of the sand (and, even then, it may still be the prediction least likely to happen on this list).
How malls are not shoppable online is an absolute joke. Amazon is essentially an online mall. So are eBay, Etsy, and countless others. Yet, the mall down the street, the mall everyone knows and loves, is not.
Want to buy something from the local Gap, where young Timmy works? Sorry, grandma, you are S.O.L.
On one level, the whole thing makes no sense at all, but, on another level, it is easy to see how it all transpired.
Online mall retailing is like a groom learning to dance for the first time at his wedding — no one is quite sure who should lead. Is it the mall operator? The retailers inside the mall? Problem is that it is both, and no one is quite sure what steps to take next.
Online mall nirvana starts with a cagey mall operator saying, “Ok, we are going to act like a marketplace and make everyone’s assortment browsable and searchable online.” Then the next steps come down to data coordination and integration with all the retailers inside the mall so that the online portal can have real-time visibility into pricing, promotions, and inventory. Finally, the whole thing ends with a coordinated system for delivery and pick up. The simplest way, mall purveyors act like online vendors within the marketplace and ship their goods directly to customers who transact via the portal. The more advanced way, mall operators also create infrastructure for shipping and pick up, so retailers can get even more economies of scale out of their operations.
Combined, the above paragraph is the intriguing reason why the rumors of Amazon potentially acquiring J.C. Penney or Macy’s locations this past year were so interesting. Amazon has the technological chops and platform to pull this all off. Now the only question becomes — will someone else figure it out on their own before Amazon does?
Smart operators like Centennial Malls and Tanger Factory Outlet Centers are already starting to pepper the edges of this discussion. Hopefully, 2021 will be the year they or someone else finally makes it happen.Source: Forbes