Just as hybrid office-remote work arrangements have become more common, retail is becoming increasingly hybrid. The line between brick and mortar and e-commerce is now blurry, and in this evolving retail environment, many entrepreneurs are wondering the best way to position their small businesses for a prosperous year. Industry experts offered their predictions for the retail trends to watch this year.
Tech will continue to shape retail
Technology is always remaking the retail environment, from creating self-service kiosks in stores to supporting the e-commerce boom. However, with the rapid evolution of digital technology, artificial intelligence and machine learning — and the need for retailers to stand out from the e-commerce crowd — tech adoption has become more pressing.
Key Takeaway
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Online shopping is more important than ever.
The rate at which business owners opened e-commerce shops and consumers shopped online increased dramatically during the COVID-19 pandemic, and the trend has continued into the post-pandemic era.
“Companies that put e-commerce at the heart of their business strategies are prepared for the post-COVID-19 era,” said Yomi Kastro, founder and CEO of e-commerce platform Inveon. “There is an enormous opportunity for industries that are still more used to physical shopping, such as fast-moving consumer goods and pharmaceuticals.”
Even brick-and-mortar retailers should have some semblance of an e-commerce presence. Many consumers prefer to shop from the comfort of their own homes or at the spur of the moment. Consider offering your bestselling items in an e-commerce store to give your customers the option of purchasing your most popular products without visiting your physical location.
Retailers are reducing packaging waste.
As consumers become more environmentally conscious, look for retailers and brands to reduce their packaging waste, said Anthony Martin, CEO of Choice Mutual Insurance Agency. “Organizations will be more conscious about using recyclable or biodegradable packaging materials, which can be easily recycled or break down naturally in the environment,” he said.
The movement toward more sustainable packaging can be seen in the emergence of companies developing new packaging materials out of plant-derived materials. Furniture giant IKEA, for example, said it plans to eliminate plastic packaging for new products by 2025 and all products by 2028. Many other large brands are moving in the same direction.
Looking to get involved in the retail industry? Here are eight tips to open a retail store and make it successful.
Technology will shape retail workforce management.
Hiring and retaining quality workers will likely remain a challenge for retailers. One way businesses can adapt is by offering hybrid roles in which salespeople interact with customers online, thereby increasing their talent pool and reducing geographical limitations on the workers they can recruit.
Mike Morini, CEO of WorkForce Software, said companies also need to consider new ways to manage on-site staff, as tech will be instrumental in remaking how the physical workplace is run.
“An hourly workforce has unique pay rules, labor regulations, compliance obligations and scheduling needs,” he said. “Companies need technology that can support their growing requirements and evolve with their business. The pandemic [accelerated] the adoption of new digital technologies, which can save organizations money by increasing efficiencies and improving the experience of their employees.”
Did You Know?
Consumers are increasingly comfortable shopping online, which means retailers will need to have an e-commerce presence to see success in 2024. To get your online shop started the right way, check out our article on overcoming common e-commerce challenges.
U.S. retailers need to protect consumer data
Consumer data protection will continue to be a major concern for U.S. retailers. High-profile data breaches not only cost retailers money but also damage their brands. And the stakes have only been heightened since the adoption of consumer data privacy laws such as the European Union’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA).
“With the landscape of Google getting rid of third-party cookies and Apple accelerating its privacy-first approach, businesses of all sizes will become under greater scrutiny for how they protect customer data,” said Steffen Schebesta, CEO of global digital marketing platform Sendinblue. “My sense is that the learning curve will be steep for American companies, and if penalties apply, the lessons will be expensive. It will get especially messy if the regulations are not enacted on a federal level. This would force businesses to deal with state-by-state regulations.”
While retail businesses collect consumer data for valid purposes, they need to ensure that information is highly protected from cyberattacks. Failure to defend sensitive customer data, such as financial information, could lead to massive lawsuits and fines, not to mention serious damage to brand reputation and lost opportunities for future business.
Tip
Cyberattacks hurt businesses in many ways. However, adhering to cybersecurity best practices can help reduce the chances of an attack, as well as mitigate the damage if an attack does occur.
