Two years on since the start of the COVID-19 pandemic, we’re tired of hearing the phrase “new normal”. However, the effects of the pandemic have undeniably shaped a new reality of retail and e-commerce.
Whether your business boomed during the pandemic or you’re just now beginning to make the shift from reactive to proactive planning, it’s important to understand retail’s new standards of excellence so you can take your next steps with confidence.
So in terms of forecasting, what can we expect from the retail market moving forward? Here, we explore the key trends that will shape the future of retail in 2022 and beyond.
Continued e-commerce growth
While e-commerce was already becoming increasingly prominent, lockdowns accelerated it into an unavoidable reality. Data from Australia Post revealed 9 million households shopped online in 2021, amassing a total of more than $50 billion. These figures represent a 57% increase from the year before.
However, with the e-commerce market being so oversaturated, consumers are being targeted with more e-commerce marketing material than ever before and have a wealth of retailing options at their fingertips. As the market becomes more competitive, retailers can’t afford to become complacent when it comes to their online presence.
To set yourself apart from the pack, focus on delivering targeted, differentiated and meaningful experiences to your e-commerce customers, ultimately increasing your customer acquisition to retention, to avoid being overshadowed by competitors. Having robust, data-driven customer experience strategies will be critical to successfully navigating the shift to digital.
Soaring levels of e-commerce shouldn’t mean that retailers should exclusively prioritise digital and give up on brick-and-mortar channels. Rather, the events of the last two years have strengthened the need for a frictionless, unified relationship across online and offline stores.
It’s for this reason that the majority of retail executives plan on increasing investments in digital channels to improve online integration at stores, confirming the increasing need for a seamless online and offline interaction.
By applying customer data to non-digital strategies, such as a physical store, and capturing data from customers in-store, retailers can provide personalised, frictionless experiences that are integrated for wherever customers choose to shop.
Transforming data and privacy
Over the past decade, retailers have been able to collect customer data online. This rise of big data has served as fuel for many retail campaigns, providing businesses with the ability to identify and segment audiences, personalise communications and track performance across channels and devices.
However, in the wake of new privacy laws, Silicon Valley tech giants’ most recent privacy update and depreciation of third-party cookies, businesses need a new competitive advantage. Retailers’ ticket to success in a post-cookie world can be found in first-party data, which is information that your business collects directly from your audience, such as customers, site visitors and social media followers. First-party data allows businesses to serve targeted messages in personalised, privacy-compliant ways.
Evolving customer needs
In 2022, retailers must also pay close attention to the continued shifts in customer behaviour, values and preferences. Research by McKinsey during the midst of the pandemic has shown that 66% of consumers said they tried new kinds of shopping during the pandemic, and another 65% said they’ll continue to do so.
In addition to this, customers’ capacity to buy has shifted. Your most loyal customer pre-COVID may no longer have the financial means to shop as much as they used to, whereas others may have increased financial capacity and willingness to spend than before. Throughout the pandemic, what your customers prioritise may have also shifted, with many consumers now valuing the quality of a product or experience above all else.
Understanding the external factors influencing consumer shopping behaviour can help retailers predict and adapt to maximise engagement. Yet, these changes will be specific to your customers, industry and business, so you’ll need the right tech infrastructure in place to quickly collect and analyse data in real-time to discover and respond to the unique trends affecting your business.
Nick Hinsley is vice president of retail at Lexer.