The retail industry is navigating a turbulent landscape marked by weak consumer spending and escalating operational costs, a situation exacerbated by the ongoing cost-of-living crisis. For retailers in the Australia and New Zealand (ANZ) region, these challenges are particularly acute. Recent statistics from the Australian Bureau of Statistics (ABS) highlight that Australian retail turnover fell 0.4% in March 2024.
Our own research has found that within this challenging landscape lies a unique opportunity. Despite the cost-of-living crisis, it indicates that 56% of shoppers are willing to pay more for brands that offer exceptional shopping experiences. This willingness underscores the potential for retailers to differentiate themselves by focusing on superior customer service and innovative shopping experiences.
Mind the gap – getting the basics right
However, many retailers are struggling to get the basics right. And there is a gap between consumers’ expectations and reality. More than 40% of consumers said they expected their shopping experience to be 100% contactless in five years and nearly a third agreed that they would be more likely to purchase from a retailer that offered contact-free checkout experiences. However, 24% expressed dissatisfaction with the speed of contact-free checkout in their most recent contactless shopping experiences.
At the same time, consumers are frustrated by poor site performance and clunky checkout experiences. Shoppers are also demanding effortless shopping experiences, free return policies, consistent experiences across online and offline stores, and same-day delivery.
The research also showed appetite for more personalised experiences, with the majority saying they would be more likely to buy from retailers who offered them. Equally, consumers would be more likely to purchase products if they offered VR/AR experiences including virtual try- on services.
Despite the huge opportunity to adopt new technologies such as AR and AI, retailers need to get the basics right before adopting advanced solutions. It’s crucial not to run before they can walk. Ensuring a solid foundation in customer service, site performance, and efficient checkout processes is crucial.
Adopting composable commerce to build for the future
Regardless of their stage of digital maturity, retailers must remain agile and adaptable in order to keep pace with evolving consumer behaviours. Composable technology holds the key to do this. This flexibility enables retailers to tailor their offerings to meet specific customer needs and respond swiftly to market changes.
A composable approach also enables scalability. As businesses grow, they can seamlessly add new capabilities without overhauling their entire system. Investing in this approach can be more manageable financially and operationally, allowing businesses to innovate continuously without significant disruption.
Enabling consistent omnichannel experiences
Embracing a composable approach also empowers retailers to provide a consistent omnichannel experience. Consumers expect a seamless transition between online and offline shopping. And by integrating various channels and ensuring data flows smoothly between them, retailers can create a unified customer experience. This not only enhances customer satisfaction but also drives loyalty and repeat business.
The retail industry must evolve to meet the challenges of weak consumer spending and rising operational costs. Adopting a composable approach offers a viable path forward for retailers enabling them to deliver unique and personalised experiences. This strategy not only helps in retaining existing customers but also attracts new ones, positioning retailers for long-term success in a highly competitive market.
Bruno Teuber is chief revenue officer at commercetools.