‘The massive changes that 2020 brought to the retail industry are here to stay. And now that parts of the world are opening up, and consumers are craving opportunities to shop in person, they expect the buying experience to be consistent both online and off,’ states the latest report by Shopify titled ‘The Future of Retail’. The report not only identifies trends that will shape the retail commerce business, but also provides recommendations that can help brands find the perfect balance between offline and online commerce.
Increased retail vacancies have created an opportunity for a new wave of digitally native brands to experiment with physical retail. The surge of brands into offline channels means retailers must focus on creating engaging and memorable experiences to win foot traffic. As a result, businesses must level up their omnichannel strategy to deliver a smooth shopping experience across channels. But to do this, employees need training in new technology like virtual shopping, live chat, and tools to manage alternative order fulfillment options like curb-side pickup.
According to Shopify’s latest report – The Future of Retail – as the role of the retail store employee evolves, staff are demanding higher compensation and better working conditions. Retailers need to adapt if they want to attract and retain employees who are happy, engaged and excited to meet customer expectations. These changes demand new retail strategies to thrive. ‘The Future of Retail’ is thus a collection of global, data-backed insights from hundreds of retail brands and thousands of consumers to get the full picture of what’s in store for 2022, as well as the strategies and products businesses need to succeed over the next year.
Digitally native brands drive retail competition
In-store shopping is ramping up again now that stores have begun to reopen following lockdowns, vaccination rates are on the rise, and consumers are hungry for in-person experiences. According to Shopify’s eCommerce Market Credibility Study 2021, 32% of brands say that they’d be establishing or expanding their use of pop-up and in-person experiences in the next year, while 31% say they plan on establishing or expanding their physical retail footprint. The study also reveals that to stay competitive, 40% of brands said offering experiential retail would be a top priority for them in the next year, something 32% of consumers say they are likely to engage with.
Digitally native brands might be at an advantage when it comes to experiential retail, since they’ll be building experiences as an extension of their already-established online reputation and community.
Cracking the foot-traffic code
Coordinating in-store experiences will also be challenging for brands that have a substantial e-commerce arm to their business, says Shopify. These merchants will need to figure out how much of their retail space to use for experiences and how much to dedicate to holding inventory that’s being sold through their online store. Cracking the foot-traffic code will be another top challenge according to 55% of brands, adds the Shopify eCommerce Market Credibility Study 2021.
Retailers will need to think about their storefront as their brand proposition, and embrace competitive differentiators like experiential retail to win foot traffic and customer loyalty.
Urbanisation will also play a key role in the future of retail. In 2020, 56.2% of the world population lived in urban environments and the United Nations projects this number will increase to 68% by 2050. This means more brands will compete in dense, urban areas, and will have to come up with strategies to succeed in smaller retail store spaces.
Brick-and-mortar stores reach more customers
Digitally native brands that get brick and mortar right will not only unlock a large (and growing) segment of consumers who prefer in-person shopping, but they can also lower their customer acquisition costs. A physical retail store is an avenue for connection and community, and provides the opportunity to attract more local customers. The Shopify eCommerce Market Credibility Study 2021 reveals that 47% of consumers say that having a local presence was a significant or very significant influence on which brands they chose to purchase from in the past year.
How to create experiential moments
Shopify’s ‘The Future of Retail’ report suggests some of the following methods that brands can employ to win customers over: Analyse customer data to test and learn: Exploring experiential retail doesn’t mean you have to go directly from online to opening permanent retail stores. You can start small and apply your learnings from pop-up shops to your expansion strategy. Use the abundance of e-commerce customer data at your fingertips to drive your physical retail decision making, including where to pop up and what types of products to sell. Analyse your e-commerce dashboard to understand where the bulk of your new and repeat customers live and what they’re buying. Then use this data to localise your product assortment and experiences. Try testing a pop-up in these locations, and where you’re most successful, consider opening a permanent storefront.
Find the pop-up format that’s right for your business
- Pop-in Stores: You can temporarily rent space within an existing brick-and-mortar store for a weekend, a week or longer. It’s key to partner with retailers who reach a similar target audience.
- Pop-up Events: Emerging and established brands attend pop-up events to reach new audiences, build brand awareness, and boost sales. This setup is great for exposure because of the combined marketing efforts.
- Leased Commercial Space: If you’ve found success with pop-up shops and are looking to expand into your own retail store, getting your own short-term retail lease is a perfect way to test the waters.
Customer satisfaction and retention require employee happiness and retention, something that’s currently a top challenge in the retail industry. Employees at major retailers have been striking, quitting and making their unhappiness known. Brands need to figure out how to overcome staffing challenges.
