More is expected of retailers today than ever before. Responding to the rapidly changing needs of consumers. Whether it concerns daily groceries, household articles or luxury items where a personal service is desired. It is evident that enthusiastic and expert advice is nowadays being expected from shop staff. Finding talented and diverse employees is therefore a priority for many retailers, and a future-proof workforce is crucial here. PwC is eager to help you to develop and implement the right innovations to maintain and optimize your customer experience even better.
When developing your retail strategy, it is relevant to have a clear understanding of who your customers are, what exactly their needs are and how quickly to respond to them. For example, during Covid-19 there was the emergence of flash delivery drivers with a fast delivery time. You can now see that the business model is faltering and the number of orders is declining again. It is also important to know what customers see and experience in the stores, so that we can continuously offer a new customer experience. Retailers are responding to this with advanced personalization techniques and smart use of new in-store technology. An example is a clothing store in The Hague, in which there is a 'custom lab' where customers can make and print their own T-shirts.
Moreover it is good to know how to adjust your business model to be relevant to customers. This can be done, for example, by means of 'omnichannel', offering more sustainable options such as second-hand clothing or by working with subscriptions. Frontrunners in the retail sector are actively responding to the previously described insights, trends and changes regarding future of retail themes
The future of retail is guaranteed to be exciting precisely because the industry is facing so many challenges from multiple fronts. Customers demand seamless switching between channels. They are doing their research on sustainable business models, don’t accept greenwashing and they are more and more conscious of sharing their personal data. This pressure creates an incredible opportunity for new innovative ideas and leveraging many trends that are already in play. In order to stay relevant and adapt to the ever changing world and needs of consumers, we see five future of retail core themes that are to be considered by successful retailers:
Omnichannel retail is increasingly becoming a ‘hygiene’ requirement, combining IT infrastructure, customer-facing operations and novel experiences to boost engagement and sales. The importance is proven by the fact that the purchase frequency is 250% higher on omnichannel vs. single channel, and the order value is on average 13% more per order. Customers now want to engage through multiple channels as one such as via a physical store, on an online website or mobile app, through a catalog or through social media. To achieve and maintain this, key departments and processes needs to be synced, even if there is no direct interaction with the customer.
93% of retailers have a presence on at least 3 social media channels, with Facebook and Instagram as the big winners.
Companies gather more data to know more about their customers, but the internet can do more than give them data, it gives them direct access to speak to customers. Take advantage.
Gathering more data is increasingly a loades proposition due to increased awareness and caution around privacy concerns. The only way to address this is by engaging directly and building trust.
While push marketing may have been necessary in the past, omnichannel push marketing could quickly become an annoyance. As companies have growing data on individual customers an improved focus on providing advice and services when customers are actively asking or looking for it helps to move towards pull marketing.
The ratio of digital to brick-and-mortar commerce will continue to shift in favour of digital convenience, with new payment technologies like cryptocurrencies and P2P transfers create new opportunities.
Shifting from human-powered advanced analytics to machine-powered recommendations and tactics is inevitable with growing datasets. The bottomline impacts however will be higher than expected.
While personalisation aims at fine-grained customer segmentation and targeted customer-centricity, hyper-personalisation is about creating categories of one per customer, with one-on-one brand relationships.
New experimental store formats are compensating for the rise of convenient e-commerce and rapidly evolving consumer behaviours, fundamentally shaking up the traditional in-store experience. An upcoming trend in this field, is personalization, for example where customers can try a winter jacket in an arctic changing room in-store.
Stores are becoming the new galleries, which should shake up the customer experience through memorable moments and allows them for quicker, smarter decisions. Important is that brands stay authentic and advantage can be taken in the stores compared to the internet, by providing personal attention and expertise.
59% of the shoppers expect the majority of retail space to be dedicated to offering experiences by 2025.
Discerning customers can see through gimmicks easily, so the key to developing fresh ideas is to be genuine and perceptive to the needs of the target audience.
Customers looking for an electric drill usually just need a painting on the wall. What if the store focused less on selling tools and more on selling desired outcomes instead?
While the internet may have increased access to information, the information overload can be problematic in its own way. Stores can take advantage by providing personal attention,expertise and answer questions.
Brand increasingly embrace retail patterns like limited editions, social-media-friendly brick-and-mortar experiences and curated selections to freshen up the retail experience.
Undoubtedly, the mainstream adoption of mixed reality headsets will add a layer full of raw creative potential on top of everyday reality for experience artists to fashion as they so choose.
Self-driving cars, once they become mainstream, will quickly become a retail touchpoint, giving customers the choice of multi-tasking between point A to point B - anything from dental appointments to grocery shopping.
To reduce the environmental footprint and meet growing consumer demands for sustainable products and services, companies are rethinking every aspect of their offerings to become circular. In the fashion industry we see that interest in sustainability is increasing and it should become more future proof by digitalisation and transparency and renting or buying second-hand clothes is encouraged. Click on the links to read more about those trends in the fashion industry.
