4 Trends Changing Retail Forever

I’ve been thinking and writing about the transformation of retail for years. Traditional retail was experiencing profound shifts before Covid, and the pandemic has simply accelerated some developments that were already well under way. 

We may not know all that the future holds, but we do know one thing for sure: When the pandemic is behind us and things return to a “new normal,” we will see permanent changes to the retail economy, driven by a few key trends. 

Technology. A truth about technology is that it never goes in reverse. Once people adopt a new behavior, they don’t revert to the old way of doing things. The shift to e-commerce has fundamentally changed the retail economy. According to the just-released IAB annual consumer report, Covid accelerated the transition from a brick-and-mortar consumer economy to a “storeless” economy by up to 500%. People have grown more comfortable buying online in virtually every product category. That “step change” to e-commerce is permanent, whether someone was already an online shopper or forced online more recently because they had no other choice.

Nesting.  Over the last eight months, with many offices closed, people have learned that they can work from almost anywhere. Some companies have already announced that remote work, or a hybrid of remote and on-site, will continue even after the pandemic ends. Along with that shift to spending more time at home comes a desire for increased comfort. This “nesting” behavior, coupled with the long-term trend of people moving to the suburbs, where they have bigger houses with more rooms to fill, has helped boost our business and will have long-term benefits for the home furnishings industry. 

Investment. When I think about the future of retail, I like to use the example of Tesla. There’s no question that 20 years from now, many more of us will be driving electric cars. But today, most people are more focused on getting from point A to point B quickly and easily than they are in investing in electric cars or solar power or other forms of clean energy. That’s often the case with sophisticated new technologies. Widespread adoption takes longer because of the enormous costs involved at every stage. E-commerce is just the opposite: a new technology that is better in every way—faster, more convenient, more affordable—and requires no upfront investment from consumers to reap immediate benefits.

Real estate. The effect of all of the above trends hits pretty hard in one area: commercial real estate. Going forward, even great retailers will need less space, because their online experiences will be so much more robust. Understanding that is a big part of what led me to launch Saatva in the first place. Before going into e-commerce, I ran a chain of more than 200 home furnishings stores—in Manhattan alone we had eight locations. I knew that by adopting an online model for my next business, I could give customers a better shopping experience, better value, and better service than they were used to getting from traditional mattress retail stores. 

In the years since, consumers have embraced the DTC model for everything from toothbrushes to automobiles. Then came Covid, which forced even more people to get comfortable shopping online. But far from spelling the “death of retail,” as has so often been predicted, I think it will lead to a resurgence. With a few key exceptions, like big-box players Walmart and Target, most retailers will have fewer stores, but coupled with more dynamic websites, they’ll be able to serve their customers every bit as well and even better than before. Instead of eight locations in Manhattan, for example, Saatva has one: a showroom that’s the physical extension of our website, where customers can experience and learn about the products at their own pace. 

Going into Saatva’s second decade, I couldn’t be more excited about the possibilities. Ten years ago, I said we were building a company for the future—an online business that brought modern e-commerce technology to the traditional retail mattress market. Now the future has accelerated forward to meet us, and we’ve never been better prepared. 

This article has been reposted on LinkedIn.