The Need to Transform Now
Millennials, Gen z, or Covid-19 all have disrupted the retail industry across sub-segments, still, the demand is purely driven by consumer expectations. Today, companies with innovations are defining the boundaries and standards in the industry. Leaders in various segments rely on technology that enables them to deliver what consumers want, at a scale, and provide the ability to quickly innovate.
In 2020, the entire landscape of consumer expectations has changed. There is a growth of recession-trained and fixed-income shoppers. Now, consumers want the best value for money, experience the product first and most of them give low priority to brand loyalty.
The Change was Already Here
In the last few years, we’ve seen the boundary between online and offline stores is disappearing. Consumers expect a true omnichannel model of online-instore-mobile by the retailer with importance to originality and relevance. Friends & peer generated views on social media matters today.
According to research, 44% of European millennials take instore pictures to collect opinions of loved ones whereas 56% compare prices on the internet while they are in the store.
According to eMarketer, as reported before Covid-19, Retail eCommerce sales are projected to grow at approx. $1Tn every year from 2019-2023.
Before pandemic, US retailers were majorly focused on drivers like on speed of technological changes, shifts in demographics and shopper behavior, global economics of procurement, transparency, and knowledge-centric shopping.
Changing Preferences Post Covid-19 Era - Get Ready
For most companies, the customer experience was the only way to differentiate themselves before CV-19. The next era is different, it is for the retailers who can innovate, transform their businesses quickly, and be the pioneers in defining the new normal beyond customer experience. Companies need to understand the holistic picture.
- Millions of people lost jobs and forced nearly everyone in the world to cope up with sudden social distancing norms. Consumer habits are already changing with contactless shopping getting popular.
- Everyday pricing will be a crucial factor to answer value for money need; as consumers plan to be cautious, even when the spread of the virus subsides.
- Consumers will now expect retailers to simplify their shopping experiences. There is a clear shift to eCommerce, click & collect, and even ways in which certain categories are consumed could alter consumer behavior permanently, creating a new retail environment.
- Inventory optimization will be based on new habits of consumers and will need more frequent sales and operations alignment. It means a need for better tracking, measuring, reporting, and analysis
- Proper demand forecasting will be needed to avoid stock-out situations, post-pandemic, at regional as well as store levels and eliminate uncertainty factors.
Staying Ahead in the Race - the tech intervention
The need for social distancing to curb the Covid-19 epidemic will continue to drive the sales for some more time. The era of inventory-led retail is ending with the consumer-driven intelligent supply chain taking the front seat with emphasis on last-mile fulfillment, omnichannel capability, and demand forecasting. The focus should be on new technology that accelerates and enables transformation at scale to think beyond the current normal.
IoT: IoT is one of the game-changers in retail. Retailers will need to improve the ability to monitor goods throughout the entire supply chain. For flawless delivery and service, retailers should equip themselves with tracking systems that report valuable data such as location, temperature, providing insights into quality control and traceability.
AI: With current customer trends towards touchless shopping retailers can reap benefits quickly. Visual recognition and infrared technology can make online and in-store experiences better for customers. Companies in apparel, footwear, and Food & Grocery have realized the value of the investment.
Voice Commerce: Voice commerce will play a significant role in eCommerce with WW Voice-based commerce touching $83 Billion by 2023. Voice search queries using virtual assistants or audio-to-text conversion capabilities will give an edge to retailers looking for innovation
Blockchain: Retail is the 4th largest Blockchain market projected to grow $933 million by 2022. For customer loyalty schemes retailers should leverage blockchain for data capture at every stage of customer interaction. eCommerce companies can lead by addressing supply chains management issues like product tracking and authenticity with blockchain. It will reduce the risk of counterfeiting especially in arts, antiques, luxury goods, etc.
Mobile: Companies innovating on this front will have an edge in the long term as shopping is going mobile, in-store and out. Millennials or non-millennials everyone preferred mobile as a primary shopping channel. In fact, 50% of digitally influenced in-store sales will be driven by mobile in 2021. With mobile payment being the world’s largest and fastest-growing market companies should look for partnerships and software companies to can keep them ahead.
In the backdrop of global economic uncertainty, the retail industry needs to quickly undergo a major transformation in both eCommerce and brick-and-mortar. Retailers need to re-evaluate their current operations and adapt to succeed. Companies should look beyond the current situation and stay relevant through
- A clear vision to evolve
- Focus on localization and scalability simultaneously
- Well balanced investment in both brick & mortar and eCommerce
- A seamless shopping experience across channels
- Super exciting in-store or off-store experiences
At Sonata, we understand the core principles of retail and the emerging trends of digital transformation. Sonata Connected Retail specializes in developing platforms and frameworks to help you go to the next level of your digital transformation. Reach out to us right away, and we'll show you the way.