From the panic of the pandemic to the roller coaster of recovery, disruptions have hit retailers in significant ways.
New consumer buying patterns that began before COVID-19, such as a shift toward buying online, have intensified. Customer expectations have been impacted, too, as many shoppers look for personalized treatment and instant communication. With supply chains in flux, in-store shelves are frequently either bare or overstocked.
It’s undeniable that the events of recent years, coupled with new technologies, have triggered adjustments on nearly every level. A reflection on the past, along with insight on current happenings, provides insight into the future. What exactly will 2023 bring for retailers? Will there be further bankruptcies? Which companies will be ready to face the realities of today and tomorrow?
Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for Read More
Five Digital Retail Trends On The Horizon
Here is a look at five trends on the horizon:
Trend 1: Retailers That Don’t Transform Digitally Will Struggle
The breadth of change that is reshaping the consumer goods industry has already dismantled some retailers. During the past five years, margins across the segment have, on average, shrunk by two to three percentage points per year (or more), according to research by McKinsey.
Retailers unable to undergo and maintain a tech transformation will lag the digitally advanced players. Between 2016 and 2020, retailers with robust tech generated 3.3 times more for their shareholders than those that had not made advanced digital implementations, according to the Digital Quotient Survey by McKinsey. The discrepancy will increase as consumers lean into ecommerce and expect a seamless omnichannel experience.
Transforming for the digital world, however, requires far more than putting up a website and digitizing processes. Taking advantage of technology to avoid negative profit margins begins with a step back to survey the organization.
It ponders questions such as: How do the current processes in place operate? What types of short- and long-term goals are in place? What changes should be implemented to reach those objectives?
Trend 2: Forward-Thinking Retailers Will Walk In Their Customers' Shoes
The relationship between a customer and a retailer is of utmost importance – and when it falters, shoppers shift. Among consumers, 64% reveal they have switched to a competitor due to a poor experience, according to the 2022 State of Digital Customer Experience Report by Verint.
However, the same survey indicated that 78% say they are more likely to be a repeat customer if they have a high-quality digital customer experience. Shoppers base their satisfaction on factors like quick response time and the ease of communicating.
Retailers that want to build positive relationships with new customers, and then retain them, will pay utmost attention to these expectations. Company executives that aim to stay in tune with consumers will take a walk in the shoes of their customers. That means strolling through a retail store and viewing it from a shopper’s eyes.
What’s readily available? What’s missing? Where is help available? Are there opportunities for video discussions with store associates, or other interactive devices? The same is true for online experiences. What do online shoppers see on a website? How can their questions be answered? How will they find what they are looking for?
Trend 3: Retailers Will Develop A Growing Awareness Of Mobile Customer Experiences
It’s the device that consumers have on them nearly all the time. In the mobile world, consumers socialize, work, plan, play, and shop – all from their phone.
Given its omnipresence, retailers that want to increase profitability will be keen on understanding the importance of this small, powerful device. In the upcoming months, products that can be easily discovered on a cellular phone will gain advantages over those that are hard to view.
Trend 4: More Retailers Will Shift Toward Video Interactions
CISCO estimated that video consumption would account for 82% of internet traffic in 2022. Clearly, consumers are growing more accustomed to going online and watching stories unfold on their screens.
This presents a key opportunity for retailers who are ready to jump in. Store associates don’t have to be stationed at a certain place in a brick-and-mortar place; they simply need to be available for a video chat to answer a shopper’s question.
Influencers play a role here, too. Shoppers look to see what their friends buy and recommend online. They also pay attention to social media influencers. Nearly all consumers planned to make a purchase through social shopping or influencer commerce in 2022, according to data from Sprout Social.
Trend 5: Retailers Will Focus On Improving Margins And Will Use The Power Of Digital To Make It So
Digital shopping means that previous physical boundaries have been broken down, and this opens new potential for retailers selling specific products. Items are no longer bound to store shelves and can be sent just about anywhere in the world. This means retailers that sell niche items have access to new markets.
The key to success lies in connecting products to those who are interested in them. The right keywords and phrases, along with an engaging digital storefront, can make this feasible.
While many forecasts remain uncertain, one factor is clear: those who are agile, flexible, and ready to adapt will have increased chances for survival. Companies with creative talent and the right mindset will be ready to face these trends and move proactively through the coming year.
About Gerard "Gerry" Szatvanyi
Gerard “Gerry” Szatvanyi, Forbes Books author of The Great Digital Transformation: Reimagining the Future of Customer Interactions, is the co-founder, president and CEO of OSF Digital, a consultancy and integrator focusing on Salesforce and supporting B2C and B2B companies through digital transformation.