Going into 2020, consumers’ day-to-day experiences shaped their expectations. People shopped at places where they found the best selection, price, or convenience. Starting in March, experiences and expectations have been impacted by an unusual force: the COVID-19 outbreak.
From an economic standpoint, COVID-19 had a varying impact on retailers in different segments. Grocery supermarkets, discount retailers, warehouse retailers, and big box home improvement stores are experiencing a surge while most other retailers are struggling. Those that had invested in innovative digital infrastructure have found themselves well positioned to cost effectively pivot and service their customers, while others are experiencing increasing costs to service those same customers.
From a consumer standpoint, social-distancing guidelines have enforced a shift in behavior, with more people buying online instead of shopping in person. Post-COVID-19, some may opt to make digital retail their “new normal.” Indeed, for the balance of 2020 and beyond, we believe the pandemic could accelerate and amplify three key trends. Let’s explore them.
Retail Trend #1: Contactless transactions
Even before the COVID-19 pandemic, 27% of U.S. online shoppers preferred to use their own device for an in-store checkout. The preference is even more pronounced among millennials (33%).
After COVID-19, that approach – along with other forms of contactless experiences – could become the de-facto standard. Customers will value not just the convenience but the safety of knowing one less person is touching the items they’re buying. Even where retailers have demonstrated strength in curbside models, they have opportunities to incorporate digital ID verification – eliminating the need to exchange a driver’s license at the point of pickup.
How are you preparing to support contactless checkout? How will that look in store vs. curbside?
Retail Trend #2: Getting personal
Within retail, personalization has been evolving from customization (reacting to customer signals) to segmentation (creating tailored experiences for groups of customers) to individualization (leveraging customer data, such as purchase history and active shopping carts, plus artificial intelligence to deliver a highly tailored shopping experience).
Mobile apps provide an ideal technical vehicle and communication channel for serving an “audience of one.” And consumers welcome this truly personal touch. In fact, in a 2018 Forrester survey, 80% of U.S. online adults indicated that they would feel comfortable sharing at least some kind of information to enable a personalized shopping experience.
Retail innovators like Stitch Fix and McDonald’s have already shown the power of personalization. Eighty percent of Stitch Fix’s active clients share feedback with the company, which then uses that data to curate “looks” for the next box. The results? Higher conversion and more items sold. For McDonald’s, investments in personalization have made it possible to adjust drive-thru menus based on real-time weather conditions, as well as customer preferences (which are linked to the license plates on their vehicles).
Retail Trend #3: Loyalty and rewards
Did you know that 95% of Ulta’s total revenues are generated by loyalty members? Or that “Nordy Club” members drove two-thirds of Nordstrom sales in 2019? Both reflect an important tenet: great loyalty programs do more than offer coupons. They also show that great programs work. If an existing program isn’t helping to drive loyalty and increase sales, it likely needs a revamp.
In this time of social distancing, customers are increasingly interacting through digital channels. That makes it more important than ever for retailers to recognize and retain customers at every touchpoint – whether on their mobile, at a kiosk, by phone or in store. Critical to making that happen is artificial intelligence (AI) and its unique strengths in helping to collect, analyze, and act on detailed customer data.
Do customers love your loyalty program? How can you make it even better to bolster retention and wallet share?
These are just a few of the trends and technologies changing how retailers engage with customers. Retailers are also embracing behind-the-scenes innovations. In an upcoming post, we will explore the role of technologies in fueling operational efficiency, worker productivity and effectiveness, and more.
Ready to think about how you can get ahead of the curve and tackle these trends now? Let’s talk.
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