Industry estimates suggest that sales in the global retail market were hovering around $23 trillion in 2020; by 2025, they will break the $30 trillion barrier. From groceries to greetings cards, automobiles to apparel, the world of retail is changing. Technology has made spending quick and easy; according to GlobalData, instant payment transactions topped 70.4 billion in volume in 2020 and will witness a huge compound annual growth rate of 30% in the years leading to 2024. Shopping has shifted towards the internet, and fast-developing nations like China and India are getting in on the action. For many brands, the rapid change in who they need to target and how to reach them has been dislocating.
Getting to grips with a few key trends can help navigate this tricky terrain. Retailers need to know what consumers understand by “shopping” and how this has shifted. They must respond to evolving shopping behaviour, creating experiences catered to this behaviour via the power of technology. And, while working out “how” different consumers shop, brands neglect the “why” – including ethical considerations – at their peril.
Customers are changing – but is your organisation?
According to research commissioned for Pay360, a payments technology business, consumer habits and preferences have irreversibly altered. Shopping is polarised; averaged across age, generation and gender, 22% say they ‘like or love’ in-store shopping, while 26% say the same about online shopping. Meanwhile 24% don’t enjoy in-store shopping against 15% who dislike online shopping. Within this, retailers must get their heads around generational and gender disparities. 46% of Generation Z respondents said they liked or loved online shopping versus just 10% of those aged 76 and over. 29% of women like or love online shopping compared to 22% of men.
How can retailers accommodate such diversity though? Understanding the pace of change in recent years is a vital precursor. For example, the Pay360 report reveals a massive post-pandemic swing in favour of online shopping, consistent across all generations; e-commerce now comes out on top for 52% of Generation Z respondents and 37% of those age 76 or over. Nearly three out of every five consumers confirmed the pandemic had changed their outlook on the retail industry. E-commerce, social media and SEO knowhow have morphed from “nice-to-have” to a necessity for retailers everywhere. But abandoning traditional retail is similarly perilous. 80% of consumers said the high street played an important role in the social and economic fabric of their communities, with job creation and accessibility cited as key factors.
Bridging online and offline worlds is a puzzle for retailers – one which technology is helping to solve. A quarter of all shoppers use mobile phones in store to find out if a product on a shelf is cheaper online. Nearly the same proportion use the internet to research product reviews, while sharing recent purchases to social media is second nature to younger consumers. And retailers must become accustomed to constant upgrades – half of 18 to 24 year olds use their phones to make mobile payments, for instance, while 22% of all consumers are enthused by the idea of AR- and VR-enabled shops enabling easier product choices and comparisons. It points to the importance of having a joined-up offering – failure to straddle the convenience of online shopping and the experience of physical shopping could mean customers go elsewhere.
Although technology provides answers to many questions about the future of retail, it is no panacea. Customer service remains a vital ingredient in brand loyalty according to 96% of consumers. Yet roughly half as many consumers over the age of 76 are comfortable using a live chat option to get help compared to their Generation Z counterparts. This proportion almost exactly reverses when it comes to speaking to a real person on a helpline to seek support. Some tenets of customer service – such as speed and responsiveness – are valued across generations. But how this is offered, and technology’s role, must be done sensitively with target demographics in mind.
One final, fundamental element of the shopping experience starts long before a good is available for purchase. 62% of UK consumers now claim a retailer’s ethics are a more important consideration in their purchasing habits than they were pre-pandemic. A majority of all consumers agree that reducing waste, shrinking carbon footprints and supporting local communities are elements they prioritise in an ethical shopping experience. Failing to incorporate them could mean declining revenues, even with a seamless strategy for balancing online and physical commerce.
A new era for retail?
There is no “one size fits all” solution for navigating changes in the retail industry. An online presence is mandatory, but many customers continue to demand a physical presence. Adopting new innovations can bring out the best of both worlds – but some customers are highly tech-savvy while others are dubious. As new technology comes online, new markets become ripe for growth and inflation starts to bite, cross-generational preferences will evolve still further. Every retailer needs to prepare.
They can do so by picking the right partner. Expertise is available to help brands isolate their most relevant consumer profiles and implement the right supporting technology. Such partnerships will become increasingly important as buying channels, payment processors and marketing media proliferate. But help is at hand. Download the Pay360 whitepaper on this page to find out more.