After the outbreak of the global epidemic, people stopped going out to shop, traditional retail stores were forced to transform, and the e-commerce market experienced explosive growth. Although vaccinations have gradually become popular and society is slowly opening back up, everyone has already developed the habit of online shopping. The epidemic has accelerated the phenomenon of digital transformation. What will be the digital economic trend of retail in the future? What other innovative technologies are the key to transformation?
Not only is the e-commerce industry booming around the world, but it is also observed that in response to the pandemic, brick-and-mortar retailers have moved to providing online order services. During the pandemic, in order to practice zero-touch sales, some businesses have even closed their stores to the outside, to prepare and distribute goods for online shopping customers only.
In addition to following traditional revenue models, to adapt to changing conditions caused by the pandemic, retailers have also developed new businesses practices, such as food delivery, subscriptions, leasing, and resale. Whether online or offline channels, top name-brands realize the importance of strengthening the emotional connection with customers, and are committed to sales strategies of carefully creating storytelling advertisements and adopting Direct-to-Consumer (D2C) business models.
When the world enters an era of coexistence with the epidemic, the retail industry will face the following new trends:
The future of retail:
Consumer loyalty has weakened, and brand value is the key to winning:
In the past, because of information asymmetry and the difficulty of obtaining products, consumers were often willing to pay a higher price just to obtain a product. Now more than 80% of consumers compare prices online before purchasing a product. Even the elderly have a certain degree of familiarity with the interface and function of their mobile phones, and can get clear and transparent product information from the friendly on-line community. Consumers are now more sensitive to prices, and will go wherever prices are cheaper. 75% of consumers believe that just because a product is high quality does not necessarily mean that they need to pay a high price to have it. Unless the brand has a unique quality or distinguishing feature that you cannot get with any other product, pricing will be important to creating operational success.
In 2020, nearly three-quarters of U.S. consumers changed their shopping habits, and 40% of them also changed at least one of their preferred brands. Compared to 2019, brand conversion rate was twice as fast, with the younger generations of consumers changing the fastest. This means that companies will need to start investing in the long-term business plan of developing consumer brand loyalty. Retailers must not only ensure that buyers have convenient access to products, but must also realize that "value" is an important consideration that affects consumers' shopping behavior. Nearly 40% of young consumers, in addition to considering a products quality, also consider whether the brand concept is consistent with their values. In the future, maintaining brand loyalty will be a challenge as consumers will pay less attention to maintaining brand loyalty.
Integrate online and offline shopping to create new retail experiences
In response to the boom of online shopping in the post-pandemic era, brick-and-mortar stores have had to reposition themselves. Real-time online supply information, convenient logistics, and turning the physical store into a touchpoint for product pickups has enhanced the consumer experience.
The boundary between digital and physical channels will become increasingly blurred. Only by integrating online and retail resources can companies or stores bring maximum benefits to brand promotion and sales. For example, the Online Merge Offline (OMO) new retail model, or the omnichannel integration concept of the endless aisle (virtual shelves), uses online stores to effectively extend the product range of physical stores. Not only do they provide customers with more product choices, but also cost savings can be achieved by reducing the physical display space.
For the consumer, they may first search for product information online, then go to the offline store to check the product features and quality, and finally, return to the online platform to use mobile payment to place an order. Another option is that they may directly complete the shopping process online, and then pick up the product at the physical store.
In addition to the pandemic driving an increase in delivery services, with a large number of people now working long hours at home, the retail industry has also been forced to think of new ways to introduce a warm and practical experience that they can bring into users' homes. If customers can have a positive experience at home, with a more realistic online interaction with the store, consumers will be more inclined to return to the shopping platform.
Introduce AI technology to strengthen digital retail strength:
Under the impact of the epidemic, retailers can create a new digital shopping experience for customers by making good use of digital tools. AI technology assisting the retail industry is already in progress. For example, e-commerce operators will use AI for customer group classification, cross-platform sales, etc., to transfer offline consumption behavior to online, to bring more new members, and create new consumption patterns.
Physical stores can also use AI-enabled data to analyze sales data from previous years to obtain popular products in various regions. Through relatively accurate forecasts, they can deploy manpower and logistics in advance, prepare for offline activity channels, and effectively improve operational efficiency. For example, introducing natural language processing (NLP) and speech recognition systems for physical stores to optimize customer service efficiency, or adding AI chatbots to online shopping pages to create better interactive relationships.
Immediate, cross-channel, and cross-touch point integrated shopping experience will be the goal of the digital transformation of the retail industry. To implement this, retailers must actively introduce AI-related digital technology tools to help brands break the divide between online and offline channels so that consumers can start the shopping process and continue to repurchase. No matter which channel they contact, driving the whole process of shopping channel growth, thereby improving the overall profitability of the company.
AI empowers to create a precise and personalized shopping experience:
After the integration of virtual and real, the retail industry will face a more fragmented consumer shopping journey, in which personalized consumption experience plays an indispensable role. E-commerce operators make good use of digital marketing tools, which can track everything from web browsing behavior to purchase history and use this data for more refined target market placement.
On the other hand, operators can also combine existing big data and then import machine learning to build an AI recommendation algorithm, which systematically collects shopper’s style data by every time a website visitor clicks a label on the site, and accurately predicts consumers by accurately predicting consumers. Products that may be purchased, customize the consumption experience of each shopper and even design a small, diverse, and more resilient supply chain. By understanding the unique shopping preferences and styles of individual consumers, we can tailor the consumption journey for them, and have the opportunity to deepen the good impression of the brand and attract customers to return.
Deep Retail will become the new mainstream:
The future retail industry should be based on in-depth retail, that is, the retail industry must improve from "us" group sales, and be refined to "me"-centered personalized business thinking.
The retail industry must think about how to create Hyper personalization for customers, to truly make discerning customers have a psychological identity due to being highly understood, and increase the emotional connection to the brand. This also means that retail technology, including facial recognition, emotion analysis, real-time data collection, and algorithm analysis, will become a necessary key technology for the success of the retail industry in the future.
Environmental friendliness and caring for the vulnerable:
The epidemic will also drive most people to reflect on environmental protection. According to the survey, one-third of consumers will simultaneously consider the friendliness of the product to the environment when shopping. If brands can think more about how to be more friendly to the environment and more caring for disadvantaged groups, they will be more able to move consumers.
On the contrary, if the service or product provided by the enterprise will cause environmental damage or extend other negative issues, consumers will often resist.
Social media becomes an essential touchpoint in the buying journey:
The retail industry should think about how to leverage the influence of the community. More than 70% of millennials believe that social media plays a key role in purchasing decisions, and 52% of consumers often take pictures and share food before meals. The retail industry should not simply think about how to advertise on the social platform and increase the conversion rate but should understand the key influence of consumers themselves on their circle of friends through social status, and conduct community management and operations in this direction, to create value and benefits.
In the face of the new normal after the epidemic, consumers' shopping behavior has changed a lot. The retail industry should think about how to shift from product-oriented sales operations to customer-centric service thinking. At the same time, enterprises should also re-examine the current situation of the enterprise, clearly locate their weaknesses, analyze how to improve customer service, and what deficiencies need to be made up.
Enterprises should also realize that they do not have to own or do everything themselves, but should think about the possibility of connecting and cooperating with other platforms, investing resources in the most appropriate places, deploying ahead of time, and mastering the first steps to win.