In the bustling world of retail, changes are always bound to happen–and with this inevitability comes the need for retailers to adapt. Since the rapid advancement of technology made the retail industry even more fast-paced, staying ahead of the competition became all the more important for businesses. Hence, keeping tabs on the latest developments is now an integral part of many retailers’ strategies.
As we venture into the future of retail, let’s take a look at five trends that are currently dominating the industry.
The rise of omnichannel retailing
Omnichannel is a term that anyone remotely interested in the retail industry has heard of. But for those who don’t know what it means yet, omnichannel is a strategy whereby retailers provide their customers with a “seamless and unified brand experience” regardless of what channel they use. This means that a customer can interact with a retail business in many different ways: from a physical store, using a mobile app, by accessing a website, and so on, and still get a seamless and consistent experience across any retail channel. But why has it become the extremely prominent trend that it is today?
With the ever-growing presence of the internet in our daily lives, consumers are starting to expect the concept of omnichannel from retail businesses; that is, if a store exists physically, the assumption is that they have a website or mobile app that customers can navigate as well, and vice versa. In fact, it almost seems that omnichannel is no longer just a trend, but a norm, in the retail industry.
In an online survey conducted by Google in partnership with Ipsos MediaCT and Sterling Brands, they found that 71% of in-store shoppers who used their smartphones for online research say that their devices have become more crucial to their in-store experience. In addition, two out of three customers who tried to find information within retail stores say that they didn’t find what they were looking for.
Another key finding from the study is that around 43% of customers who fail to find the information they need in physical stores leave frustrated–something that retailers definitely would not want their customers to feel. A similar percentage of customers apparently also search for information online, even as they navigate physical stores, using search engines (64%) or a retailer’s website or app (46%).
But get this: that online survey was published way back in 2014, when smartphones weren’t even as popular as they are now.
This goes to show that omnichannel is becoming more and more relevant in the retail space, more so as a larger number of potential customers use their smartphones and browse the internet for more information about brands and their products. Now, the challenge for retailers is to think of ways to meet their customers where they are, be it in their physical stores or online.
Personalized customer experiences as revenue drivers
“Personalization is not a trend—it’s the future of digital marketing,” said The Arora Project CEO and Founder Krishan Arora. The personalization he speaks of, though, is not simply using your customers’ first names when you email them; but rather, utilizing the data you collect from them to gain a better understanding of their needs, preferences, and behaviors, which you can then use to personalize their experiences with your brand.
Similar to how consumers now generally expect omnichannel retail experiences, 71% of them now expect personalized interactions from companies, according to McKinsey & Company’s Next in Personalization 2021 Report. Various research studies make the benefits of omnichannel very clear. For example, a 2018 Epsilon study found that 80% of consumers are more likely to purchase from brands that offer personalized experiences. In the same year, Accenture Interactive found a similar result: that 91% of consumers are more likely to shop with brands that provide them with relevant offers and recommendations.
But the perks of personalization don’t end with customer acquisition. In fact, personalization also helps with customer retention. In the “The State of Personalization Report 2023,” Twilio Segment found that 56% of consumers say that they could become repeat buyers if a brand offered them personalization.
One downside of personalization, though, is that retailers would have to invest in the technology needed to achieve it, such as a customer relationship management platform, an advanced point of sale system, and many other tools. Therefore, while this is an extremely relevant trend, it is one that may be difficult for smaller businesses to follow.
AI in the retail sector
Albeit somewhat controversial, artificial intelligence or AI is steadily becoming an unavoidable conversation to have for a lot of different industries, and retail is no exception. With AI’s reputation revolving mostly around chat bots such as ChatGPT, most people would struggle to think how AI can be integrated into retail businesses, but in reality, some big companies around the world are already leveraging it to enhance their business operations.
E-commerce giant Amazon is one of the best examples of how AI can be used in the retail industry. With a myriad of practical uses they’ve made for AI, their digital voice assistant, Alexa, only scratches the surface at this point. For example, predictive AI has become the backbone of their in-app personalization features for customers. With AI analyzing customers’ purchase habits, Amazon is able to recommend products relevant to its users, which could help increase a consumer’s tendency to make more purchases. Their convenience store, Amazon Go, also utilizes AI to track which products are being picked up by shoppers, who then get automatically charged for those items.
There are countless use cases for AI, however. With it, companies can also constantly analyze historical sales data and local weather reports to predict future demand for certain products to optimize their supply chain, offer enhanced customer service with AI-supported conversational assistants, monitor carbon emission rates for sustainability purposes, and many more. The possibilities are practically endless with the right technology.
Sustainable retail practices by retailers
73% of chief experience officers (CXOs) have upped their investments in sustainability over the past year according to Deloitte’s 2023 CXO Sustainability Report. Among these CXOs, 61% said that environmental issues such as climate change will have either a high or very high impact on their strategy and operations over the next three years.
Beyond the obvious idea that environmental issues are bound to affect all of us, a relatively recent Nielsen global survey also found that almost 75% of respondents would either definitely or probably change their consumption habits to reduce their impact on the environment. With consumers becoming more socially and environmentally conscious, it’s no surprise that they would also want to purchase from brands that share the same principles as they have. After all, in McKinsey & Company’s The State of Fashion 2020 report, 66% of all respondents said that they consider sustainability as a driving force behind their purchase decisions.
Therefore, it isn’t far-fetched to say that in order to win over a good fraction of consumers, companies need to adopt sustainable retail practices or at least incorporate sustainability as part of their corporate social responsibility initiatives from hereafter.
Some examples of sustainable practices being implemented in the market are eco-friendly delivery, waste reduction, eco-friendly workplaces, more efficient and ethical supply chains, sustainable packaging, and many more.
Cashless transactions as a trend
In the extremely fast-paced digital age, it’s no surprise that contactless and cashless transactions are slowly becoming the norm. Simply put, it’s a trend that’s easy for consumers to hop into because of the many benefits they get in comparison to using cash exclusively when shopping. The convenience they get from being able to pay using only QR codes or a debit or credit card, security features such as two-factor authentication, and bonuses that card or e-wallet users can obtain simply through purchasing are only a few out of many. Given all these perks, the question to ask is no longer why people go cashless, it’s what’s stopping them from doing so.
Even in less technologically advanced countries like the Philippines, cashless transactions are becoming increasingly popular, as made evident by recent studies and reports. Local e-wallet giant GCash, for example, hit 3 trillion PHP worth of transactions in the first half of 2022. Meanwhile, Visa’s Consumer Payment Attitudes Study found that a staggering 84% of Filipinos tried going cashless the year before GCash marked such a milestone.
With cashless transactions becoming more and more prominent by the day, a cashless society is definitely on the horizon, and retail businesses need to support these modes of payment as soon as possible to not get left behind.
To follow or not to follow trends?
At its core, not every trend will align perfectly with every retail business model. However, the essence of evolving around these and looking for ways to adapt should remain a priority for retailers. To stay competitive in the current market, retailers should not simply ask themselves whether they should follow or not, but rather, think of ways in which they can implement them most effectively–as many other businesses will likely look for ways to ride the same developments.
As the retail sector continue to shift, however, it’s imperative that retailers stay in the know, as today’s standards will inevitably set the benchmark for the future.
