The most significant influence on the retail sector over the past 19 months has unquestionably been the COVID-19 pandemic. (There’s nothing quite like a major global event to affect what we buy and how we buy it, —not to mention who sells it and how!) While the toilet paper panic-buying is mercifully in the rearview mirror, other emerging trends in consumerism—as well as ever-changing technology—will continue to shape the retail landscape into 2022.
Face-to-Face with Online Shopping
When COVID-19 forced retailers to severely limit store occupancy, or even shut their doors altogether, many merchants expanded or initiated their online shopping options. Admittedly, online shopping is nothing new —it’s been around for years. The difference during the pandemic is that it suddenly became the only option for many retailers to keep generating sales. And consumers adapted: according to the Verizon Look Forward Study, 60% of respondents reported shopping primarily in-person before the pandemic, but that number currently sits at 37%. Even more telling: respondents estimate that a year from now, they will likely be shopping both in-person and online equally.
Additionally, spending has reportedly been strong despite the pandemic; it’s just been redirected to alternate sectors. Instead of travel and entertainment, consumers have been putting their money towards home improvement and consumer goods (though now that many states are easing lockdown restrictions, we will likely start to see more spending among the hospitality sector, too).
Brick and mortars are hardly a thing of the past, though: only 16% of respondents expected to be shopping mostly online one year from now. However, retailers providing essential goods have been able to adjust to provide a smoother customer experience through innovations such as:
- Online ordering and curbside pickup
- Grocery delivery services
- Self-checkout with contactless payment options
And these are all preferences that respondents admit they will be using more frequently a year from now.
You Say Data; I Say Data
(It bothers you that you read those differently, doesn’t it?)
Another emerging trend is consumers’ awareness of data collection and its usage among retailers.
The main reason companies collect consumer data in the first place is to tailor an improved customer experience. Indeed, once you know more about your customers’ likes, you can gear your business to better align with their needs. The problem is that most Americans (81%) are worried that the risks they face from data collection outweigh the benefits. Many also worry about how companies are using their data and feel that they have no control over it.
According to Forbes, the uncertainty among consumers is prompting a change: “[…] Apple’s installation of the privacy feature in iOS [means] users downloading apps can choose to be tracked on other apps and websites. Meanwhile, Google in 2022 will phase out cookies and not replace them with other third-party tools that follow users online. This change will force businesses to identify ways to get more customers to opt in, which comes down to trust. If customers don’t want the retailer to track them, the retailer has a trust problem.”
Additionally, virtual data sharing (or “data ecosystems,” as per McKinsey) stands to develop as a more cost-effective way to optimize data. It operates through reward programs between a network of retailers (everything from shops to banks, airlines, restaurants, etc.). Members spend their money among participating retailers, earn points, and then redeem with whichever party they’d like.
This networking strategy, which is already common in Europe and Canada, offers more accurate insights into consumers’ needs, wants, and general preferences and has successfully generated more sales among the partner companies involved. It can also aid in the trust issue mentioned in the previous paragraph, since being affiliated with a company a customer already knows, likes, and supports will make them more likely to extend their patronage to a new retailer. It’s a win-win (or win-win-win, depending on the number of retailers taking part…).
Walk the Talk
Another growing trend among consumers is rewarding retailers that initiate social responsibility and sustainability. Global digitization has raised awareness—and therefore social consciousness—among consumers and retailers alike, generating more concern for issues like climate change and social justice. These subjects are important enough to consumers that they are even likely to shift their loyalties to brands that are more closely aligned with their values, meaning those that take direct and valid action towards the following:
- Hiring a diverse staff
- Raising funds and awareness for issues like supporting mental health
- Reducing their carbon footprint
- Sourcing their products in fair and ethical ways
And retailers are taking notice (as well as action): many companies have initiated environmental and social policies in response. Additionally, this trend will only accelerate now that the Biden Administration has included the protection of the environment as a cornerstone of its plan. In fact, Forbes estimates that over the next year or so, we can expect to see the first few retailers making names for themselves and reaping the rewards by building on a values-based business strategy. It might sound tacky to capitalize on environmental and social issues, but if it’s done well and honestly, everyone wins.
The pandemic has forced us to face a variety of challenges collectively and has affected pretty much all aspects of our lives, including the way we shop. Although some of these trends were already gaining momentum pre-pandemic, the onset of COVID-19 dramatically advanced the agenda. The good news is that we adapted, and we will continue to adjust as new information, improved technology, and increased awareness emerge. We’re all in this together.
To learn more about contactless payment for your small businesses, check out our blog, Insider Spot.