By Gavin Masters – Principal Consultant
Financial uncertainties, shifting consumer behaviours, and technological advancements are placing significant demands on retailers. For those aiming to lead in the retail industry, there’s a lot to think about. Success will hinge on being agile, adaptable, and innovative.
In this article, we examine the current retail landscape, from emerging trends like AI to the strategies employed by leading retailers and the best practices we can adopt from them.
AI: From endless possibilities to tangible use cases
Generative AI is a hot topic in retail right now, offering retailers several opportunities to enhance customer experience and optimise their businesses. However, statistics from a 2023 Gartner survey revealed that only 54% of AI models successfully progress from the pilot stage to production. This highlights the gap industry leaders need to address to transition from conceptualising the potential of AI to implementing concrete use cases.
Nevertheless, some retailers have already started to realise the technology in practice. Take Ultra Beauty, for example. The American retailer has integrated AI to enhance the shopping experience, using AR for makeup try-ons and AI that learns your preferences. Their GLAMlab and Shade Finder tools enable virtual makeup trials, while their AI-powered beauty advisor and Beauty School Live provide guidance and learning. As these technologies continue to evolve, the retail landscape will undoubtedly become more interactive and personalised, paving the way for an innovative future in shopping.
Loyalty, brand identity, and time matter more than ever
Retailers are increasingly recognising the crucial role that knowledgeable and engaged employees play in delivering exceptional customer experiences. These employees not only have deep product knowledge but also show a genuine enthusiasm for helping customers, which builds stronger customer relationships and drives brand loyalty.
Loyalty programmes, long recognised for their potential to drive repeat purchases and build customer brand affinity, continue to play a key role in the customer experience, albeit with a slightly evolved role. With today’s customers seeking more than just transactional purchases, retailers must utilise data-driven insights to better understand their customers’ needs and preferences. This allows them to create loyalty programmes that deliver genuine value and nurture long-term loyalty.
Customers now have numerous choices at their fingertips, meaning retailers need to find a way to stand out from the competition. While creating a strong brand boosts customer loyalty and justifies premium pricing, a discount approach can appeal to price-sensitive consumers looking for value. To succeed, retailers must strike a balance between maintaining brand integrity and meeting consumer demand for affordability and perceived value.
Time is a precious commodity in retail and can significantly impact the customer experience. In an era characterised by instant gratification and heightened expectations, retailers must prioritise efficiency and convenience to stay competitive. Initiatives like quick pickuppromises and guaranteed delivery dates are key strategies that can enhance customer experiences and drive loyalty and long-term success.
Driving sustainability and responsibility
With the retail supply chain currently responsible for 25% of greenhouse gas emissions (GHG) globally, retailers must consider how they can become more environmentally friendly and implement sustainable initiatives in their operations.
Consumer behaviour has also shifted, with customers now expecting brands to practice environmental responsibility at every stage of a product’s journey. Re-commerce, also known as reverse commerce, involves buying and selling pre-owned, refurbished, or recycled goods, often through online platforms, to promote sustainability and extend product life cycles.
Today’s shoppers are more interested in the impact of the products they buy for several reasons, including environmental concerns and cost savings. Platforms like Vinted, The RealReal, and Sellpy are gaining popularity, as they reduce the environmental impact of fashion while offering consumers diverse and affordable shopping options.
Leading retailers are also bolstering their sustainability efforts by re-evaluating their returns management processes. Zara, for example, is utilising data analytics to learn more about return patterns, helping the company improve areas such as product design and size accuracy. This proactive approach not only reduces future returns but also strengthens customer trust and loyalty. By prioritising sustainable returns management, retailers can minimise waste, lower costs, and contribute to a more sustainable industry.
There are also legal aspects that retailers must monitor. While non-EU member states are not currently affected by regulations such as Digital Product Passports (DPPs), Corporate Sustainability Reporting Directive (CSRD), and the European Accessibility Act, UK-based companies operating in an EU member state will need to comply. Therefore, it’s practical for UK businesses to make strides in these areas to become early adopters, which can differentiate retailers in a crowded market and highlight their commitment to sustainability and ethical practices.
Beyond superficial omnichannel
While the concept of omnichannel is nothing new, retailers are still only scratching the surface of its possibilities. Despite recognising the importance, retailers often face challenges in fully executing their strategies, with some guilty of ‘omnichannel washing’ – acknowledging the principles of omnichannel without fully utilising them to create truly engaging customer experiences.
To move beyond superficial omnichannel, retailers must adopt a holistic approach that addresses key areas of improvement:
Utilise data-driven insights – Retailers can personalise interactions and tailor marketing effectively by leveraging data-driven insights. This approach helps businesses exceed customer expectations, delivering exceptional experiences across all touchpoints
Enable a unified customer experience – A seamless customer experience is vital for omnichannel success, requiring smooth transitions between online and offline channels. Retailers need to invest in technology that ensures consistent brand messaging and engagement across all touchpoints
Implement innovative technologies – Innovation in retail is crucial, with generative AI enabling personalised interactions and predictive capabilities. Adopting new technologies keeps retailers competitive, meeting evolving consumer expectations and enhancing market differentiation
Break down silos – Achieving omnichannel success requires breaking down organisational silos and fostering cross-functional collaboration. Retailers who prioritise this create smoother interactions and enhance the overall customer experience
Find out more about what lies ahead for retailers
Read more about these topics and what the future holds for retailers in our “Retailers Guide to 2024.” This guide leverages our expertise in retail, trend reports from NRF Retail’s Big Show 2024 in New York City, best practices from leading retailers, and insights from the shopping streets.
Download it today by clicking here.
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By Gavin Masters
Gavin Masters is an experienced digital strategist and transformation leader with a wealth of success in digital B2B and retail. He currently works as Principal Consultant at Columbus, where he leverages his expertise to help businesses achieve their digital goals.
The post The future of retail: How brands can stay ahead of the curve appeared first on InternetRetailing.
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