The retail industry is changing, fast. Over the past decade, we have seen this sector move to a primarily online function and innovate to meet the needs of an ever-shifting assortment of consumers. In fact, 2019 showed great progress for eCommerce to close the gap in total market share of sales compared to brick-and-mortar retail. (1) As well, many unknowns about pending legislation and its effect on merchants around the world can cause some anxiety for those in the industry.
Despite these unknowns, one thing has become apparent: Consumers are continuing to shop more and more. Evidenced by 2019’s record-setting holiday season, brands that strategically navigate the complex world of retail will reap an abundant reward. The idea that there’s a ‘retail apocalypse’ is far-fetched; rather, the retail industry has been overtaken by the digital transformation. Merchants need to be aware of the constantly shifting nature of commerce and prepare accordingly to ensure they keep pace with the many factors impacting their business. This series will explore these changes affecting many aspects of the retail industry to give brands a glimpse into the future and predictions of what is yet to come.
Getting Ahead of Retail Regulations
Retailers cannot avoid all factors coming their way, or in the case of regulation, even see them coming. Trade policies can change with a moment’s notice, leaving many merchants scrambling to find a new strategy. While it’s difficult to predict the future, you can be proactive in setting your brand up for success in the face of inevitable change. With many new regulations facing US retailers in 2020, from the California Consumer Privacy Act (CCPA) to the United States-Mexico-Canada Agreement (USMCA) and the impact of Chinese tariffs, staying ahead can be the difference in hitting revenue goals.
Currently, just 8% of US businesses are prepared for the impacts of the CCPA. (2) While this currently impacts a select group of US retailers, this policy is likely to spread across the United States. Thus, having a plan in place now can help save merchants from significant fines and regulatory issues down the road. A similar train of thought can be applied to increasing Chinese tariffs. Merchants with affected products should consider an alternative strategy in place now to avoid incurring increasing penalties in the near future.
Shifting Consumer Behaviors
The one constant in retail is change. Companies must be able to keep pace with consumer preferences, which can shift as often as the weather. The 2020 shopper will likely not look anything like the shopper of 2030. Today’s Gen Z consumer lives ‘in the moment’, makes brash decisions and prefers experiences over physical entities. They are more heterogeneous than other age brackets before them and gravitate towards brands that share their same ideals. Further, Gen Z’s spending power is currently valued at $44 billion and growing. (3)
The things that matter to consumers are constantly changing; it is up to merchants to anticipate these expectations and deliver. Yet, with continued innovation, consumer expectations will continue to increase. According to Deloitte, the current shopper values great deals, availability of products, ease of check-out, personalized experiences, online support and alignment with a brand’s values. (4) Are you able to match these preferences today, let alone what they will look like a year from now?
Pacing Retail Innovation
Closely tied to consumer preferences are innovations in retail technology. The Amazon Effect has led to nearly impossible customer demands for many independent retailers. However, with the help of end-to-end partners, many issues with fulfillment can be alleviated. Same-day shipping used to be an eCommerce novelty, where today, it is the difference in conversion.
From the way retailers market to consumers to how shoppers check-out to receive their products, the customer experience has changed immensely. Goods can now be bought directly through social media, opening a new door for digital commerce strategy. While the Amazon Go retail concept and the rise of BOPIS are changing how consumers interact with physical stores, none of these new methods of acquisition matter if retailers are unable to efficiently fulfill customer orders. Technology must work in unison to increase the customer experience at every touchpoint.
Retailers sticking to the same script will likely not yield the same success in 2020. All operations, from the supply chain and backroom to check-out, must be aligned to ensure a seamless customer experience. Yet, with all of the variables in retail including regulation, consumer expectations and technology, your processes will constantly need a refresh. For retailers, an adaptive and agile mindset is the way to get ahead in the digital age and a constantly-evolving industry. Stay tuned for further insights into the changing face of retail and how they can impact your operations.