Retailers Are Reshaping The Shopping Experience

Right now, the retail industry is reshaping where we shop, how we shop, and when we shop. It is based on a realization that the macroeconomic environment demands drastic action to accommodate changing consumer preferences and lifestyles. As a result, there are several issues – and opportunities – that retailers need to address. Here are some observations.

1. Retailers are expanding where they sell but must do so thoughtfully. Dillard’s name is well accepted in the South but outside of that region it is relatively unknown, so it would not be a strong attraction in Northern cities. Name recognition is essential.

2. Retailers must plan for economic uncertainty. Raising prices in an uncertain environment can be a bad choice (even though costs have gone up) when businesses need to sustain their customer base. Retailers have to know what the customer is willing to pay and why. For instance, consumers are often likely to support a smaller business to show support for the local community. In contrast, national chain stores must have friendly staff that invite customers to return to counter higher prices.

3. Automation can enhance the customer experience. More and more customers are fans of automation, and in most cases prefer it when it can make shopping easier/faster or give them more control of the experience. 73% of consumers prefer that local retailers use automation instead of staff in at least one area of the shopping experience.

4. Customers want to engage with brands. Knowing when to send emails or when to promote a sale via text – or both – typically depends on the audience, but understanding where to start can make all the difference. Connecting at the right time is more important than ever as customers are bombarded with more messaging than ever before.

5. Social and mobile commerce are two of the biggest digital trends in the retail industry – and they are booming. Social and mobile selling are made possible by e-commerce tools, helping retailers reach more customers at a time. Today 79% of consumers make purchases from their mobile devices. Square reports that on their platform mobile payments are up +117% this year. It is partly because of the growth of online and social channels. Doing business on-line is meeting customers where they actually are. These days customers are shopping in both physical stores and all the digital options available, so a savvy retailer will want to cover all options.

6. Experiential retail experiences are rapidly evolving. 2023 is shaping up to see the return of ‘the experience’. After two years of varying restrictions due to COVID-19, consumers are eager to enjoy the brands they love again – and eager to do so in a new tangible way. Virtual and digital experiences still matter. However, since the in-store experience is returning to prominence, retailers are focusing on enhancing their business in their physical units.

7. The borders between verticals continue to blur. For today’s businesses, diversifying their offerings is a key way to drive revenues and grow their brand. In an uncertain economy and an increasingly competitive business environment, businesses are realizing the importance of multiple revenue streams and should look for natural brand extensions that customers will accept.

8. Flexible payment options are becoming increasingly important to younger consumers – especially Gen Z – and need to be explored. Buy now, pay later (BNPL) options are improving the shopping experience, and customers – especially younger customers – are looking for them. The data is not as strong for older age groups. Currently, 33% of retailers are offering BNPL options according to Square’s 2023 Future of Retailing Report. 41% of Gen Z-focused retailers plan to add BNPL to their payment option.

POSTSCRIPT: The Square report points out some important facts. We are coming out of the more-than-2-year pandemic period and customers have changed. Brands still have a powerful influence on customers. The customer will buy what she knows, but she is likely to be increasingly influenced by social media and mobile e-commerce presentations, and that shifts the marketing model for retailers. The macroeconomic environment is uncertain as well and, while I still see a strong ending to the current fiscal year, many economists fear a recession.