Change, they say, is the only constant and this is particularly true in retail.
Although the prevailing narrative around physical stores is negative, more shops opened than closed globally last year. We humans will always enjoy the experience of picking up and playing with products, and the convenience of taking them away with us. What is changing is how we do it – and why.
On my visits to retail locations around the world, I was able to look at the forces influencing retail, and what retailers are doing to address them. I was struck by how resourceful and inventive the retail community continues to be, and how they’re able to not only mitigate the changes in consumer behaviour, but actively take advantage of them.
Here are my six predictions for the next year of retail based on those observations.
- The intersection of physical and m-commerce
Last year, 39% of Black Friday purchases were made on smartphones. 88% of consumers now use mobile retail apps while shopping in-store. M-commerce (as opposed to simple e-commerce) is very much A Thing. While most retailers now employ some kind of mobile strategy, some are taking their use of mobile to the next level.
Beauty brand Sephora is one great example. It links its mobile app to its in-store experience, using personalised in-app messaging to entice customers to book makeovers and fashion consultations in-store, and also to inform a sophisticated loyalty programme. These efforts have not gone unrewarded – Sephora recorded a healthy 28% increase in sales last year.
The smart use of personal data drawn from customers’ mobile shopping habits has enabled Sephora to deliver a new service of genuine value and driven footfall to its stores. Likewise, m-commerce should be seen as an opportunity rather than a threat for retailers. In 2020, I expect retailers will put great effort into mapping the full customer journey, uniting digital and physical activities to understand what new services they can provide to entice people in-store, and what digital tactics they can deploy to activate them.
- A focus on the basics of customer experience
Modern customers demand convenience. How many of us have walked away from a self-service till when buying a bottle of wine because a staff member wasn’t available? Or, indeed, abandoned an online basket because the delivery time was too long? You aren’t alone – 45% of shoppers do the same.
Another essential part of customer journey mapping is the prediction of such friction points. That’s why the delivery of a simple and smooth customer experience will be a key focus for retailers in 2020. Perhaps some will take cues from Tangar, an app that allows customers to build shopping lists at home and then shows them how to navigate around the store to pick up the products when they arrive.
This year, retailers will be looking to offer more of this type of convenience. Using a mix of data collection and a deep interrogation of shopper behaviours, we will see a gradual improvement in the identification of those pain points, and ever more novel approaches to eliminating them.
- Amping up the shopping experience
To drive footfall at scale, retailers will continue to exploit the unique experiential opportunities physical stores provide.
Consider Japanese cosmetics outlet AINZ & TULPE. In 2015, it created ‘Look’, an interactive digital shop window, for its flagship store in Tokyo. Multiple models’ faces, made up in on-trend Japanese styles, followed tourists as they walked past. Once they had their attention, tourists who touched the screen with what they deemed the most appealing face received multi-lingual coupons for the make-up used in the picture.
Look’s greatest triumph was its ability to get people off the street and into the shop, particularly those with whom there was a language barrier. It generated a 40% increase in tourist visits to the store and a 10% daily increase in sales.
In other words, experiences like this should have a tangible outcome. Generating social coverage is nice, but it’s unlikely to provide a solid ROI. As e-commerce and m-commerce continue to grow, I expect we will see physical retail react with more of such innovative, bottom line-focused approaches next year.
- Sustainability as a selling point
This year we have seen the growth of Extinction Rebellion, the rise of the extraordinary Greta Thunberg, and public opinion turn firmly against single-use plastics. Many brands have responded with ambitious sustainability pledges, while retailers such as Waitrose have launched packaging-free initiatives to great fanfare. Sustainability will be an equally hot focus for brands in 2020 – and given that 87% of shoppers say they would purchase a product because the selling company promoted a cause they cared about, who can blame them?
One organisation to watch is Terracycle, and its service Loop, a remarkable, first-of-its-kind circular economy scheme. Customers can purchase branded products online through the Loop Store or partner retailers, paying a deposit for reusable containers. Goods are shipped to consumers in a reusable tote bag, which they refill with the empty packaging after use. The totes are then collected by a courier, which returns the packaging so it can be refilled, and the cycle can begin again.
One important thing is that Loop doesn’t compromise on customer experience with its packaging choices, which brands are already finding highly appealing. And what Loop is doing is just the tip of the iceberg for new sustainability drives. Retailers’ back office and operational sustainability efforts are sure to become yet more comprehensive next year, and these efforts will be used in consumer-facing comms and marketing, too.
- Ever stronger storytelling
Storytelling is an overused word, but it really works. Studies show that stories activate seven parts of the brain, triggering memory formation and all-important emotional engagement. People identify with stories more than facts, and they are more likely to share them. That’s why I expect retailers and brands to double down on bringing their stories to life next year.
Take Swiss handbag brand Freitag, which makes bags from recovered truck tarpaulin and old setbelts. In its new Zurich store, a customer can book a 90-minute slot and build a bag themselves, which shows the craft first-hand and reinforces the back-story that gives rise to the brand’s innovative materials. Customers get an appreciation of how the bags are created, and an understanding of the eco story behind them.
Much more memorable than ordering a bag online – and an experience that could only be provided in person.
- A push for personalisation
Studies show that 39% of shoppers who receive a personalised shopping experience will tell people about it, while 44% are likely to become a repeat buyer. And personalisation is set to move far beyond digital experiences.
At the new adidas store in London they combine real-time personalisation with delightful convenience. Show an item to a smart mirror in the store’s changing rooms and it will display product information. Or point your phone at a pair of trainers you like, and its app will let you select a size to try on. You’ll even be brought your selection by a member of staff if you wander off to another part of the shop. It’s like an online retargeting tactic, but of genuine benefit to the customer.
Retailers in 2020 will continue to explore how they can develop personalisation in their offering. One challenge will come from ensuring consistency of personalisation over the entire customer journey. This means focusing on how a customer is welcomed to the website, how they are addressed via e-mail and how they are dealt with in store, which requires a single, unified source of up-to-date customer data.
Implementing such a thing is no mean feat – but those who do, and who develop engaging new customer experiences as a result, are set to have a great 2020.
Ian Scott, Retail Innovation Manager, Tag