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Top 5 Challenges Retail Industry Will Face in 2021

Top 5 Challenges Retail Industry Will Face in 2021

Consumer Goods and Retail | Jun, 2021

Retail industry is constantly changing and there are always new challenges faced by the players in this competitive industry. Since 2017, there have been several major retail companies that have filed for bankruptcy and this phenomenon might continue through this year. Though it does seem kind of frightening, this is not the end of days for retail sector, as the number of retailers has grown exponentially in recent years. With half of 2021 almost over, let us take a look at the five challenges that the retail industry is facing or would likely be facing this year.


It will be an extremely tough year for firms that underpay and overwork their employees. Just like the tectonic shift, the whole landscape of retail employment is shifting. Hiring of employees is on the rise and the labor industry is extremely tight and way more competitive than it used to be. According to the U.S. Bureau of Labor Statistics, as of 2020, over 20 million people are employed in the US retail industry. Also, the fact that the job of a retail associate calls for more than just achieving the sales and being the admin of the store. With the ever-changing scenario, retail associates these days must evolve from being just “salespeople” to “experts and consultants”.

Despite technology advancing at the speed of knots, retailers will not rely on the latest distribution models, assortment strategies or technological advancements to win the market. The ones’ winning the market will achieve it by delivering a meaningful human interaction that will give confidence to consumers in what to buy. This requires an increased responsibility in hiring, training and empowering the sales associates to always put customer interaction first. In simpler words, a retailer intending to stay competitive in today’s market needs to bring A-game when it comes to hiring staff and developing the staff’s skillset. Gone are those days when training an employee on products and store policies were enough. The need to train the staff to relate better to the customers is indispensable. Connecting with the customers is imperative if any retail business is to grow.


Engaging with customers across many different channels is a necessity for businesses in today’s marketing world. From e-mails, to SMS, to social media, the multi-channel communications are extremely essential for engaging with the customers, as this is what drives the creation of the exemplary customer experience. However, with so many separate channels, it is not so rare for customer data to become siloed. If all the moving parts of a marketing department are not effectively communicating and working together, customers can become overwhelmed with conflicting or repeat messages. This barrage of marketing communications can easily have the opposite of the intended effect on customers and result in the shift of customers to competitors with a far clearer message.

The only way to tackle this problem is to ensure that one has the right technology and communication procedures in place. All arms of a marketing team must be on the same page and have a clear strategy on what they want to achieve. A clear strategy will help the retailers establish all the channels working together, rather than working against one another. This will not only ensure that the retailer reaches the customer with a clear message but will also save money and time.


The changes in economic conditions can have destructive impacts on the business plans of a firm. Economic forecasters looking ahead through the next decade are likely to find their predictions clouded by the recurrent themes of shortages, rising costs, and up and down business cycles. These changes in economic conditions provide marketers with new challenges and threats.

Further, no economy is free from the tendency of variation between boom and depression, whether it is a free economy or controlled economy. In any event, economic swings affect marketing activities, as they impact purchasing power. Retail marketing firms are susceptible to economic conditions, both directly and through the medium of marketplace.

For example, in the United States, most of the retailers are extremely worried about how the whole US-China trade war will impact the sector. China exports fell more than expected in December, while exports to the US fell 3.7%, the first nonseasonal decline since October 2016, signaling more pain ahead as the trade-war fallout starts getting measured by the markets. The IMF has also cut its forecast for the world economy for the third time in six months due in part to trade tensions, which said that the global growth would be 3.3% in 2019, which would be the weakest since 2009. US retail sales fell 0.2% in February 2019, according to the U.S. Census Department. Year-over-year retail sales were up 2.2% in the reported month. A robust economy will generate annual retail sales growth of 3% or more. The trade war did hurt the global economic growth and the damage for more than a year of punitive tariffs which may be difficult to repair. The additional fees imposed on goods from China raised the production costs for merchants. This in turn slowed down the growth among the merchants who won’t be able to absorb the rising production costs. Though, the trade war is over, the consequences are still felt. The conditions have worsened after the pandemic hit the world economy. With rumored news of China being the epicenter of the deliberate spread of the virus in the world, the trades with the neighboring countries and major economies have dwindled to a far worse situation than the US-China trade war.

Moreover, the UK’s vote to leave the European Union (EU) could have far-reaching impacts for the UK retail industry. The impact of the UK’s decision to leave the EU on the country’s retail industry has been more moderate than expected. It has come at a time when many retailers are trading on slim profits and declining sales, as they get to know the new breed of consumer. Sterling is some 14% below its value pre-referendum, the possibility of tariffs, changes to customs regulations and a shortage of labor, all threaten to raise costs further, with a shift in VAT rules potentially also forming part of the mix.

Furthermore, the prevailing bilateral frost between India and China is leading to a chilling effect on local trade. Around 60 million members of the Confederation of All India Traders (CAIT) have called for the boycott of Chinese goods. India imports nearly $ 70 billion worth of Chinese goods and services every year. Trade with China accounts for over 40% of the country’s total trade deficit. However, the Government of India is unlikely to impose any ban. It can probably look at increasing tariffs or changing policies to make Chinese goods less attractive. For many small vendors in the country, Chinese goods are a staple. The increase in tariffs could make it unaffordable for many of the small vendors to invest in Chinese goods, thereby bringing their businesses to a halt altogether. With the pandemic affecting the world economy and now the slow regain of the market conscience the effects are impaling. With the shift of the retail business over the online platform as a response to the worldwide lockdown, the retail industry has looked for a way out of the setbacks experienced in the almost two years. Spread of COVID-19 did slow the market in the last few years, but the economies are still expecting to benefit steadily out of the latest strategies.