As it gets more serious for companies to achieve global sustainability goals, the overarching mindset needs to shift from facilitating incremental improvement to achieving green moonshots: going from do less harm to do more good.
70% of the consumers who indicated sustainability as a high priority, are willing to pay up to a 35% premium for responsible brands. But numbers alone aren’t enough, the sustainability conversations requires a sincere two-way engagement with stakeholders and customers.
More than 66% of the shoppers - 225 million - will pay more for sustainable goods.
Both consumers and regulators will become increasingly critical of token efforts in the area of sustainability, and instead demand fundamental change. On the other hand, sustainable transformation can offer a new domain for innovation.
Companies can engage in sustainable transformation with a purpose-driven approach, inviting their stakeholders and customers to join in and combine efforts.
When rethinking supply chains and business operations to achieve sustainable transformation, sometimes the benefits can be realised not from adding more features, products or services, but by reducing resource use, eliminating waste and minimising footprint.
While the ethical and environmental benefits of local sourcing are well-demonstrated, addressing the challenges of establishing this value chain will define new winners and losers of this race.
In a rapidly changing environment of regulatory changes, consumer demands are climate-induced disruptions, companies that champion resilience over efficiency will be better positioned to navigate uncertain waters.
By combining connected hardware and software, the physical footprint of a company can be perfectly represented as a digital construct in real-time, enhancing decision-making and optimisation capabilities.
Enhancing the customer experience (CX) has proven to be a key driver of engagement and conversion. To increase customer retention, loyalty and spending, good CX from a customer perspective means that the company is listening closely and then acting on this information. Customers want to receive a more personalized experience. New technologies, such as AI, AR and VR can be a great enabler for this. But a pivotal requirement is that the tech should never feel gimmicky. It should always act as an enabler to make the shopping experience less frictionless, more seamless and more enjoyable.
73% of all people point to customer experience as an important factor in their purchasing decisions.
Brands must identify core KPIs that define good CX, such as daily active users, retention rate, net promoter score, customer lifetime value and employee ratings from customer interactions.
New customer acquisition is usually more expensive than customer retention; moreover winning customer loyalty and advanced customer loyalty programs means guaranteed repeat business.
The key to maintaining a loyal customer base is to stay connected, build trust and provide exceptional service. This is not only on the front-end, but should also include the mid- and back-end processes such as making sure that invoices are correct and customer get fast responses to their questions.
While seeming a trivial convenience, personal shoppers (covering services like curation and advice) add an on-demand human touch to an increasingly overwhelming (digital/physical) shopping experience.
The rise of mainstream VR and casual gaming could trigger an interest in virtual worlds as a social arena to hang out, shop and catch up, esp. as the pandemic conditions prolong over multiple years as we now see with the metaverse.
With intelligent wearables and smart biometric scanners, safe authentication can merge with seamless CX, making applications like “pay with a smile” possible.
Using advanced analytics based on aggregated data, retailers are able to better understand local preferences, new growth opportunities and customer lifetime value. 81% of users use Instagram to research products and services and in total 180 million users do active shopping on the app each month but raw data can be overhyped. The key to optimise consumer insights, is to identify clear business objectives, collect the most relevant data points and run the analysis to answer specific business questions. In addition, the organisation should be able to utilise and implement this information, otherwise these high-value insights would still be rendered useless. Currently, a grocery delivery company in the Netherlands is already adapting this. The customer receives notifications when their preferred delivery window is almost full and should act on it.
64% of the retailers, target individual customers online with special promotions and discounts.
Collecting big data comes with its own costs. The goal is not to collect as much data as possible, but in fact prune the data as quickly as possible to maximise signal and minimize noise.
Data is usually held as an objective source of information but the way it is collected, and analysed and interpreted all can introduce bias. Not to mention the fact that data can only highlight historical patterns but can never predict atypical future scenarios.
Even as companies rely more on automated algorithms and machine learning to generate insights, it is still advisable to have a critical eye on the results and interpretation. A good rule of thumb is to try to and explain why certain results might be logical based on the underlying factors.
As wearables and IoT devices (like smart speakers, connected exercise machines etc) become widely adopted, new streams of health data are unlocked with great potential to transform healthcare, among others.
From smart CRM to neuromarketing, AI-enabled sales tools are revolutionizing how brands reach potential customers and sell their products/services.
Organisations increasingly choose to join data alliances and partnerships, to source, consolidate and exchange customer data, enabling holistic insights.
These are inspiring and exciting times for global manufacturers of consumer products and retailers. After all, they have to adapt their organizations to the current economy challenges, disruption caused by new (especially mobile) technologies and changing consumer expectations. PwC's Retail & Consumer services consist of a broad service package aimed at retailers, manufacturers of consumer goods and service companies in this sector.
We have over 20,000 specialists with different expertise in almost 160 countries who focus on the R&C sector. We can help you succeed in your market.