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Retail futures: Social commerce, impulse buying, the metaverse, and re-commerce – it’s all change in the digital landscape

The digital marketplace is growing exponentially, bringing new challenges, channels, and business models as the traditional path to purchase undergoes a significant shift. Although the fundamentals of retail remain the same – we’re talking free shipping, fast delivery, an easy to navigate website, and relevant product content – customer expectations have risen, and businesses must be prepared to make adjustments to the customer journey.

The modern retail customer at the heart of this transformation wants dynamic shopping experiences that both anticipate and meet their needs. Digital retail is a critical component of this – the expectation is that 100% of brands in North America, Asia Pacific, Europe, Middle East, and Africa will have a digital marketplace line in their budget by 2024.

From social commerce and live shopping to the re-commerce market, retailers must stay on top of new platforms, experiences, and technologies to continue making market gains.

So, to appeal to your customers, you need to focus on how you can keep up with expectations and build strong customer ecosystems.

  1. Remove online shopping frictions with social commerce
  2. Set up shop in the metaverse to expand your digital presence
  3. Experiment with the experience economy to put personalisation front and centre
  4. It’s time to get serious about sustainability as consumers call out greenwashing tactics
  5. Respond to changing consumer mindsets and tap into the ever-expanding re-commerce market

How you can improve your customer journey

future of retail industry

1. Remove online shopping frictions with social commerce

The traditional purchase funnel is collapsing as consumers now expect to transact at the point of inspiration.

But now there is more! Impulsive, tailored buying is increasingly becoming the status quo of online shopping – and this provides a new opportunity for social commerce to become a revenue stream.

Social media purchase points will grow significantly in the lower e-commerce funnel as more users begin to use social commerce checkouts to facilitate online impulse purchases. Digital Marketing strategies will lean heavily on impulsivity as platforms such as TikTok introduce both geo-filtered shopping for local retailers, and search result advertising further feeds consumer impulse purchases. Retailers should stay informed about new social media features and optimise their content for the greatest impact at the consumer-end.

As the value of social commerce looks set to reach $7.3 billion in 2023, brands should consider four key components:

  • Mobile channels – connect with digitally-savvy customers on their channel of choice
  • Creators – use different creators and content to talk directly to customers with trust and authority. For major business announcements you want to publicise, high-profile influencers can be a good way to maximise the reach, but for daily content creation, smaller content producers will be more cost effective
  • Live shopping – provide increased product engagement with personalised live buying
  • Conversational commerce – build a community of buyers through strong brand value and a homogenous identity

Times have changed since the tailors of Saville Row used to retroactively alter suits, retailers now need to be proactive in their personalisation strategies. At the heart of social commerce is the requirement to identify a niche target audience and market as close to the point of purchase as possible – for quick and streamlined customer experiences.

2. Set up shop in the metaverse to expand your digital presence

future of retail industry

The metaverse is an online space where businesses can represent themselves digitally to connect with consumers in new and exciting ways. Digital assets can be created, used, bought, sold, and experienced in a much more rich and immersive way than when you visit a website or app – presenting opportunities for businesses to stretch the boundaries of marketing and commerce.

For key industry figures, the metaverse is the next iteration of the internet. By 2027, almost all the marketplace giants will offer metaverse enablement alongside their existing business services. If the metaverse produces the same transformative impact as the web did, the retail market could supercharge itself for ‘commerce on steroids’ – so what can retailers expect to see?

There is an expectation that the metaverse of the future will create a digital customer experience closely allied with real-world retail. Live events and personalised ads are already emerging as key ways for retailers to improve their marketing strategies. From a commerce perspective, virtual marketplaces can replicate physical buying spaces and Direct to Avatar (D2A) business models allow retailers to sell their products directly to virtual avatars. No face-to-face contact required!

A marketing and commerce strategy supported by digital assets, an influencer model, and engagement driven by customer loyalty will be critical for retailers to secure growth as the metaverse takes hold.

3. Experiment with the experience economy to put personalisation front and centre

future of retail industry

Experiential shopping is taking traditional commerce strategies by storm. Consumers don’t just want to shop, they want a dynamic shopping experience that anticipates their needs as well as meets them.

Attention spans are decreasing, and as social media becomes a lens through which some digitally savvy consumers live, personalisation must remain a critical driving force to improve customer engagement.

Interactive displays, immersive environments, and experiential technology will allow customers to engage with products in ways that have previously not been possible – improving brand loyalty and increasing the likelihood of purchase.

Managing customer interactions is critical for retailers to accurately personalise experiences. For M&S, who currently supports five billion customer interactions per year across physical and digital channels, this has involved developing rules engines and data models for every touchpoint. Incorporated into a data fly wheel, this system allows M&S to prioritise personalisation across the entire customer journey. Its biggest challenge is handling the orchestration layer – but with effective management and creative thinking, M&S has managed to convert in-store shoppers to digital, brand loyal consumers.

But back to the physical stores. Simple design choices such as dual entrance design will also gain popularity as a method to focus on inspiration and ease in physical stores. Even the smallest decisions can make a big impact to tailoring the consumer journey.

Ways you can enhance your experiential strategy include:

  • Make sure you have a value scheme that’s obvious to your customers. Loyalty schemes are long-term programmes and typically produce ROI between three to five years
  • Start with simple use cases to see what value it brings and then scale where necessary
  • Create a clear, measurable objective to aim for – this can help focus on the data that’s relevant to what you’re trying to achieve

4. It’s time to get serious about sustainability as consumers call out greenwashing tactics

future of retail industry

Sustainability has been an industry buzzword for the last decade, but now (more than ever) retailers need to show their commitment to tackling climate change. According to McKinsey, 70% of consumers are willing to pay more for products that have been sustainably produced – this provides a lucrative opportunity for retailers to tap into a new market.

Businesses now need to tailor traditional approaches to reach eco-conscious consumers and demonstrate your long-term commitment to sustainability. Key strategies can include:

  • Incorporate sustainability into your strategy, with clear sustainable targets that are measurable
  • Create a wide range of sustainable alternatives on your product shelves
  • Strengthen your transparency and communication on a product and corporate level

5. Respond to changing consumer mindsets and tap into the ever-expanding re-commerce market

future of retail industry

The way retailers sell their products is also being impacted by the sustainability agenda. Concerns over waste and ethical practices in the retail market are high amongst Gen-Z and millennials, with many embracing re-commerce as a way to profit on old items. Digital buying and selling hubs such as Vinted and Depop are already driving market growth up from $24 billion in 2020 to an expected $51 billion by the end of 2023. And the growth doesn’t stop there, with an expectation that the value will increase by another 175% by 2025 – so retailers don’t want to miss out!

The benefits of e-commerce are varied, and include:

  • A reduced demand for new garments, which in turn reduces the demand for raw materials and lowers energy usage in factories
  • Discounted prices to help consumers save money
  • Increased recycling and reuse of items that are no longer needed but are still good quality

The growth of the re-commerce market represents a shift in consumer mindsets. Producing clothes from upcycled materials, crafting new furniture from old, and selling food goods approaching their sell-by date are all strategies that retailers can utilise to appeal to the growing shared economy.

What lies in store for the future of retail?

Digital retail is not slowing down any time soon. Expanding into emerging markets such as re-commerce, introducing new ways for consumers to engage with physical commerce, enabling impulse buying, and personalising interactions, are just a few ways retailers can make market gains and futureproof their business.

Read more about what’s coming next for retailers in our latest report, which explores the top trends and insights from industry professionals so you can be prepared for any future changes in retail.

Download it today by clicking on the button below.

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