Retail technology is perhaps one of the fastest growing industries coming out of the pandemic, with digitisation being one of the key aspects of this transformation.
Customers’ expectations and needs are changing parallel to this shift and successful retailers must reshape their business models to adapt to these new customer behaviours and buying trends.
2020 was a transformative year for retail – with 2021 increasingly building upon the previously established trends from last year. The pandemic, whilst devastating for many sectors, has created an impetus for dramatic, innovative change within the retail sector, offering a compelling case for a digital-first approach. As we have seen, the shift to digital accelerated across business. Retailers have had to invest in greater retail technology, not only regarding digital storefronts, but also throughout the customer experience. According to the Office for National Statistics, at the height of the pandemic restrictions in April 2020, retail sales fell by a quarter compared with before the pandemic, however the number of sales that took place online increased by over 10% compared to the same period (March to August) the year before. Furthermore, the study also found that despite the reopening of stores across the UK later in the year, the increase in online sales remained and has continued into 2021, showing a clear move from physical stores to online storefronts.
This escalation of online customer engagement, including among customers who previously did not interact with online channels, will only increase the importance of organisations needing to deliver intuitive, straightforward customer journeys as well as personalised services and experiences. Above all, this will rely on customer trust, to share their data to receive better and more fulfilling customer experiences. This data can then be used by brands to create customer profiles and provide offers and recommendations relevant to the individual. This, according to Forbes, results in 91% of customers being more likely to shop with a brand again.
As we have seen in many sectors over the last year, not only are customers becoming more reliant on digital transactions, but also, due to the variety and quantity of products available, consumers hold a large amount of influence now more than ever. In today’s digital era the power dynamic between organisations and their customers has dramatically changed, increasingly leaning more towards the customer. As a result, more and more retailers are having to respond and act in ways that at times may not be cost effective. One prime example of a change such as this can be seen in the normalisation of free returns. In the past, to make a return, the customer would pay the postage to send an item back. However, as some organisations began to spearhead free returns, other retailers had to follow to avoid losing business. In this way consumers hold far more influence than before, due to their ability to take their business elsewhere thanks to increasingly competitive and accessible markets. Additionally, the normalisation and demand for the implementation of universal payment solutions such as PayPal, Apple Pay and most recently the payment splitting function Klarna, is another change we can see in the industry that was led by customer expectation.
Whilst it’s important for companies to adapt to the changing demands in the virtual retail sector, organisations should not forget about the increasing opportunity to improve physical store experiences with technology. Online sales experienced growth equivalent to 5 years over 2020, however these still represent under a third of all retail sales, so the continued importance of in-store experiences is evident. Technologies such as predictive attention analytics have long been used to test and optimise stores to aid footfall. Predictive visual analytics platforms instantly show what the human brain sees first, enabling organisations and brands to optimise the performance of their content whether moving or static, digital or physical. Not only do technologies such as these help retailers know how to better their in-store offerings, but they can also help businesses sensibly introduce digital services such as video concierge, allowing customers to shop ‘in-store’ over video conferencing services. This can be especially useful for organisations whose stores were not designed with video concierge in mind.
Over the last decade, with the introduction of online retail and most recently with the boom in digitisation brought about by the pandemic, consumers have gained increasing agency. Today, customers are even more able to demand change within the retail industry. We find ourselves facing a once in a generation opportunity to reset the retail experience, with much of the potential for change being led by consumers. However, to do this, retailers will need to be open and willing to implement change, led by the customers’ needs.