December 9, 2020 5 min read
The opinions expressed by the entrepreneur’s contributors are their own.
The current global health crisis has fundamentally changed the retail world. Organizations of all sizes struggle to keep up with the dramatic changes in day-to-day operations and anticipate the next steps. According to Opportunity Insights, consumer spending has recovered to more than 90% of prepandemic levels in the US, but it is targeting different areas. Spending on restaurants, hotels and transportation is very low, while spending on groceries and home entertainment is increasing. Total retail spend for the week ending November 1 was approximately 8% higher than January.
In this disorder there are opportunities for entrepreneurs. Consumers behave differently and retailers are adapting through digital transformation and diversifying their partners to meet new consumer demands. Four trends have emerged that are important to businesses looking to thrive in retail now and beyond the impact of Covid-19.
1. Reducing the physical space, increasing the range of products
Over the past year, the physical presence of retail has transformed into new shapes, sizes, and experiences. More stores have turned into fulfillment centers, investments in large physical formats have declined, and retailers have focused more on niche products and local suppliers shortening their supply chains. Many retailers are looking for new partners to expand their product range or to meet a demand affected by the pandemic, e.g. B. masks, partitions and other items that consumers can no longer live without today.
Manufacturers and suppliers who want to work successfully with retailers should understand retailers’ needs for detailed and accurate product information. This data plays a key role in ensuring that the right product is available exactly when the consumer needs it. Almost 70% of consumers said a lack of product information was the main reason they left a product page, according to a study by Salsify.
Related: 7 Inexpensive Design Ideas for Small Retail Space
2. More urgency for consumer insights
The current transformation in retail is also an opportunity for technology startups to support access to customer insight and analysis. It is more imperative to understand and anticipate consumer interactions with products. Any personal interaction, as there may be less of it, must be counted and serve the purpose of involving the consumer over the long term.
Startups like Adrich, which provide real-time product usage analytics, are helping retailers and brands strengthen relationships with consumers. A thin, flexible sensor has been developed that sits behind a product’s regular label, creating a feedback loop for brands and retailers to track consumer interactions with the product via the cloud and Bluetooth. Retailers know when and how consumers use different products that can help with inventory planning, merchandising, and localized promotions.
3. New ways to try products
Augmented Reality (AR) technology can support “try-before-you-buy” experiences that are becoming increasingly common. Currently, consumers are less likely to have contact with people and products that others may have touched. While more consumers will undoubtedly return to the stores as health protocols relax, online shopping will also continue to grow. A Salesforce poll in May found that the majority of people in all income brackets expect to buy more online in the future, including 71% of the high income groups.
AR showed signs of growth even before the pandemic and offers solutions to today’s retail challenges. According to a 2019 Nielsen survey, around half of consumers are willing to use AR to rate products. As a result of the pandemic, jewelry, designer fashion and shoe brands are offering new virtual try-ons or seeing growth in existing apps that allow customers to shop from home or more securely in-store. Ulta’s GLAMlab was launched in 2016, but usage has quadrupled in recent months as the virtual try-on app became a key part of the reopening of stores where customers could no longer try makeup before buying.
What could affect or disrupt the maturation of AR is the still widespread occurrence of incomplete and inaccurate data filtered through dealer systems. In order for a virtual product experience for retailers to lead to successful results, product information must be standardized in order to ensure a smooth flow between the physical and digital world. Not only do retailers lose time and resources trying to track down the information during the set-up phase, but consumer confidence is compromised when key product attributes are missing or unavailable when testing new technology offerings. Business owners can expect continued demand for solutions that address these data challenges and help retailers create digital product experiences for customers who cannot test physical products.
Related: Why Warren Buffet Might Be Wrong in Retailing
4. Growth in sustainability and transparency
Customers around the world are feeling more connected due to the shared experience of the pandemic, and according to Accenture, there has been an increase in conscious consumption and a desire to buy more locally. Many retailers are starting sustainability initiatives and re-examining the environmental impact of their supply chains. In May, Walmart announced a partnership with clothing reseller ThredUP, combining Walmart’s interest in sustainability with the need to address the tight budgets of consumers hit by the pandemic recession.
Along with the growing interest in reuse, more consumers want to understand where products come from and how they are made. This type of transparency requires brands, retailers, and online marketplaces to adjust their requirements for unique product identification. For example, obtaining authentic barcodes and identification numbers should be seen as an integral part of the product launch for small brands that have a feasible chance of reaching a wider audience.
COVID-19 has created a turning point in consumer behavior. Despite the difficulties they face today, small brands and business owners can see this as an opportunity. Your courage to break new ground is more important than ever for retailers. Successful collaborations must innovate quickly, taking into account the immovable rules for retail engagement in terms of data standardization, completeness, and accuracy.
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