In 2019, the uncertainty of Brexit caused spending growth to slow down rapidly, forcing the industry to undertake a large-scale business restructure. This resulted in 9,169 store closures, and over 85,000 jobs being lost. In January 2020, these losses led to talks about how retail was changing at an unprecedented speed. However, what was not foreseen was how the retail industry would become almost unrecognisable due to the restrictions imposed by the COVID-19 pandemic.
As a result, many are questioning, what is the future of the retail industry?
We’ll take a look at the challenges retailers face, as well as addressing the many ways in which the global pandemic has given retail the drive to identify the priorities essential during their recovery. Will they be able to bounce back and rebuild their presence?
The e-commerce switch
The closure of many ‘non-essential’ retail stores has changed consumer behaviour. There’s an ever-growing trend of items bought online, which were once seen as resistant to e-commerce; jewellery, perishable food items, pharmaceuticals, home furnishings, luxury items, and home improvement products. While many of these trends are likely to have risen from the pandemic, it’s suggested that these shake-ups will continue beyond lockdown.
Today, when consumers need a product, they go online to search for it. Websites are becoming the ‘store’. Online merchants can display more products and services while offering more information in an effortless click of a button. This has led to many retailers having to dramatically improve their digital operations, including adding more delivery slots, introducing new e-commerce capabilities and entering new markets.
Moving forward, convenience-based retailers must adapt and find new ways to reach and fulfil their customers’ needs. Providing a broad mix of digital changes will provide more opportunities to drive engagement and growth, and this will also be advantageous to their physical store, as it not only creates brand awareness but can push to drive an in-store campaign or offer.
What are the forces retailers must contend with in order to succeed?
There is a multitude of challenges retailers must face moving forward, but goals can be achievable, provided a brand, or independent retailer has the right leadership.
1. Financial loss.
Following COVID-19, it’s unlikely many will have disposable money to spend on non-essential items.
2. Baby boomers
Brands need to suit the needs and sensibilities of younger consumers.
Technology is advancing at unparalleled speed. Retailers must keep up, or face being left behind.
The never-ending procession of challenger-brands to the market.
What must retailers do?
- Accept constant experimentation, integration, and change.
- Push out of a safe place and challenge the status quo.
- Take risks.
- Build a talented and motivated team.
- Offer customers something real, that they can’t just experience online.
- Keep up to date with digital trends.
According to a study, more than three-quarters of millennials surveyed indicated they'd prefer to spend money on experiences with their friends and family as opposed to products. This would explain the sharp increase in spending before the COVID-19 pandemic on categories like entertainment, live concerts, restaurant and travel.
There is also the factor that younger generations lack disposable income. In comparison to previous generations, due to substantial student debt and homeownership being out of reach for many, their spending habits will differ.
Today, retailers need to serve more discerning and informed customers with lower net wealth and higher debt, who have a stronger desire for experiential spending. They also need to face a lot of competition, online and offline.
What is driving the desire for experiences?
Due to pressures from social media, people are eager to showcase they have meaningful life experiences online. Many people no longer want to know the best walks in England; they want to know the best walks for Instagram photos. The same goes for restaurants and travel. Consumers want to purchase a cocktail they can show off on their social media feed – otherwise, what’s the point?
Consumers look to Instagram for inspiration for their next adventure; they see a destination on their feed and decide to book tickets minutes later. Experiences, not products, play best on social media.
How can retailers adapt?
Physical stores still very much have their place, as they are often the first point of contact between brands and consumers. As a nation that has become increasingly technologically entrenched, many do still crave a physical retail experience. Retailers must now draw the customer into their brand story, deliver on an immersive brand and product experience, and ultimately create a close relationship with their customers.
Retailers must also make their stores newsworthy; they need to get people talking about their products, taking photos of their impressive displays, and connecting to their brand story.
1. Use influencers to drive traffic
Starbucks, for example, has recently encouraged customers, with the help of influencer Molly-Mae Hague, to take photos on Instagram with the Pumpkin Spice Latte and their favourite autumn looks. This enticed consumers into the store to purchase their seasonal drink, ready for an Instagram photoshoot.
2. Post images of their physical store
Retailers need to post pictures of their physical store on Instagram and other social media, whether that’s new stock, professional shots or fun events that followers will find entertaining and want to see for themselves.
3. Present employees’ personalities
People are interested in other people. That’s why social media and reality shows are so popular. It’s a good idea to show workers having fun, or showing off parts of their personality on social media, as this gives followers a peek at the type of people who are part of the brand, and want to visit themselves in-store.
4. Encourage social reviews
Once a customer has purchased in-store, retailers should encourage them to post images of their purchased goods and boast about their experience. They could even run a competition or introduce a hashtag. This will boost brand awareness and, in turn, drive more traffic into the store.
Share and retweet
There is nothing that can boost brand loyalty more than retweeting, sharing and commenting on customers' posts when they say something nice about a store.
Tapping into customers senses
While retailers need to continue to know their customer and adapt their social media ways, they also need to address needs on a much deeper level. The need for security, belonging, entertainment, inspiration, purpose and recognition are all elements every human needs and wants. We want to see a face away from the blue light on a screen. We want simplicity, and to experience things that don’t always need the validation of likes, favourites and comments. We want connection, true connection.
This leaves retail with two strategic choices moving forward. Retailers need to sell something completely unique, which is particularly hard in a global market, or they need to sell in a way that no one else does. This means delving deeper to create meaningful experiences in stores and reinventing the wheel, so to speak. Ultimately, the selling process needs to become as important as the products themselves.
If you’d like some industry-leading expert advice on how to capture customer interest with your display merchandising then check out our advice and inspiration hub.
So, what does the future of retail look like?
As industry experts, here at Displaysense, we understand that 2020 has been a challenging year for retailers and it’s inevitable that from this that there will be a shake-up in consumer habits. Online shopping will continue to see growth; however, we believe there is a real opportunity for brick-and-mortar retailers to evolve.
Brands may need to develop a more ‘experience’ style sales tactic and offer their customers more of knowledgeable service to generate customer retention. Independents will become ever more reliant on localised consumers, which is where the power of self-advertising through the likes of social media will become more of a necessity.
If you’re a retailer, the coming months will continue to look a little different to what they once did. You will need to ensure you maintain safe social distancing measures to protect your customers and staff. To do this, it’s essential to implement a range of social distancing and hygiene products that adhere to Government guidelines.