The economic and geopolitical landscape can be incredibly complex. It is really difficult to predict the specific effects that they will have on the retail industry. But it’s important for businesses to keep a close eye on these events in order to anticipate and prepare for any changes that could hit their business. It is extremely important for retailers to start planning their paths ahead, rather than getting stuck in a quagmire of uncertainty and indecision.


One of the essential factors in creating brand loyalty is to ensure a good customer experience. A 5% increase in customer retention can increase a company’s profitability by 70%. Retention is a direct result of impeccable customer experience, as both are inherently linked. The most common mistakes that retailers make are letting their existing customers go and thinking that they can be easily replaced by the new ones. If a retail business keeps this mindset, it will find extreme difficulty in sustaining its business growth. While offers and promotions contribute towards helping customers feel like they are special, the most important aspect to an overwhelming experience is personalization.

Getting to know customers on the basis of their interests and previous purchases can help retailers drive loyalty. These insights can be reaped from data, or even a simple conversation. Though most part of reaping these insights will depend on the size of the business, no one should be too big for a quick chat with a regular customer. A simple personalized message and offers can be delivered to the customers on their preferred way of contact. Even a simple personalized e-mail can make a world of difference. Anticipating what the customer wants and needs should be the forefront of a business, as it will help the business to usher the customers down the sales funnel towards their next purchase.


Technology has been a major boon to retailers and customers alike, however, they also play a major role in propelling the challenges in retail industry. Keeping pace with the technology beast will be one of the greatest challenges for retailers in 2019. With technology accelerating at an astronomical rate, retailers must keep pace if they are to remain relevant. Consumers want an experience to match that of Amazon and Alibaba – one that is powered by AI, ML and big data.

With more e-retail experiences available and shipping times reduced drastically, it is not that hard to think why more than 90% of Americans make use of online shopping in some way or the other. Online retail grew 500% between 2000 and 2020, according to the U.S. Commerce Department. Department store sales dropped almost 50% during the same period. In the first three months of 2019, 5,994 stores closed their operations, compared with 5,864 during the full year 2018. However, these are the same Americans who still spend a major portion of their total shopping budget on the traditional brick & mortar locations. In simple words, even though everyone is shopping online, they still are making most of their purchases in-store. The pandemic situation threatens to change the typical flow in the upcoming five years and show a better and convenient way of the business in next five years approximately.

As consumers are seamlessly moving between online and offline platforms for shopping, they are becoming more open to retailers which can best facilitate these transactions. With the explosion in mobile retailing, in-store research and showrooming are more common than ever. On the flip side of the coin, online shipments can be delivered to a local store, further closing the gap between offline and online retail.

The solution here is to emphasize on creating an unparallel experience for the customers across all the channels. Customers are always in the lookout for retailers which they can trust to deliver unmatchable services time and again. Only the right customer data can help the retailers in creating an omnichannel experience for the customers, allowing them to interact wherever and however they wish.

The rules of retailing indeed are being rewritten in this time of transformative change. Innovation, consolidation, collaboration, integration and automation will be required to reinvigorate commerce, profoundly impacting the way retailers do business now, and in the future.

According to a recent report published by TechSci Research, Saudi Arabia Food Services Market, By Type (QSR (Quick Service Restaurants), Café, Dinning Services, Others (Canteens, Lounges, etc.)), By Region, Competition, Forecast & Opportunities, 2026F, the Saudi Arabia food services market is anticipated to reach USD26.54 billion by 2026, growing at a CAGR of 7.68% during the forecast period. The market growth is widely expected to be dependent on the factors like rising disposable income among the young working population, the booming tourism in the country and increasing urbanization in the country. A large base of young and earning population when coupled with the social and cultural changes that the group is experiencing the market is bound to boom in the upcoming five years of the forecast until 2026. Increased the overall demand for online food ordering and delivery in Saudi Arabia due to the spread of COVID-19 addressed a massive opportunity for online food delivery services. The market players recognized the opportunity and abiding by the WHO regulations helped them regain customer trust and, as a result, helped the market recover from the adverse effects of the pandemic in the future five years.

In another report by TechSci Research, Saudi Arabia E-Retail Market By Segments (Apparel & Footwear, Groceries, Electronics & Appliances, Home Furnishing & Furniture, Others) By Region, Competition Forecast & Opportunities, 2026, the Saudi Arabia e-retail market discusses the position of the online businesses and the sudden shift of the industry from an offline platform to online platform. The market is expected to register the growth on the backbone of modernizing retail, growing young adult population that have disposable income and their inclination toward utilization of this income to satiate their palates. The changing lifestyles, internet penetration and use of smartphones have made e-retail so simple that it brings the world at the fingertips thereby instigating the population to spend more and feasibly thus substantially supporting the growth of the market in the future years. 

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