Trending: 10 Challenges that Will Shape Retail’s Future

Posted October 13, 2015 in Blog, Retail

By Javier Salazar

Who is today’s typical shopper? And what does he or she want?

It’s an important question as retailers struggle to keep up with a changing marketplace, emerging purchase and payment technologies, rising consumer expectations, and significant demographic shifts.

But before you jump on the bandwagon and blame all the upheaval on “millennials,” the generation born between 1980 and 2000, consider the findings from Accenture’s global market research, which studied behavior and preferences of 6,000 consumers and compared the responses among millennials, baby boomers (1946-64) and genX (1965-79). In all three age groups:

• 55% said they look for the “cheapest return option”
• 41% use showrooming to find the lowest price, mostly using a smartphone
• 36% shop online when stores are closed
• 89% say access to real-time information about product availability influences their shopping choices.

Surprised? They’re not nearly as different in their habits and preferences as you might expect. That’s why keeping up with retail’s future and its new landscape is critical regardless of how you define your “typical” customer. Of course, we all realize it’s important to cater to tomorrow’s customer, but even if your current customer base skews older, you’re not exempt from meeting changing retail demands.

That said, here are my picks for the top 10 challenges now facing retailers:

1. Mobile means everywhere. Consumers now use smartphones and other mobile devices to navigate their entire shopping process, from inspiration and trend research to price and availability comparisons to soliciting advice and opinions from friends to redeeming online coupons and accessing loyalty programs to in-store search and purchases to… well, everything. There’s virtually no part of retail that isn’t being influenced by the proliferation and increasing capabilities of consumers’ digital devices. As SmartInsights.com’s Mobile Marketing Statistics 2015 definitively declared, “The implications are clear –if you’re not able to reach your audience through mobile search or display, or you’re not providing a satisfactory mobile experience, you will miss out compared to competitors who are.”
2. Payment is more than cash and cards. Point of sale is no longer limited to the checkout counter, and the variety of payment devices and methods continues to multiply, both in response to new security standards (including October’s impending EMV liability shift) and technological advances. Retailers must be prepared to accept and process chip-and-pin cards, contactless NFC payments, pre-paid cards, mobile payments, buy online/pick up in-store sales, and sometimes even payment-on-delivery, in addition to traditional cash, credit, debit and e-commerce transactions. If you can’t accept their preferred method of payment easily and safely, consumers will take their business elsewhere.
3. Worries about workers, wages and working conditions. Competition to hire and retain skilled workers is creating the need to raise wages, revamp on-call scheduling systems, improve comfort and safety in the work environment (in-house and in the supply chain). While these changes can increase pressures on the bottom line, they can also offer opportunities to improve productivity and service.
4. Discount pricing vs. brand reputation. Consumers love a good deal, but as discount and on-sale pricing strategies approach unsustainable levels, many retailers are choosing to focus instead on product quality and improved merchandising in order to build brand reputation and loyalty.
5. Go omni-channel or go home. A seamless customer experience across all channels and touchpoints is no longer an option – it’s an absolute retail requirement. A customer-centric focus is critical for retail’s future success, and that means service wherever, whenever and however the custom prefers.
6. Now that Amazon’s raised the bar, we all have to jump. Customer expectations for a range of fast, flexible, cheap delivery options are revolutionizing the entire concept of fulfillment. Free delivery and return, buy online for in-store pickup, curbside or locker pickup, ship-from-store, hold-at-location, Sunday delivery, uber-like delivery apps, and the ability to redirect or make other in-transit delivery changes are probably just the beginning of an ongoing trend.
7. City dwellers shop differently. In recent decades, retail strategies have mostly focused on superstores in suburban markets. Now that nearly 81% of American live in metropolitan areas (according to the latest census data) and both young professionals and retiring baby boomers are staying or moving into cities, retailers are starting to understand the need to adjust their merchandise selection, store formats, and inventory strategies to accommodate urban shoppers, who are more likely to live in the immediate neighborhood, walk or use public transportation instead of driving, and shop more frequently for fewer items. Smaller store formats, local delivery options, compact packaging, and faster checkout are among the strategies to consider.
8. It’s not just shopping; it’s an “experience.” In-store shoppers have high expectations: personalized, professional service, including outstanding product quality and selection; thorough product expertise and instant availability of product information; hands-on brand engagement and in-person product experience; flexible assistance and easy problem resolution; and speedy checkout. Retailers are experimenting with creating a “networked shopping environment” through improved store design, an open and engaging showroom atmosphere, interactive displays, in-store navigation apps and incentive programs, and real-time IT solutions that integrate omni-channel’s capabilities and responsiveness into physical stores.
9. Social media increasingly drives buying decisions. While it might be too soon to quantify social media’s full impact on retail, there’s no doubt that it is having a strong influence. Instagram, Pinterest, YouTube, style and how-to bloggers, not to mention Facebook and Twitter, all help consumers discover and share products, get behind-the-scenes insights and objective recommendations, document purchases and experiences, and solicit opinions and feedback from friends. In fact, in mid-September, tech blog VentureBeat.com reported a new social media/retail partnership: “Pinterest teams with Topshop to create color palette tool based on saved Pins.” Yes, I believe we’ve only just begun to see social media’s effects on retail.
10. E-commerce marketplaces offer alternate sales venues. While most retailers are investing in e-commerce capabilities, some are also testing online marketplaces such as Amazon, eBay, Craigslist, Bonanza, and Ruby Lane, which sell products from a variety of providers, often in a range of categories. Purchases are typically drop-shipped from the retailer or wholesaler to the customer, while other functions are handled by the marketplace operator. Selling through a third-party can be daunting, but can also offer greater exposure to a wider reach of customers.