By Anastasia Lloyd-Wallis
COO & Head of Insights, Retail Doctor Group
The retail ecosystem is an extensive and interconnected community that’s made up of consumers and the retailers and partners that feed, clothe, supply, and entertain them. In a “normal” economy, the retail ecosystem is pretty stable, and remains constant and unchanging for the most part.
However, add disruption to the mix (such as that brought on by COVID-19) and you have a recipe for an uncertain and changing retail ecosystem.
The Customer Journey – How Consumers are Shopping Today
Disruption and progress go hand-in-hand in an innovative environment. The disruption the pandemic caused was always scheduled to happen because we were forced to confront the challenges in innovative ways – whether people were aware of it or not.
This innovation and progress radically altered customers’ shopping behaviours and experiences, including higher prices, low supply chain inventories, strains on manufacturing and logistics, and the rise of aggregators. To survive (and thrive) brands have adopted rapid digital transformation in response to the ever-changing needs of today’s shoppers.
Results from Retail Doctor Group’s recent 2022 Consumer and Retailer Sentiment research indicate that consumers no longer see online and offline as separate experiences; it is now all just one branded experience.
And as consumers become more and more connected in this digital transformation, their behaviours, needs, expectations, and perceptions are going to change at the speed of light, too.
DID YOU KNOW?
70% of retailers predict that online sales will continue to rise. However, 42% of those polled expect to grow their in-store network, too – an increase of 8% since September 2021.
Is your brand ready? How will your store network change in the next 12 months to anticipate your customers’ journey?
In-Store Network Changes – 12-Month Forecast
Retail Doctor Group’s Insights division has spent 3 years connecting with Australian retailers and consumers alike, tracking changes in retail behaviour and sentiment.
Our ongoing research analyses the gaps between consumer behaviour and retailer strategy and identifies possible deployment steps retailers could take to meet their customers’ ever-evolving needs. Download a copy here
Perhaps the most indicative of all results, indicate that retailer sentiment has changed drastically, with 42% of those polled agreeing that they see their brands expanding into more stores than ever before. This is a monumental increase, up by 30% from 2020 showing the positivity for the future and continued retail growth.
When we link this to consumer behaviour, we see that consumers are keen to get back into store – with 1 in 3 consumers wanting to visit a retail store to have a physical interaction with someone. We must remember that consumers are human, driven by emotions, and human connection is, and always will be, a driving force for behaviour.
For example, our neuroscientific personality profiling Limbic Insights™ will tell you that these are personality types who prefer the human touch in a sales experience. They want to interact with the staff in store and be part of the community.
So, what does this mean for online sales?
Online Sales Changes – 12-Month Forecast
An astounding 70% of retailers feel that their online sales will continue increase in the year ahead. We see the gap between transaction retail and experiential retail widen, with consumers now more tech savvy than ever the simplicity and habit of the online purchase has become second nature to most, including those consumers who were classically digital avoiders.
Online purchases have been seen to provide consumers improved convenience and simplicity, and are now part of normal consumer behaviour.
How has Consumer Shopping Behaviour changed in the last 12 months?
It’s pretty obvious that customers no longer want to feel like just another transaction, a number on the bottom line. The key trends of “time is a currency” and “experience vs transaction” come through quite clearly.
And even though consumers want the simplicity and efficiency of an online experience, they also want a human connection, that personal touch. In fact, consumer spending habits over the past year indicate that an overwhelming 69% of customers polled spend their money in large shopping centres, while 40% of those also prefer to shop in standalone stores.
Online marketplaces have proven to be a popular choice for 52% of shoppers, and the trend for online shopping continues with 55% of shoppers spending their money on retailers’ websites or on social media.
So, what does this mean for retailers?
- The power of the brand – Brands that can build a connection with their customers will excel in the post Covid-19 retail environment. Over 95% of consumer decisions are driven by their emotions, and consumers are now looking to connect with the brand in a seamless ecosystem, rather than distinct channels.
- The educated consumer – The growth of consumer use of marketplaces (58% of consumers are shopping at marketplaces however only 18% of retailers are using this method to engage with customers) showcases a more educated, omnichannel consumer who is no longer linear in their purchasing behaviours.
- The purpose of the physical store – Customers are more targeted in the physical environment, and their reason for visiting the physical store is changing. We see consumers that have pre-researched and use the physical store for transaction, however on the other end of the scale we are seeing consumers wanting retail to deliver entertainment and an experience worth leaving the house for. We’re seeing this widening gap between experiential and transactional retail.
Consider:
- Retailers need to determine how to grab customers’ attention in-store with new product development, new ranges, integrating strong, fresh imagery, and window displays.
- Pay more attention to the increased importance of wayfinding for customers, and optimize store layout.
- Reconsider the use of retail footprint space – focussing on data and physical space integration.
- Consider less counters and barriers, update store design, heighten space for staff and customers to interact
Talk to our Insights team to find out more about how you can understand what is on your customer’s minds and what you can do to stay ahead of the curve or download a copy of RDG’s 2022 Consumer and Retailer Sentiment research here. To find out more, contact us on businessfitness@retaildoctor.com.au or call us on +61 2 9460 2882.