Micro fulfillment centers bring merchandise closer to buyers
With the e-commerce boom of recent years, massive fulfillment centers became a symbol of commerce. Jonathan Morav, head of product strategy at retail fulfillment company Fabric, said companies are now looking more to micro fulfillment centers, far smaller facilities that can be located closer to the residential areas where their customers live. They also enable businesses to take advantage of falling commercial real estate prices in downtown cities.
Underutilized space in malls and parking lots can hold micro fulfillment centers. While an average Amazon fulfillment center is around 800,000 square feet, a micro fulfillment center typically takes up less than 50,000 square feet and is often as small as 10,000 square feet, while still fulfilling the expectations of fast, free shipping, Morav said.
Brick-and-mortar retailers will create special customer experiences
Brick-and-mortar retailers have faced significant challenges as the industry has evolved. Retailers have a better chance of being successful if they create unique and memorable customer experiences by personalizing the shopping journey and making it fun.
Personal shopping services will increase.
Personal shopping services include online preorder and pickup, personal shoppers who walk customers through the showroom floor and much more. Personal shopping services create an extra layer of customer service that can enhance the overall experience and is difficult for e-commerce stores to replicate.
Deb Gabor, CEO of Sol Marketing and author of Irrational Loyalty: Building a Brand That Thrives in Turbulent Times (Lioncrest Publishing, 2019), said small retailers, in particular, can benefit from extending personal shopping services to their customers.
“Local and small retailers are especially well suited to these kinds of personalized experiences and are leading the charge in the category,” Gabor said.
Did You Know?
Personalized shopping services don’t just enhance the customer experience; they create opportunities to cross-sell and upsell customers to drive more revenue.
Automation in pricing will continue to rise
In recent years, more and more companies have relied on automated technology to ensure their prices are properly set. Expect automated pricing tech to become even more commonplace, helping retailers reduce the amount of labor required by their staff.
Omri Traub, an executive at restaurant point-of-sale software company Toast, expects automation to play an even bigger part in this arena going forward. He pointed to “a new wave of companies” that provide such automation solutions as a service. Once implemented, he said, the tech will provide “low implementation costs and [reductions in] operating costs.”
“With continued shortages of workers within select domains, automation investments will continue to increase,” Traub said. “Examples for small business include online pricing automation to balance profitability and revenue growth, as well as inventory management systems to ensure the perfect amount of inventory is on hand.
Marketing and customer engagement will see changes.
Customers now primarily engage with small retail stores in an online, mobile-friendly model. That’s shifted the paradigm for marketers and customer engagement specialists, and the trend will continue this year.
Social media will continue to introduce customers to brands.
Social media is a major driver of the customer journey and online sales for many companies. Going forward, experts expect that hashtags and meme culture will play as large a role as traditional advertising methods for successful small businesses and their younger customers. One way that will happen, Gabor said, is through “creative social commerce,” in which platforms such as TikTok and Instagram fuel online shopping.
“Social shopping, such as shoppable TikTok and Instagram, [are] likely to continue rampant growth among savvy retailers,” she said. “More creative social programming … is also popping up.”
This includes experiential marketing, such as live events that are streamed over social media platforms. Whether people engage with the brand in person or online, these types of events offer widespread exposure.
Influencers will keep playing a big role.
Love them or hate them, influencers will remain relevant for nearly every retail brand. With companies highlighting authentic voices, Gabor said, consumers will be able to look for leadership among those individuals.
“During a time when consumers prize honesty, sincerity, and truth from the brands they love, influencer programs must emphasize similar values,” she said. “Brands will continue to be mindful that their micro-influencer campaigns focus on influencers who authentically align with the values and beliefs of both their brands and their consumers to ensure that those influencer campaigns have a meaningful impact.”
Key Takeaway
Consumers expect to be able to interact with your brand from their mobile devices, and they will continue looking to influencers for brand and product recommendations.
Key retail developments to watch
The economic headwinds that all businesses face may be especially pronounced in the retail industry, which has had a rocky couple of years that have led to innovation and evolution. We anticipate further adoption of novel tech solutions, increased personalization and creative customer engagement campaigns this year. Retailers that can tap into each of these trends will be best positioned to come out on top.
Alex Halperin also contributed to this article.
