10 trends that will transform retail in 2019
Let’s take a look at the key trends set to shape the retail year to come.
As new battle lines for product, merchandising and distribution are drawn, emerging technologies will be vital for decade-old and newly launched brands to successfully evolve.
Messaging becomes the new secret weapon
Every month we exchange more than 8 billion messages with businesses on Facebook Messenger, a number that has significantly grown by 400% in the last 12 months. Further enabled by WhatsApp, WeChat, Instagram DM and live chat — messaging is now the preferred way to communicate.
When we think back to the basics of service, any good customer relationship begins with a conversation and builds on that conversation over time.
2. Increased focus on voice
As we prepare for the rapid adoption of voice-enabled technologies in years to come, 2019 is set to be foundational for retail and customer usage.
By the end of 2019, 50% of US homes are expected to own a smart speaker 3, and Australians are closely following suit with Google Home and Alexa audiences growing locally.
As a lively, engaging and helpful experience; voice creates important customer connection through higher memory effects and physiological responses, and allows retailers to better understand their customer.
Retailers investing in voice will have a competitive edge. Those with localised search strategies (incorporating ‘near me’ searches as an example) will reap initial rewards as customers search and discover via voice.
Whilst the opportunities relating to purchase have yet to be realised, we are on the cusp of what’s to come. Fuelled by advances in NLU and AI, conversations are becoming far more contextual and valuable for both the customer and retailer.
3. Social commerce will grow, quickly
Social commerce is set to grow fast this year, with mobile usage increasing and social-loving generations maturing in the year to come. Today’s customer doesn’t need to visit a website to buy; they can discover, research and purchase directly from social — and often, it’s a more enjoyable and convenient experience.
Social content formats are changing; the rise of ‘storyliving’ over traditional storytelling is expected to continue with Instagram Stories now growing 15 times faster than feed sharing.
Both retailers and social platforms will adapt to new content opportunities, and make it easier to instantly buy on social given the breadth of shoppable moments. More retailers will launch exclusive products available on Instagram, Snapchat, YouTube or WeChat only, and we’ll see new frontiers open with digital/fictional influencers (such as Lil Miquela) releasing their own collections.
4. Real-time data drives deeper customer knowledge
As technology advances, the need for a master data strategy and real-time insight correlation is higher than it’s ever been. As customers, we are human data sources; and retailers are striving to better understand search, purchase and engagement behaviour through centralised and transparent platforms.
Functioning alongside artificial intelligence and increased data inputs, mobile location intelligence and store sensor data will allow activity to be mapped out in physical locations. As a result, we’ll see the convergence of offline and online customer profiles to track a more complete customer journey, understand brand sentiment, and improve budget efficiencies.
To complement this, there will still be a need for traditional data and analytics. Machine learning algorithms suit predictive insights and specific use cases, however, traditional methods will continue to be used for time-series, ad-hoc analysis and business dashboards.
5. The search for value in data exchange broadens
Perceptions on data exchange, security and privacy have been tainted in recent times due to misconduct and breaches.
90% of people logging into retail sites are hackers using stolen data (the highest percentage of any sector 5 ), and the impacts of breaches can be devastating. Last year illegal activity concerning Under Armour, and its MyFitnessPal fitness-tracking app, affected close to 150 million users.
Gone are the days where customers would willingly hand over all their information without a clear benefit in return. Today, they want assurances that their data will be protected, and they want to understand why their data is required and how it will improve their experience. 75% will avoid purchasing a product if they do not trust the retailer to protect their information.
Given we are seeing more dialogue around customer data rights; retailers will demonstrate trust and transparency in the way they handle data, and ensure that their strategy focuses on data collection methods that drive an improved experience or superior level of service (both directly and indirectly).
6. Personalisation gets more precise
Netflix and Spotify have set the standard for personalisation, providing relevant recommendations and curating content based on what we’ve watched and listened to, what time of day it is and what mood we’re in.
As a result, customers are now craving more precise personalised experiences when it comes to shopping. They’re comfortable sharing data in secure ways if the retailer can effectively draw meaningful insights and go beyond surface-level personalisation.
To meet expectations, it’s anticipated retailers will focus more closely on the individual, their behaviours, attitudes and intentions — she added the skirt to her cart on her mobile and is now in-store, or he’s a high-value shopper sharing his wishlist on social — and then generate a personalised message or reward to encourage purchase.
As customer engagement and lifetime value become more important; we’ll see personalisation extend beyond website, social and email; to product, service, pricing, events and experience offerings.
7. Less ownership
Customers will continue to move away from ownership to subscription and rental services. Largely driven by millennials to date, this trend is set to influence broader audiences as concerns about sustainability grow, and the desire for personalisation and convenience increases.
Following in the footsteps of disruptors such as Rent the Runway, Stitch Fix and GlamCorner; retailers will adopt subscription and rental innovations to open up new revenue streams and offset in-store traffic.
This year, we’ll also see the ‘secondhand’ market be adopted more broadly; currently at $20B globally it’s expected to double by 2022. This growth is largely being fuelled by the re-selling movement which has permeated youth culture, and consignment leaders such as TheRealReal.
8. New delivery and payment methods
The time customers are willing to wait for delivery has significantly dropped in the last 3 years; from within a week, to under two days. Fast delivery, free shipping and allowing customers to pick their own delivery option will keep businesses popular, and this year we’ll also see additional methods of delivery emerge to meet customer demands, increase efficiencies and reduce expenses.
As last-mile delivery costs can make up to 28% of a product’s total delivery cost; retailers and delivery providers are set to experiment with sensor-driven replenishment, drones and autonomous vehicles to gain a competitive edge.
Mobile payment solutions will also continue to gain traction this year following on from the successful adoption of ‘buy now, pay later’ preferences, aptly serving the customer’s need for instant gratification, speed and flexibility.
9. Adoption of mixed realities accelerate
Retail will become increasingly interactive with high-quality content distributed through a combination of augmented reality, virtual reality, and mixed reality experiences. Applications such as virtual fitting, product catalogues, avatars, try-on and in-store search will bring products and services to life to create a more spontaneous shopping environment, and drive conversion through immersion.
Digital collections and 3D garment simulation, which showcase clothing and accessories virtually, will also increase in popularity due to the sustainable nature of designing and sharing fashion in a way that avoids single-use clothing waste.
10. Increased blockchain usage
Today’s customer wants assurance their products have come from the stated origin, and that their order has been safely handled and transported. As corporates and customers seek greater transparency, we’ll see more retailers experiment with blockchain — an immutable data ledger into which everyone involved has to verify every step along the supply chain process. Walmart is an example of a retailer investing in blockchain technology; they have partnered with IBM’s Food Trust blockchain platform to improve food tracking and safety, and as a result, reduced the time it takes to track food sources from months to 2.2 seconds.
Blockchain will also help retailers open up sharing economies, enable omni-retail communications and accept new payment forms such as cryptocurrency.
2019 is set to be a year of transformation and growth; with high customer expectations, technology advancements and relentless retailers forging new ground and continuing to push our industry forward in exciting ways. _______
1. Deloitte’s December 2018 Retail Forecast
2. Facebook IQ: Digital Research and Insights
3. Adobe ‘State of Voice Assistants’
4. Hootsuite Social Trends 2019 report
6. https://trends.fjordnet.com/trends/data-minimalism 7 ThredUp 2018 Resale Report