The Future of Retail in a Rapidly Changing Consumer Landscape
The consumer industry is changing like never before. Post-COVID, the push for contactless and newer distribution models supported by digital levers, anywhere anytime commerce, tiered loyalty structures, and differentiated pricing models have made retailers and consumer goods firms choose innovation to define retail’s perpetually evolving role.
What are the key trends that will shape 2022 and the future of retail?
Here’s an overview.
Hyper-Personalization Is Becoming the Norm
Discerning consumers look for micro-targeted offers and promotions as the ‘segment of one’ is gaining predominance. While personalization has been around for some time, the ability to leverage consumer data left as digital footprints across e-commerce sites and social media channels opens new opportunities for hyper-personalization and engagement. More refined recommendations and life-event-based offers increase customer satisfaction and marketing ROI.
Live Commerce Is Just Getting Started
When Alibaba focused on Taobao Live in 2016, not many knew that the future of commerce was about to begin. Social commerce is already mainstream. The next frontier for retail is live commerce. This engages customers in real-time through chats and videos. Influencers vouch for products and enable sales. The primary purpose is to make the buying process more interactive and entertaining, moving the consumer in their decision journey from awareness to purchase. Shopping as a community in live sessions enhances participation and product knowledge. It’s a single-point platform that brings together content, creators, and community. China’s live commerce gross merchandise value reached $171 billion in 2020, while that of the US is expected to reach $25 billion by 2023. Retailers like Nordstrom, Macy’s, and Avon are on board the live commerce bandwagon, and the area is ready to show explosive growth in the coming months.
Stores Will Leverage Greater Synergy with Digital
Even though the first half of 2020 saw a record number of retail bankruptcies, liquidations, and store closures, retail stores will remain the largest and most important channel for retailers in the future. The role of retail stores will evolve to become multi-dimensional across branding, transactions, and fulfillment.
Phygital will play a more significant role as physical stores and digital experiences merge and leverage each other’s advantages. Stores will identify customers during check-in instead of check-out to personalize and provide immersive shopping experiences. Visual merchandising with endless aisles, virtual try-on, and cognitive assistants will improve the in-store experience. Heat mapping will lead to better product placements using the internet of things. Consumer recommendations, facial recognition, and community collaborations will lead to seamless shopping experiences. Stores will be increasingly used as localized and last-mile fulfillment centers as dark stores and ship-from-stores gain more traction every day.
The supply chain for retail is witnessing unparalleled growth
According to Euromonitor International’s Voice of the Consumer: Lifestyles Survey 2021, 32 percent of consumers will purchase from brands that support social and political issues that align with their values. Around 27 percent will boycott brands that don’t echo their values.
Brands will focus on ethical sourcing, green supply chains, recyclability, and other areas to align with their customers’ value systems. Blockchain will be more extensively used. It is already used to track end-to-end sourcing and suppliers to provide greater transparency across the supply chain, such as in farm-to-fork foodservice retail. Newer allocation and distribution models within the supply chain are also emerging, bringing greater agility to last-mile delivery.
The Evolution of Retail and Rise of the Consumer Genome
Wall Street’s retail apocalypse narrative has finally been laid to rest in 2021, as retailers across the US opened 8,100 new stores, about twice the number of announced closures. While the type of store openings centered around discount, off-price, and warehouse clubs, brick-and-mortar will remain the dominant channel for shoppers. However, the role stores play will undergo a paradigm shift with a greater emphasis on omnichannel.
The consumer genome will become increasingly rich, drawing in data from consumers’ digital footprints while shopping and browsing. There’s never been a better time for retail, and only the smartest and technologically adept retailers will stand to gain the most from these changing times.
References
1: www.alibabagroup.com/en/news/article?news=p200330
4: www.euromonitor.com/article/five-key-global-consumer-insights-to-help-future-proof-your-business