- Invest in creating unique in-store experiences to build brand affinity: The customer data you’ve collected online will help you strategically create experiences as an extension of your digital presence and community. Building a sense of belonging is easier to do in a physical environment, and can encourage customers to buy into your brand versus just the products you sell.
You can do this by creating community-focused spaces that offer events, workshops, brand collaborations, or support for charitable causes. Create memorable in-store experiences that align with your unique brand values, rather than just trying to increase sales revenue and boost your bottom line.
- Use customer profiles to offer personalised recommendations’
- Integrate POS with your e-commerce platform: According to Shopify eCommerce Market Credibility Study 2021, 50% of consumers say that personalisation based on their interests and past purchases have influenced their decision to purchase from a brand over the last year. Offering customised product recommendations or personalised product testing experiences is one way to achieve this in store. The key is to sync your customer profiles through a point of sale (POS) that integrates with your e-commerce website. This way you can easily review a customer’s holistic purchase history.
- Train your employees to improve the in-store experience: Training and preparing store staff to add this type of value to the in-store shopping experience will also keep them more engaged, provide opportunities to upsell or cross-sell, and create growth opportunities — something that’s crucial to retaining employees in today’s retail landscape.
- Offer in-store appointments: One way to create a personalised experience is to set up testing stations and let customers make appointments to test new products before buying. Then have one employee equipped with a mobile POS manage each station. When the customer arrives for their appointment, your staff can pull up their customer profile and make personalised recommendations based on past purchases.
The post-pandemic customer journey will bring about the next phase of omnichannel shopping
As shoppers return to stores, the lines between buying online and in person have blurred. According to Shopify eCommerce Market Credibility Study 2021, 54% of consumers say that, over the next year, they’re likely to look at a product online and buy it in store, and 53% are likely to look at a product in store and buy it online.
Shopify says that this shift in consumer behaviour, combined with the increased competition coming from digitally native brands moving into retail, means it’s not enough to use the retail store for acquisition alone. Retailers must build relationships and experiences with their customers that only omnichannel commerce can offer.
After a year of shopping mostly online, consumer expectations have also changed. Every buying journey is multi-faceted, and can start and end on any channel. For example, according to Shopify eCommerce Market Credibility Study 2021, 55% of consumers want to browse products online and check what’s available in local stores. That’s why over the next year, 43% of brands will focus on showing available inventory in nearby stores. Customers also want to check out online but return products to a physical store, or look at a product in store and buy online. For 47% of consumers, these factors have a significant influence on their purchase decisions.
Brands will face several challenges
The Shopify eCommerce Market Credibility Study 2021 reveals that 49% of brands say breaking down organisational silos between digital and physical stores will be one of their biggest challenges over the next year, and 47% of retailers say unifying online and in-store operations and data will also prove to be difficult.
E-commerce brands moving into physical retail are also increasing the pressure on traditional brick-and-mortar retailers, who are often held back by legacy technology and infrastructure. Retailers are planning to increase their investment in digital channels to drive sales over the next 12 months. Brands want to spend more on their company-owned North America Europe, Middle East & Africa Asia Pacific online store as well as social commerce, on their custom mobile App, and on livestream selling.
Increase average order values and customer loyalty
Brands that are able to embrace technology to unify channels and create an omnichannel strategy will have a competitive advantage that wins and retains more customers, says Shopify. Creating a fully ICSC finds that over half of online shoppers use click-and-collect, with 67% adding extra items to their carts when they can pick them up immediately. Another advantage is that customers who buy online and return in store can be incentivised to make additional purchases when they return in store. These types of upsell opportunities are available to brands that think strategically about using their store in tandem with other channels.
How to succeed in the next phase of omnichannel commerce
Shopify’s ‘The Future of Retail’ report suggests some of the following methods that brands can employ to succeed in the next phase of omnichannel operations:
- Turn your retail store into a showroom to improve brand discovery and awareness
- Carry less stock in store: Completing the purchase online means you can carry less inventory in your physical stores, freeing up more space for experiential retail and customer interactions. Instead, you can opt to keep the bulk of your inventory in a warehouse.
- Make sure the sale is connected to your physical store: The actual purchase may take place online with showrooming, but if the consumer discovered your product in store, you’ll want to make sure the sale is attributed to your physical store. To do that, have your store staff check the customer out online while they’re at the store, or email the customer a unique checkout link.
- Unify your customer and product data to provide a consistent customer experience across channels
- Track product performance across channels: Providing a consistent customer experience across channels requires a unified view of your product and customer data. The best way to achieve this is to build and manage your business through a single platform that lets you manage all your sales channels from one dashboard. This way you can easily connect with third-party solutions and integrate data sources and workflows. Use a commerce platform that integrates with the sales and supply sides of your business, and a POS system that connects your digital storefront with retail locations in a central reporting hub. Managing your business from one platform will also provide a single view of sales data and reporting. So whether it’s in store, online, or on social media, you can efficiently track product performance across all sales channels.
