It is often said that change is inevitable, and in retail, this is especially true. The retail industry is a sector in a constant state of disruption.
Influenced by technology and increasingly fast-paced changes in lifestyle trends, consumers are constantly evolving. And they expect the brands they purchase and the stores they frequent to keep pace with their changing preferences. In retail, it is the organizations that constantly reinvent themselves that stay one step ahead.
The impact of e-commerce demonstrates the need for constant evolution
Looking back at the rise of e-commerce brings to life the rapid pace of change retailers must be ready to embrace. In 1990 the world’s first web browser was launched, making possible the e-commerce platforms we are familiar with today. Amazon launched in 1995, just two years later the brand had completed 1 million transactions and quickly went on to become one of the world’s largest retailers.
In 2021, Amazon accounted for almost 60 percent of all online purchases in the U.S. In the U.S., e-commerce accounts for 14 percent of all retail sales but, in some sectors, online sales are much higher, for example representing 46 percent of apparel sales.
Brands that were unable to foresee and respond to consumers’ rapid adoption of online shopping found themselves out of touch. In 2020 Neiman Marcus, established more than 100 years earlier, filed for Chapter 11 bankruptcy having struggled to adapt to the rise of e-commerce, demonstrating just how important online sales had become.
And Amazon is a leading example of reinvention for retail success. Launched as an online bookstore, Amazon excelled at listening to and delivering against consumers’ needs, leveraging data to build intuitive customer experiences and evolving to include music and video then consumer electronics, toys, games and more to become the one-click-everything-store consumers recognize today. The brand continues to evolve into new categories and formats, even opening brick-and-mortar stores as e-commerce giants explore the role of physical brand experiences.
New technologies drive changes in consumer behavior
E-commerce isn’t new, but the need for retailers to continue to evolve in the face of changing consumer behaviors driven by technological advances remains.
In 2021, 74 percent of Americans purchased goods online and that comes as no surprise viewed in the context of wider consumer habits. In 2011 only 35 percent of Americans reported owning a smartphone. By 2021 that number had risen to 85 percent. The rapid rise of smartphone ownership put the internet into consumers’ pockets and, naturally, they moved online.
Today, while e-commerce is commonplace, new technologies are reinventing e-commerce.
Four key retail technology trends in 2022
- Social commerce
Social commerce is the practice of enabling consumers to purchase directly on social media platforms. Traditionally, social media has been seen by retailers as part of the product discovery phase, enabling consumers to learn about brands and products. But, today, forward-thinking retailers enable consumers to complete their entire purchase without ever leaving their preferred social channel.
The global social commerce market was valued at $584.91 billion in 2021 and is anticipated to grow to reach $6.2 trillion by 2030. 80 percent of executives expect to be selling via social media within the next ten years, demonstrating that brands not already embarking on social commerce risk being left behind.
Today’s consumers don’t differentiate between online and offline experiences. Every interaction with your brand, whether in-store, on your social channels or on your website, is part of one connected brand experience.
In recent years brands rushed to meet customers in their channel of choice, but many failed to connect back-end systems and tools resulting in multiple standalone experiences.
Brands focused on multi-experience recognize that customers move back and forth between channels as they browse and purchase and want to have a single connected experience, for example seamlessly researching a product on your website, learning more from your chatbot, following up with a live agent, making a purchase on social media and having the opportunity to exchange the product at the local store.
To move away from frustrating siloed experiences, brands are investing in technology to ensure a seamless 360-degree view of the customer regardless of channel, as well as building channel-specific experiences.
And 360-degree data isn’t just good for the customer’s experience. With a true understanding of your customers and their behaviors across channels and platforms you can better drive cross and upselling opportunities.
While Gartner data reveals that only 14 percent of organizations have achieved a 360-degree view of the customer, the race is on to create a single customer view as brands push towards digital transformation.
- Next-gen technology
Augmented reality (AR)
AR lends itself naturally to the online shopping experience. By offering AR tools, shoppers can visualize their purchase. Retailers making use of AR have the opportunity to drive sales while also limiting returns by enabling the shopper to “try before you buy”. And adoption is on the rise. By 2025, it is predicted that nearly 75 percent of the global population and almost all smartphone users will be frequent AR users. As such, AR is a seamless addition to social commerce.
The Metaverse will transform how retailers interact with their customers. While still in its infancy, brands that discount the relevance of this platform to their audience risk allowing the space to be dominated by others. Just as in the early days of e-commerce, the metaverse is an environment unlike any other and retailers must explore how it fits into the experience for their consumers.
The metaverse is a space where brands can be creative, extending their brand experience into new spaces. Several well-known brands have begun testing the opportunities the metaverse presents for retailers. NIKELAND gives consumers the opportunity to explore Nike products by outfitting their avatar and trademark filings reveal plans to sell virtual branded sneakers and apparel. A series of patents suggest that Walmart, the largest retailer in the U.S., also has plans to enter the metaverse.
In 2017 just 7 percent of Americans aged 12 and over owned a smart speaker. Today that number is 35 percent. While consumers most commonly use smart speakers for simple tasks, like playing music, in 2021 27 percent used smart speakers to make a purchase with health and beauty, electronics and household supplies being the most purchased categories.
Voice-enabled commerce lends itself to everyday purchases such as dish soap, kitchen towels and pet food. When it is a regular purchase, you know exactly what you want and don’t need to consider the pros and cons of different options.
22 percent of consumers using smart speakers for shopping cite the lack of a visual display as a drawback in the shopping experience. But, as our homes become increasingly connected, we can anticipate a likely uptick in voice-enable commerce. Imagine you ask your voice assistant to help you buy a pair of pants, you’re shown a variety to choose from on the smart display in your kitchen and prompted to use voice commands to scroll through to compare, choose and purchase the option that best suits your needs. This approach would radically change the nature of online search in e-commerce.
The combination of intuitive voice-based search with the reassurance of visual display is expected to drive voice-based commerce forwards. Retail brands should be mindful not to overlook this technology as it continues to evolve.
Since urban covered markets first made retail an organized industry the sector has been evolving. Today, technology continues to create new ways to engage with consumers and is reshaping the retail landscape. By listening closely to your customers, understanding their changing needs and identifying and eliminating pain points across your customer journey your brand will stay one step ahead.
From customer journey analytics to customer experience design and delivery, Startek® has the skills you need to deliver world-class retail experiences. To learn more about how we can support your brand, contact us.