I think we can all agree that the immediate wash up of a post pandemic period has been challenging and complex for everyone. The combination of rising inflation, economic recession, supply shortages, war in Ukraine and Government changes, have put both consumers and destination owners and operators under pressure and unsure of the path ahead.
Many in the retail sector are wondering whether a return to in-person experiences and a resurgence of customer experiences is viable in an industry with recruitment issues, a lack of experience and training? Added to this we don’t know if the rise of online retail will continue post Covid.
As the costs to borrow increase, how far and how much investment should and will be made in infrastructure, development, people and experiences?
There are still many uncertainties and unknowns in the sector that I want to shed some light on in this article and hopefully give retailers some guidance based on my experience and research, as they seek to find a way forward.
Are we seeing the start of Digital Fatigue in consumers?
Digital Fatigue is a new term starting to be used in the post pandemic landscape. The growing consensus is that consumers have had enough of lockdown, staying home and are now feeling more bold and adventurous and want to return to physical experiences. If that is the case, then creating a welcoming environment will be key to trapping this audience who are thirsty for experiences.
The trend is being backed up by some interesting research. For example, IDC analysts predicted that by next year, to counter digital fatigue, 60% of leading organisations will look to differentiate by delivering trusted and memorable engagements that recreate physical experiences.
Coupled with this, e-commerce as a competitor to in store shopping is starting to level off. Gartner analysts saw e-commerce totalling about 17% of retail sales in 2022 with growth as a percentage of in-store shopping almost levelling off in the next few years.
Hybrid retailing on the rise
Whilst most shopping journeys start online, it doesn’t mean they should always finish there. In many cases an online shopping journey’s best and most convenient destination is a physical store down the road. Shedding the siloed approach and “us vs. them” mentality of “online vs. offline” is a huge opportunity for retail destinations.
And there is evidence to back this up. Consumers are opting for hybrid -shopping rather than strictly online, with 48% of people preferring hybrid -shopping compared to 39% this time last year according to the Boston Consulting Group research on shopping habits.
And according to Andrew Goodacre, CEO of the British Independent Retailers Association (BIRA) we are seeing more of the smaller retailers develop ‘hybrid’ retail models, making better use of the opportunity provided by the internet to complement their physical store.
Sustainability.
This continues to be an important issue in retail and an influencer of purchase decisions. Genuine and demonstrable commitment to sustainability is needed. Greenwashing is a big no no and harmful to reputation. 63% of customers say they would like brands to be more vocal about their sustainability plans, but remain sceptical about their authenticity according to The Chartered Institute of Marketing.
90% of consumers are more concerned about sustainability than ever before. (BCG). Retailers need to evolve with the consumer to hold onto their brand relevance in 2022 and beyond.
Brands need to show off their culture and purpose. Sustainability must be at the heart of their business and across the entire supply chain. According to the British Retail Consortium 41% of Brits recognised that recyclable choices and sustainable packaging influence their buying decisions, and 70% are willing to pay a price premium of 5% for sustainable products.
A couple of other trends to be aware of include:
- Focus on food and eating. Food is the new clothing. Well, almost. Market trends are pointing to a diverse food mix in shopping centres, and this new leisure activity will drive footfall. According to research by Deloitte, 35% of respondents would visit an enclosed shopping mall if amenities included a food hall or dining/take out facilities and this rose to 40% of respondents aged 18-34.
- Hyper local is a growing opportunity. Local store lookups have increased more than 4 times their pre-pandemic levels, and stay there, according to Near St Shorter trips and local tourism is growing as travel risks linger. The farther you travel, the less secure you might feel. Searches containing “getaways near me” have increased by 100%, and searches containing “open now near me” grew by 40% between September 2019 and August 2021, reports Google. That’s good news for local merchants.
The rise of data driven retail marketing
Marketing is evolving. Shopper Marketing has needed to change and COVID has provided that catalyst.
Consumers are now much more digital savvy. Mobile phones have allowed consumers to price check, research and showroom in real time. Today’s destinations need not only to readily accept digital, but embrace it in equal measure to join the clicks to bricks.
This means that destinations should be more data driven not only for business decisions, but in marketing to shoppers, specifically in managing shopper data and using insights from the best of CRM technology to personalise and add more relevance and reward to shopper communications.
For some businesses, challenging times, create problems, but for others, they create opportunities. For smart retailers there are some obvious trends developing and opportunities to seize now.