The retail industry is constantly undergoing a metamorphosis and evolving, influenced by major shifts happening in the space of consumer preferences, the impact of spending power, and the fatigue of too many options available in this day and age.
Defining Retail: Retail is the sale of goods and services to consumers through various channels of distribution and supports industries such as apparel, automotive, electronics, FMCG, and many other allied sectors that meet customer living and lifestyle needs. While physical stores continue to dominate in this area majorly, non-store methods such as e-commerce have taken a considerable space in the e-retailing space.
As businesses are getting more streamlined than before, communication with consumers is becoming easier than ever thanks to the rise of digital media platforms. According to Statista, the global retail market generated more than $26 trillion in sales in 2021 and is projected to reach $30 trillion by 2024. Regardless of the economic uncertainty, the pandemic has continued to accelerate growth in the retail industry through e-commerce, and the result of this outcome will have a significant impact on the retailing ecosystem in the coming years.
E-commerce and Retail
Taking a cue from a global statistical benchmark, according to DataClarity, "Technology will affect one-third of retail tasks in the United Kingdom by 2030." Globally, many businesses have already embraced digital services and technologies, whereas smaller businesses have been compelled to create digital platforms to adapt and be relevant.
To compete with e-commerce brands and e-marketplaces, brick-and-mortar stores require a new game-changing strategy to be able to compete with the ease of doing business brought about by the internet, but experts have negated such comparisons as there are positives to both models when it comes to the distribution of a product.
Apart from B2C e-commerce thriving, wholesalers in the B2B space also have a plethora of options for growing their small-scale enterprises into thriving businesses by conducting business online, as digitalization is the new driving wave for retail, wholesale, and the distribution industry.
The use of consumer data accrued from consumer purchasing history has proven to be a profitable sales tool for many e-commerce platforms such as the Flipkarts and Amazons of the world, providing specially tailored product and brand recommendations based on the consumer's browsing and previous purchase history. This trend has increased consumer convenience because consumers can now simply look up something online and buy it based on the recommendations and the supporting reviews the said brand has received. Consumers today are far more confident in purchasing commodities online to meet their needs than in pre-Covid times.
Besides B2C e-retailing, B2B e-commerce platforms, though nascent in India, have also made doing business easier.
Despite all the rapid growth of e-commerce platforms, physical stores have found a way to reemerge! Small-scale retail businesses have started using the services of B2B platforms to place bulk orders to get better deals; they can choose the best products and get prices that accrue to higher margins and better sale discounts to incentivize their customers. These, combined with the familiarity of the buyer, the convenience of doorstep service, and the best price as a sales tool, are ways that shop fronts are innovating to attract and keep their buyers locked in.
Retailers are continually looking for a competitive advantage and better ways to reach customers, more efficient customer journeys, and possibilities to satisfy customer demands proactively. In the retail industry, consumer preferences will always be a driving element. As humans, we are simply bound to gravitate toward what we find appealing.
Another very important playing field for brick-and-mortar stores is minimalism. Interestingly enough, retailers are using this harp to also state that, "We do not use unnecessary packaging materials as these are wasted materials and only add to disposal waste and clutter."
Can this be a leveraging point to choose your friendly neighborhood store over the overpacked for safe e-commerce shipments?
Sustainable ‘A Means to Growth?’
According to a McKinsey and Company report, sustainability has risen to the top of the retail priority list, and in the post-covid era, this trend has accelerated. Over two-thirds of consumers opt for the importance of limiting their use of disposable materials to mitigate the impact of climate change. Retailers, especially e-commerce players, must devise newer strategies to overcome this impediment to attain minimalistic packaging in their supply chain process to attain a more sustainable image. When it comes to consumer preferences, sustainability has become a new standard and is a big concern for both e-commerce and retail. Creating an environment where sustainability is the top priority is equivalent to collaborating with a consumer mindset that prioritizes conservation over profits.
As for futurists and those concerned about the ecosystem for sustainable living, it has been statistically found that over a third of consumers value ethical practices in the products and services they purchase. Unethical practices are also a leading factor that determines the detachment of consumers, which primarily dwells in the area of brand preference and brand loyalty. Today's consumers have access to information, and a single blunder can completely derail any retailer's reputation.
Can e-commerce's overwhelming one-time use packaging become a sustainability concern? Can sustainability and environmental stewardship return to favor the centuries-old practice of brick-and-mortar retail? Time will surely tell, but one thing is for certain: the war between conventional retail and e-commerce is a war worth watching, and it will be the consumer, the environment, and the ecosystem that will eventually benefit.