Against the backdrop of economic volatility, rising costs, and inflation, the market landscape is changing, putting pressure on retailers to adapt to the evolving environment. At the same time, emerging customer trends are continuing to influence how brands and shoppers engage in the physical and digital marketplace. As shopping habits change, digital solutions have become a silver bullet to help retailers build customer loyalty and engagement, even in a challenging consumer environment.
The customer is changing as rapidly as the retail environment, and it’s essential that brands pay attention to emerging market trends and adapt their processes to accommodate these changes. The 2020s have so far been marked by significant digital transformation, and there’s no sign of this slowing down. Retailers must invest in digital solutions, such as digital loyalty programs, to keep pace with a changing retail environment and respond to emerging trends while continuing to provide value to consumers.
There are three key emerging trends that demand attention from retailers:
1. Restricted spending
While the rate of inflation has slowed down, it’s clear that costs continue to rise, which is putting pressure on shoppers and their spending habits. As a result, global data shows that 28 per cent of consumers plan to reduce their spending this year. Additionally, 21 per cent of consumers plan to shift towards shopping for more affordable brand options, while and 31 per cent plan to increase their shopping in discount stores.
According to data from McKinsey, 60 per cent of consumers have changed their spending behaviour as a result of participating in loyalty programs, demonstrating an appetite for value among loyalty program participants. Digital loyalty programs provide an opportunity for retailers to enhance consumer engagement, despite the challenges of increasing costs. Retailers that leverage digital solutions can tailor their sales and marketing campaigns based on real-time consumer trends and behaviours as well as help consumers access greater savings based on their own shopping habits. This can help consumers save more while fostering a greater sense of brand loyalty.
2. Gen Z consumers
Consumer demographics are also shifting, with close to one-fifth of Australians now falling into the Gen Z bracket. Data shows that social drivers are changing the buyer behaviour of this demographic, with 48 per cent preferring to buy products considered innovative, and 30 per cent preferring to shop with brands that demonstrate strong social and political beliefs, while boycotting those that don’t align with modern social norms.
Digital loyalty programs can be a powerful asset for retailers wanting to engage with more social consumers, including Gen Z. By eliminating plastic loyalty cards and shifting towards digital records over paper-based receipts, brands can appeal to environmentally conscious shoppers. Digital loyalty programs also let brands and shoppers engage with social practices, promoting charitable donations as part of loyalty programs, or even leveraging real-time shopper data to adapt to changing business needs and requirements.
3. Authentic automation
Consumers are increasingly seeking authentic interactions that result in real-word outcomes . This trend is particularly relevant for brands, and digital loyalty programs can help bridge the gap between automation and accessibility, empowering consumers to achieve genuine savings with the support of targeted promotions based on real-time data, while helping brands to strengthen a positive brand reputation.
Change and innovation is nothing new in the retail world. However, three years of continued volatility has forced retailers to adapt and change their processes at a rapid pace. While increasing costs have challenged the marketplace and put pressure on consumers and retailers alike, businesses have an ideal opportunity to deliver more value to customers and foster a greater sense of loyalty and engagement.
Digital loyalty and rewards programs give retailers the freedom and opportunity to tailor offers and deals to shoppers, providing essential value and savings at the point of sale. They also let retailers engage with more socially responsible consumers, tapping into environmentally friendly business practices and helping consumers make charitable contributions with their rewards.
Anurag Vasisth is group CEO of Loyalty Now.