Retail is one of the oldest forms of business known to humankind. It has continually evolved to deal with disruptions and keep pace with the consumer's ever-changing needs and convenience.
The advent of the Fourth Industrial Revolution — a term for the current digital age popularized by WEF founder Klaus Schwab - saw the retail industry offer newer buying experiences to consumers. Rising connectivity and the proliferation of digital technologies such as artificial intelligence (AI) and cloud helped the industry tide over the critical challenges posed by the unanticipated COVID-19 pandemic.
However, the lockdowns, mandated social distancing, panic buying of essential items, and global logistical disruptions drastically changed buyer behavior. It has given rise to new trends in the retail industry that are here to stay.
Even as the world has returned to the pre-pandemic level activities, the radical changes in buyer habits brought in by social distancing norms at stores are here to stay.
For instance, customers' reluctance to use shared facilities such as cash and cards at the POS terminals has boosted seamless zero-contact buying. The adoption of digital payment facilities increased manifold among various consumer segments. Other contactless transactions, like the cashier-less self-checkout facility, and self-service portals, have gained currency and are likely to become more common.
To adapt to consumer choices, retailers must embrace this shift in consumer preferences and invest in digital solutions like computer vision, machine learning and deep learning, chatbots, digital payment platforms, and sensor fusion.
Online and offline buying convergence
During the lockdown, consumers relied heavily on the digital buying experience.
Consumer expectations have changed toward online and in-store (offline) buying experiences, and the convergence of the two experiences has gained traction. While the retail industry has taken cognizance of this radical shift in consumer expectations, the response in terms of execution so far has been lukewarm.
They embraced the key benefits of online buying, such as easy product search and discovery, accessible assortment, and quicker checkout. Even though consumers have returned to retail stores, they want to carry on with the same easy experience in physical buying that they experienced in their digital transactions. This expectation will only grow with time.
Retailers must integrate digital technologies into the various in-store functions to ensure a seamless alignment between the two worlds of buying. They should invest in digital displays, smart mirrors, and real-time inventory checking; and offer options like contactless payment, buy-online-pick-up in-store, reserve online pick-up in-store, and purchase online return in-store.
Picking appropriate digital technologies such as cloud, artificial intelligence, augmented reality, and the internet of things would deliver the seamless and immersive experience consumers want, ensuring their loyalty to the retailers.
Retailers must select the correct digital elements to offer a superior and immersive experience.
Social media is an integral part of modern life. According to 2020 Statista figures, social media consumption increased by 75% in India during the lockdown in 2020. This gear shift in social media usage can significantly boost retailers aiming to market and sell their products on social media platforms. Consumers would prefer to complete their buying process while remaining on the social media platform of their choice. Social media marketing was a hit in the pre-covid days, and social commerce would be the trend to flourish in the future. Integrating the buying process, from product search and discovery to merchandising to faster checkouts and easy payment options, targeting consumers' preferred social media platforms should be focused and well-strategized. Retailers must empower consumers with a faster buying process on their preferred social media platforms.
One of the disadvantages of the online buying experience is the lack of physical feel that plays a significant role in buying decisions.
To compensate for this lag, retailers can tap into the power of digital technologies such as AI and augmented and virtual reality technologies to enhance the experiential shopping journeys of online consumers.
Convenience and safety have gained importance in the consumers' minds, and retailers must take cognizance of this shift in consumer mindset and focus their resources on implementing VR (virtual reality) and AR (augmented reality) technologies to replicate the physical buying journey of consumers. A once nice-to-have feature, digital stores and virtual showrooms have become a must-have requirement, and retailers should not ignore them.
AR and VR technologies coupled with analytics can provide consumers with seamless experiential buying journeys in real and virtual worlds and enable retailers to efficiently serve a loyal consumer base. According to a Research and Markets report in September 2021, the size of the AR and VR industry in India was $1.83 billion in 2020 and is expected to grow at a CAGR (compound annual growth rate) of 38.29% by 2027. After all, the metaverse is the future of social connectivity, according to many experts, and embracing augmented, and virtual reality in all spheres of life will only increase in the upcoming decades. The retail industry also needs to be part of this transformational journey and adapt accordingly by properly strategizing and adopting the appropriate digital aids.
However, retailers must exercise caution while choosing which trend(s) to align with and in what sequence. Before decision-making, retail organizations must assess their vision and objectives, existing and future business segments, and target consumers. Once decided, they should devise strategies and embark on transformational journeys in an agile-led iterative manner to adapt themselves efficiently and sustainably and enjoy incremental benefits from the start and avoid the pitfall of gulping too many at once.
All the trends discussed above will persist in the long run, and organizations must be agile enough to adopt them quickly. Retailers need to identify, think forward, and adapt to the latest trends among consumers. They must get a head-start by investing in key building blocks such as AI, automation, ML, IoT, extended reality, and other innovative technologies. These technologies are like a magic wand in retailers' hands, enabling them to deliver a superior experience to the consumers in their buying journeys and, in turn, help them survive, sustain, and flourish in the post-pandemic era.