Over the last two years, the retail industry’s resilience has been on full display and shows no signs of abating. Even the most traditional retail players have leaned into digital services as shoppers have embraced the convenience of it. While talk of predictions typically brings a crystal ball to mind, a snow globe might be more appropriate for this blog, as thoughts turn to what retailers need to adopt and change to survive in 2022.
Here are four key areas retailers should keep their eyes on to start working on this year:
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Next to the 100% seamless stores which are currently running as ‘pilot’ across Europe, the consumers are, due to Covid restrictions, far more digital savvy than before. They now consider digital journeys without having any sort of friction as a ' hygiene factor’ instead of a major differentiator. Many retailers still run their ecommerce shops on old user experience (UX), ‘semi-broken’ journeys and they still consider digital and physical stores as separate departments. The whole concept of seamless shopping means to understand the mind of a user and try to find out what will give them a simple, logical and enjoyable shopping experience. It is about what a user feels after interacting when shopping at a retailer. Does it leave a positive feeling, or is it the other way round? Well, this is the last thing retailers think mainly from an operational point of view, instead of thinking about ‘consumer-first’. Converging physical and digital should definitely be a top priority to improve and/or have in place for 2022. Not selecting this as a top priority, will make the survival of any retailer more difficult in the years to come. Our advice is to understand the existing frictions, listen to your shoppers’ wants and needs, and don’t rely on the standard technology because it has its limitations. The retailers should really go for the best UX and seamless journey, whether it's online, offline or even in the metaverse, because the time to act is now.
A few years ago the first blurrification of channels in retail was a big topic. This phenomenon in which consumers are moving their purchases of a product category from channels or retail formats traditionally associated with that category (e.g. food retail) to alternative channels (e.g. mass merchandise) and in which retailers from one channel are selling items traditionally associated with other channels, was and still is of great interest to both manufacturers and retailers. At one time, different retail formats such as grocery and mass merchandiser served different purposes, but they are now becoming indistinguishable.Almost 10 years later it looks like everything exploded. Discount is not only adopted by big brands to sell more, but it has also been used as a frontrunner in fresh, sustainability and innovation. Online is booming and its business model is rapidly revolutionizing itself with the introduction of subscription-based models and the hurricane of quick commerce with Gorilla and Getir leading the pack. The next big thing is the rise of Direct-to-Consumer (D2C) models and the evolution of the B2B Marketplace. This will affect the bargaining power of retailers who will be under more pressure. This will give the brand manufacturers the possibility of creating new revenue streams and be less dependent on the retailer. Our recommendation is to have a deep understanding of what the competitive edge is in this new channel and how to prove to the consumer what additional value there is to buy D2C. A composable commerce strategy can best be used to start small and rapidly scale up as you gain most traction.
Surprisingly many retailers still survive on the market without having loyalty programs. Perhaps the assumption here is that these programs need to reach a certain ROI and they may be focussed mainly on giving discounts. In a few years the difference between a good and/or a bad loyalty program will be based on real-time insights from shopping behavior. Having a loyalty program must be seen by the retailers as a first entry point to step into the data journey. We believe that within a few years the loyalty programs will go ‘full on steroids’. This means that hyper personalisation will make the difference in every part of the journey and it will help you turn your shoppers into loyal customers much faster. Loyalty on Steroids is more than just having standard perks such as discounts and saving points, it’s all about collecting the consumer data to make their experience enjoyable, exciting and rewarding in such a way that they feel truly special. Our advice on this is to explore the data you have, predict future consumer needs and implement (for a start) a few automated processes preferably using AI/ML so you can prepare for a data-driven future.
When analyzing most of the ecommerce sales funnels we identified, a key trend focused on the optimization of the conversion. In most cases there is no seamless interaction between channels. However, the focus still is on making this journey as fast and frictionless as possible. By achieving this, especially in the online grocery shopping, the funnel becomes efficient, yet dull, without any inspiration or chance for engagement. Most of the sales funnels in retail are alike. According to our Grocery Shopping Apps Friction report, insights show that online shoppers from grocery stores are switching to niche players or even back to the physical store to experience more engagement such as new recipes or new products. Our recommendation is to make sure you strike the right balance between conversion and engagement for the sales funnel. This way, you gain from optimizing the conversion rate and preventing drop-outs while making sure the experience is engaging enough. As we are not yet in the metaverse where complete immersive experiences are standard, we think that functionalities such as live commerce, shared funnels and AI-based personalized recommendations can be easily integrated into the funnel to provide a better experience in the short term.
Retail is ever changing and so are your customer expectations. One of the best things you can do for your shoppers is to supply them with better digital tools to make the shopping experience easier, convenient and hyper-localized. If you’re looking to modernize your in-store and online experience, connect with me or visit our retail page.
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