‘RETAIL IS DEAD’ has been a widely-published headline for years now, and for good reason. The retail market has been overwhelmed by change. It’s becoming more dynamic, faster paced and increasingly more competitive.
But dead? From what we’re seeing, the opportunity for innovation and growth has never been more apparent. Perhaps today’s retail revolution is best summarised by Nike’s Vice President of Stores, Cathy Sparks, who once said:
“Retail is not dead, but boring retail is dead.”
Here are some of my predictions for what retailers should expect to see take place in 2020, and what you can do to keep pace:
‘Brand interaction hubs’ will dominate the High Street
Consumers can buy almost anything online these days; from zombie survival kits, to yachts and jets, to entire towns (Albert, Texas, sold for $2.5 million on eBay back in 2007). The fact is, more often than not, visiting a store is no longer the most convenient way to shop.
Now that consumers no longer NEED to visit stores, retailers need to make them WANT to, hence why so many retailers are focusing on providing novel and engaging customer experiences.
Brick-and-mortar retailers are transforming their stores into ‘brand interaction hubs’, where consumers can interact with their brand, their products and their people in an engaging way.
Four out of five consumers value experience as much as a brand’s products and services and customers are willing to pay 16% more for a great in-store experience.
Perhaps that explains why we’re also seeing big manufacturers, digital businesses and previously pure-play/online only retailers like Google, Amazon and Warby Parker build interactive playgrounds. In fact, over the next five years it’s expected that 850 digital native companies will invest in brick-and-mortar stores.
But to do this well, retailers are realising that they need to accurately understand who their customers are and to adapt their stores to deliver powerful experiences to them specifically.
Return on Experience (ROX) will become a trusted metric for retailers
PwC say what we all intuitively know to be true: that experience is what makes a brand a winner and investment in experience is essential.
PwC’s Global Consumer Markets Leader, John Maxwell, said: “Whether your organisation sells household goods, health services, cars or financial services, delivering a superior experience will be what makes you a winner… Because consumers today are so discerning and powerful, it’s our perspective that most organisations need to invest far more in customer experience (CX).”
Unlike a Return on Investment, which is typically immediately measurable through sales increases or cost reductions within a single channel, PwC’s new concept of Return on Experience (ROX) is a metric that relates to your entire omni-channel offering and its ability to develop short-term sales but also lasting brand-relevance.
Retailers will focus on building communities around their brands
In our social media driven world, modern consumers are eager for a sense of community. They want to be connected with people that share their tastes, interests and passions.
To increase brand relevance, we’re seeing more retailers using their stores as community spaces to connect customers through their brand. But customers don’t want to just be a part of any community, they want to be a part of a community that reflects their values.
Sustainability is something that’s playing heavily on the minds of today’s more conscious consumer base, leading to a very strong demand for greater transparency and accountability from big brands.
Over half (57%) of consumers will pay more for sustainable products and 61% will switch away from a non-environmentally friendly-brand.
In 2020, we will see more and more retailers realise and meet this demand by building more places where consumers can gain value, community and connection.
Tailored inspiration will drive greater customer engagement
Modern consumers are looking to be inspired, but in order for this to happen, it needs to be highly personalised and relevant to them.
That’s why personalisation is becoming increasingly important – 91% of consumers are more likely to shop with brands that recognise them and tailor offers to them, and over 50% expect to receive personalised offers within 24 hours of making themselves known to a brand.
For Millennials, promotions are digital, communicated one-to-one and in real-time via mobile devices in-store and online. That’s why in 2020 we will see store sales events becoming highly personal and immediate.
Stores will become one of many touchpoints
With today’s technology, consumers now dance to a completely different beat than they did a decade prior. For instance, one in 15 online purchases now happen between midnight and 6AM, proving that the retail market is always open and constantly evolving.
“The role of the store has also evolved, becoming one of many touchpoints that lead to consumer transactions.”
In 2020, we will see a unique blend of large, all-encompassing flagship stores combined with smaller convenience formats and increased omnichannel integration. For most major retailers, that means operating across a multitude of physical footprints, all aimed at pleasing their target customer in a variety of shopping modes.
But there will also be an increased focus on hyper-localised offerings, like Nike by Melrose, which uses data analytics to curate products that appeal to Nike Plus members in the area.
The shop floor will embrace automation
New improvements in AI and machine learning will provide unprecedented business insights for better workforce management on the shop floor, allowing store associates to focus on building valuable relationships with customers and becoming experts in their field.
Retailers that utilise the latest technology to pinpoint valuable touchpoints in the in-store customer journey, and use a virtual queuing system and appointment booking software to create more engaging and powerful journeys, will gain a considerable advantage over the competition.
As it stands, 53% of Millennials don’t think store associates have the tools they need to provide great customer service – showing a clear opportunity for improvement.
With the right tools in place, store associates will have more time to dedicate to customers and become product experts, which will have a positive impact on consumers.
The vast majority (79%) of consumers say the opportunity to engage with knowledgeable store associates is “important” or “very important”.
The subscription economy will become the new norm
Up until recently, the subscription economy has been dominated by clever e-commerce businesses that find a niche and dominate it, but the industry is growing rapidly. In the US, the subscription e-commerce market has grown by over 100% every year for the past five years.
With subscription models, consumers are essentially outsourcing decision-making to brands and trusting them to do the thinking for them. Rather than fixating on numbers sold, the focus is on successful outcomes. For retailers, it’s a huge opportunity to convert transactions into long-term relationships and sustained revenue streams, but this will require brands to better manage personal, responsive and multi-dimensional relationships using customer data.
In 2020, we will see larger brands move into the subscription economy and also move into lifestyle categories, such as sports and fitness, rather than being product specific.
At Qudini, we’re big believers in the power of the High Street in driving brand presence and relationships and, as a result, securing lasting brand relevance.
We’re driven to ensure that the magic of retail thrives into the future through creating a world where retailers own their future and their stores become essential and strategic tools for driving lasting brand relevance.