How Consumer Trends are Shaping the Future of Retail Industry

We as a generation have seen the evolution of retail from independent specialty shops to one-stop-shopping in department stores, malls, and big-box chain stores.
How Consumer Trends are Shaping the Future of Retail Industry 

Retail as an industry is accustomed to regular and rapid reinvention. We as a generation have seen the evolution of retail from independent specialty shops to one-stop-shopping in department stores, malls, and big-box chain stores. In the pursuit of sourcing cheaper and raising margins, supply chains have gone from local to global while the dot-com boom of the 90s signaled the birth of e-commerce as we know it with the founding of Amazon and eBay. 

Perhaps never before, has the retail industry been so reliant on technology and innovation as the tools to navigate yet a new phase of reinvention - one shaped by a set of forces that have been building over the past several years, and have now been accelerated and amplified as a result of the pandemic, which will leave long-lasting implications.

I look back at the year 2020 and think about what drove these shifts in behavior during a year when consumers spent more time online than ever before, as well as forward-looking projected areas of consumer engagement in 2021 and beyond.

A few takeaways/ trends, today’s consumers are adapting to or already have from my personal experience;

Omnichannel: As consumers increasingly move between different retail touchpoints, both online and offline, a seamless Omnichannel experience is only going to become more vital. During the past year, mobile usage has surged, with retail apps, in particular, showing significant growth. Failing to meet customer expectations here can be costly, with a one-second delay in mobile load times impacting conversion rates by up to 20 percent.

Shift to E-commerce is Here to Stay: The percentage of consumers that will shop or expect to shop online versus in-store in the next six months remains markedly higher than pre-pandemic levels. Whether decor, homeware, or fashion, this view is consistent across categories and demographics, pointing to wide and sustained changes in shopping behaviors.  

With the biggest shift happening in shoppers aged 35 and above, it poses questions for high-street retailers who have perhaps relied on older demographics for footfall. A rethink may be necessary in terms of how the in-store experience can complement, rather than compete with, online shopping - for example, with inspiration happening online and fulfillment and aftercare more suited to the physical store.

While saying this, I would still point out that in the space of furniture and home decor physical touchpoints are still extremely relevant and necessary! The in-store experience is still a priority for home decor retailers: but this experience can be personalized by using the strength and precision of digital. For instance, a consumer walks into a furniture store and makes her first purchase, posting that she is able to make repeat purchases online. Once comfort and trust are developed, the e-commerce store plays a great tool to continue addressing concerns, understanding purchasing behavior, and trends. 

Consumer Choice: E-commerce has enabled the rise of increasingly discerning consumers who demand more for less and are willing to do their research before making a purchase. They have the ability to control nearly all aspects of their purchase journey, choosing from a host of Omnichannel conveniences like on-demand delivery, curbside service, and free returns. Rather than being sold to or channeled towards certain purchases, consumers have the power to dictate their terms when it comes to CX and value - which is especially important for price-sensitive consumers who have experienced changes to their disposable income.

Direct-to-Customer: D2C is more than a mere trend. Brands are increasingly eager to interact with their customers independently in order to understand their behaviors, needs, and aspirations. As the customer journey becomes increasingly digital, new touchpoints are allowing them to do so at an unprecedented scale. New brands/ stores are using laser technology to customize their products on demand according to their customers’ preferences. In their words, they have gone from ‘selling what they make’ to ‘making what they sell’.

Personalization: It is the cornerstone of an insightful customer relationship that brings added value to the consumer. Data-savvy brands know how to adapt their marketing strategies to their audience, but the products and supply chain can also be customized according to every particular customer’s tastes and needs.

Artificial Intelligence: From understanding unstructured data to the creation of innovative products, Artificial Intelligence is becoming increasingly powerful. But the rise of powerful AI makes human understanding, skills, and abilities all the more critical to put meaning behind algorithms.

It’s all about relationships: The pandemic has triggered many consumers to reevaluate their relationship with brands, leading to the prioritization of those that more closely align with their own beliefs and values. Similarly, the ability for brands to form strong relationships is a true game-changer. It determines the strength of their collaboration with retailers, partners, and suppliers and the loyalty of their customers. Trust plays an important role in the implementation of new digital trade models:  a lot of e-commerce platforms, for instance, allow their customers to make cash payments upon delivery.

Change in Consumer Purchasing Behavior: As the purchase journey changes, we’re seeing consumers move from searching for specific products online to seeking inspiration and ideas in the same space. Channels that retailers may have traditionally associated with the end of the purchase journey, such as search, are increasingly a place for discovery. This is especially true in assessing how the store outcomes are affected by the investment that retailers put into reaching audiences in inspiration moments online. Engaging consumers through digital channels is an increasingly important tool for delivering in-store sales.

We are in an interesting space when it comes to retail, especially the home and furnishing market that has grown dramatically over the last 18 months. Every key player must regularly hold social listening exercises to understand the pulse of the market.
 

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