- Sync your product information across channels: Use a platform that automatically syncs product information including price, descriptions, SKU counts, and images to make sure your product data and inventory levels update in real time and are always accurate across channels. Customers can then check what’s in stock, sign up for restock alerts, and choose their preferred order fulfillment method, regardless of where they’re shopping from.
- Use brick-and-mortar locations as fulfillment centres: You can also use your brick-and-mortar locations as fulfillment centres to offer flexible, blended shipping options like BOPIS — something that 58% of consumers, according to Shopify eCommerce Market Credibility Study 2021, say is important to them and 33% of brands are prioritising over the next year.
Consumer and employee expectations push brands to reimagine the retail staff role
Customer experience plays a big role in a shopper’s decision to buy. ‘It’s the reason why 58% of consumers made repeat purchases from a specific brand over the last year. In response, 44% of brands plan to increase their employees’ interaction time with customers over the next year,’ states Shopify eCommerce Market Credibility Study 2021. But, engaging with customers will go beyond traditional in-person interaction, Shopify foresees. Instead, store staff should act as experience hosts, facilitating options like virtual shopping, live chat, and appointment shopping. According to the Credibility Study mentioned earlier, 39% of retailers say they’re investing in improving the tools and technologies employees use to do their day-to-day work. This includes tools and Apps to manage virtual selling, staff shifts, live chat — something 41% of consumers say is valuable to them — local delivery, and in-store appointments.
But customer satisfaction and retention require employee happiness and retention, something that’s currently a top challenge in the retail industry. Employees at major retailers have been striking, quitting and making their unhappiness with the industry known. Brands need to figure out how to overcome staffing challenges if they want to succeed in an increasingly crowded retail market.
Reimagine the store staff role
The future of the store is in the hands of its employees. That’s why 40% of brands are striving to improve employee acquisition and retention, says Shopify eCommerce Market Credibility Study 2021. And although stores have begun to reopen, retailers will continue to struggle with the fallout from pandemic-induced layoffs. Forty-nine per cent of brands say hiring and retaining employees will likely be a top challenge in the next year.
If retailers want to win back store staff, they must improve their role by rethinking job descriptions as well as pay. Once employees are hired, retailers will face the challenge of training them in technologies that power the experiences customers crave. That’s why 40% of retailers plan to invest in training store staff to interact with customers using technology to improve the in-store experience. This includes virtual selling Apps, live chat, and using software to manage click-and-collect order fulfillment.
Happy and engaged employees lead to loyal customers
Hiring retail store staff and training them in emerging technologies will not only pandemic-proof the store employee role, but also result in a better overall customer experience. Shopify eCommerce Market Credibility Study 2021 states that 54% of consumers purchased from a specific brand in the last year because they could easily reach customer service on the channel of their choice. And since 58% of consumers purchased from a specific brand due to excellent past customer service, retailers that invest more in their employees will win more customers.
Providing store employees with more opportunities to grow, and more flexibility, will also increase employee happiness, engagement, and retention. This in turn leads to better customer retention.
How to improve the employee experience and meet customer expectations
Shopify’s ‘The Future of Retail’ report suggests some of the following methods that brands can employ to improve the employee experience and meet customer expectations:
- Create more specialised roles and increase compensation to match:One likely explanation for staffing shortages in the retail industry is that store employees are quitting due to burnout. Jobs that used to include folding and organising merchandise, greeting customers at the door, pulling inventory from the stockroom, and customer checkout, now also include making sure customers are keeping a safe distance in store, cleaning surfaces routinely, managing in-person or virtual appointments, responding to live chat, and coordinating curb-side pickup orders, says Shopify.Store staff are demanding more benefits, flexibility, and higher pay in light of those increased responsibilities, but brands should also consider offering more specialised roles. Increased specialisation not only prevents your staff from feeling spread too thin, but keeps these roles from feeling mundane, which can lead to employee churn. Consider hiring virtual shopping specialists, or staff that specialise in appointment shopping — or train high-performing employees in new technologies, to keep them learning and engaged.
- Make sure you’re providing a healthy work environment for employees:Employees stay with good teams and good managers. Creating a healthy work culture that treats employees with respect, offers flexibility, and recognises employees for good work should be the foundation for any employee retention strategy. One way to make sure you’re maintaining a healthy work environment is to schedule weekly one-on-one meetings with store staff to check in, give and receive feedback, share praise and recognition for their work, and discuss growth plans for your employees. Whether they want to learn new technologies like virtual selling and live chat, or prefer to manage the sales floor, you can create an engaging and positive work environment that they’re excited to be a part of.