The days of the passive retail consumer is over. Today, they’re seeking a much deeper involvement in their purchasing journey – and the brands who can give them this are the ones with whom they will choose to shop.

The retail industry has just experienced a watershed couple of years, defined by unprecedented changes and brought on in part by the pandemic – high inflation, rising energy prices, the cost-of-living crisis and ongoing geopolitical uncertainty. And although as we head deeper into 2023 some of these issues may be easing off to a certain degree, it’s fair to say that we are all stretched and needing to make our money go further. Retail brands, meanwhile, are navigating raised operating costs, ongoing supply chain pressures and narrowing profit margins.

Consumer attitudes and behaviours are changing. People are seeking greater value from their shopping, and while price will be the ultimate purchase driver, there is a reluctance to compromise on convenience and values. Expectations of service, retail technology and sustainability are rising. The future of retail will be hybrid, seamless and regenerative – and the shopper will be much more deeply involved.

Three of the main ways this desire for involvement is manifesting itself are people’s use of social media, their craving for personalisation and how they are embracing sustainability.

The rise of social commerce

Consumers are looking for a heightened sense of value and connection from brands and retailers. As they seek to be rewarded for their engagements, the focus is on strengthening emotional relationships and enabling participation.

“In the UK, one out of three Gen Zers now start their purchase journeys on social,” according to Ogilvy Social.Lab’s Social Media Trends 2023. And according to Mintel, social commerce is predicted to rise to a staggering $604 billion globally by 2027.

However, social commerce is currently in a period of evolution, as Facebook, Instagram and TikTok all scale back their commerce efforts and refocus on driving ad revenue. In app-purchases have been affected by lack of trust and experiences not being seamless, while the cost-of-living crisis is increasingly driving consumers to marketplaces. And nearly three quarters of consumers are using marketplaces/peer-to-peer sites, with research suggesting that convenience and fulfilment options are proving the greatest draw.

Some platforms are recognising the shift and adapting the customer journey accordingly. They are further enhancing the product discovery stage through social channels and then using marketplaces to close the loop. For example, Snapchat provided an AR try-on experience for users, with checkout directly on Amazon.

Shopping apps with TikTok-style feeds are incorporating livestream shopping, which continues to be a powerful means of creating connections and growing communities. Influencer commerce is also rising as consumers become ‘prosumers’ and use products to promote their own brands and channels.

The opportunity is there to increase the number of explorable entry points and embrace discovery-first strategies, from shoppable tags to live streams and virtual consultations, integrating marketplaces into the ecosystem to close the loop.

Hyper-personal and hyper-convenient

Personalisation is a priority for consumers, with four in five willing to share some type of personal data for a better experience – so said PwC in its report Frictionless Retail: The Future of Shopping. And ensuring a sense of ease and nurturing consumers throughout the end-to-end journey is becoming essential, as people need to make their money go further and expectations rise.

Personalisation has become a core consumer expectation – meeting customers’ needs at each step of the journey, across every channel, and adapting to changes in real time. The advantages of this are clear, with nearly half (49%) of consumers saying they will likely become a repeat buyer after a personalised shopping experience with a retail brand, according to Twilio’s report The State of Personalization 2022.

Rich customer data is the key to implementing retail personalisation. Brands and retailers must leverage purchase history, location and demographic data so that consumers can be served a tailored shopping experience that appeals to their unique needs and interests. As personalisation becomes the default standard for engagement, a growing number of brands and retailers are enhancing their data capabilities and using AI and machine learning.
Frictionless/autonomous ‘grab and go’ retail concepts that use computer vision-based AI and remove the need for checkout are gaining traction, particularly within the grocery sector. Pre-launch trials for Verizon’s 5G Edge Cashierless Checkout found that transaction times were cut by half, transactions were increased by 78% and revenue by 138%.

Using tech as part of a sustainable future

Gartner reported that by 2026, 25% of people will spend at least one hour a day in the metaverse for work, shopping, education, social and/or entertainment. But the future of retail will be both technologically and sustainably driven, underpinned by advances in transparency, circularity, data and intelligence, and new digital communities. As environmental concerns grow, we are witnessing a shift away from conspicuous consumption of physical products.

Consumers are increasingly seeking out ethical brands and retailers that align with their values, looking for those that help them to live and consume in a better, more sustainable way. Awareness of the escalating climate emergency, the rise of inequality and the damage caused by excess consumerism is motivating people to significantly change their purchasing behaviour. Sustainability concerns dovetail with frugal mindsets to raise expectations in relation to saving resources, longevity and circularity.

Mary ‘Queen of Shops’ Portas said at a recent talk, “We are living in the most creative times in retail ever.” Technology is helping to speed and enrich customer journeys to previously unseen levels – where people can purchase and receive things in record time and with minimum effort; where data is used to treat us as the individuals we are; and where hybrid physical-digital formats can provide truly immersive experiences.

But as well as giving customers the deep level of involvement that they crave, brands that will continue to win the hearts and minds of the nation are those that act with a conscience – not encouraging people to buy more than they need to the detriment of their mental or financial health and of that of the planet.

We’ve commissioned a series of industry reports, including for retail, that will help you discover the challenges of the future customer in terms of how you can best connect, support and transform their experience to gain competitive advantage.

Written by

Andy McDonald

Andy McDonald

Andy McDonald is a Retail & Logistics industry-focused leader with an international perspective helping companies deliver on their strategic goals. With over 25 years of experience, Andy is regarded as a specialist in Digital Customer Engagement, Contact Centre Strategy and Customer Experience Analytics. Having an engineering background, Andy prides himself on remaining customer-focused while balancing technology and service-based investments on behalf of this clients.

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