Despite declining retail sales and disruption from the pandemic, there is an opportunity for small and mid-size retailers thrive if they can respond to changes in consumer behavior. Consumers are prioritizing competitive prices, convenience and experiences, giving digital channels a marked advantage over their brick-and-mortar counterparts. However, brick-and-mortar retailers may be able to win back foot traffic by embracing these new expectations and innovating by using data to understand their customers, offering boutique experiences and contactless transactions, and by positioning themselves as hyperlocal, community-oriented alternatives to impersonal digital giants.
Driving Business with Data
Data (which can be employed to quickly spot and capitalize on emerging developments) is becoming increasingly important to any retail business. By using analytics tools which monitor and track every user interaction, purchase and behavior, tomorrow’s retailers can thrive by becoming more customer-aware and staying more attuned to current environments. This means not only using these solutions to get a better sense of which products are flying off shelves, what to stock and in which quantities, and leveraging on-demand order fulfillment to optimize supply chain management. It also growingly means coupling business intelligence with predictive technologies, which will allow business owners to determine which products customers want before customers themselves even know that they want them. From artificially-intelligent inventory management and promotional tools to pay-as-you-go and print-on-demand solutions, numerous affordable high-tech solutions can help retailers stay better attuned to customers’ shifting needs.
Digital and Contactless Transactions Take Over
Given the growing need for social distancing the demand for less human contact, leading retailers are increasingly putting a premium on safety and making it a priority to inspire confidence in consumers going forward. As a result, more retailers are moving to limit store hours, introduce temperature checks, cap the number of shoppers allowed on-site, place barriers at checkout centers, space out installations and introduce controlled and/or one-way aisle traffic.
But technology will also play a major role in fielding health concerns and facilitating this transition. Just a few upgrades to the retail experience that consumers can expect to see coming soon include cashier-less stores where they’ll simply grab items and go (paying by phone for transactions); outlets where smart digital signs (which know personal tastes and habits) will prompt and direct them; fitting rooms and appointments that they can reserve in advice via smartphone app; and “frictionless” experiences that minimize the complexity of tasks and human interaction, so that they can easily order items online and pick them up curbside or from coded storage lockers.
The Rise of Pop-Up and Boutique Experiences
With operating costs like rent and real estate still at a premium, more retailers will look for creative ways to do business going forward, such as pop-up, time-limited and portable retail operations. Alongside more flexible physical footprints which will allow stores to appear anywhere there’s a crowd (i.e. fairs, festivals, or along well-trafficked neighborhood routes) will also come greater choice and personalization in inventory. Mirroring the way shoppers expect everything to be hand-tailored to their tastes online, consumers will soon be able to buy virtually anything from jeans to housewares customized to their preference on-demand. In effect, future retailers will make it a point to come to customers, rather than ask customers come to them. Likewise, they’ll also place less emphasis on maintaining a fixed inventory, and more on serving as a virtual gateway to a world of products. Many retailers will shift focus to serve as virtual showrooms, using easily-transportable tablets or kiosks to showcase their wares and let their clients purchase custom-tailored items on-demand.
The Shift to Hyperlocal Accelerates
Tomorrow’s customer, having been influenced by COVID-19’s impact, is placing greater emphasis on value and essential household items, and is increasingly interested in products’ origins, healthfulness and environment impact. With countless competitors just a click or call away, and more retailers competing for their attention than ever, they’re also becoming more price-sensitive and quick to dismiss nondescript or easily replaceable items. As a result, those retailers that will be successful in the future won’t just look to put greater emphasis on locally-sourced goods and services, tell a more compelling backstory (both for their brand and featured inventory items), and strive to help customers get more value for every dollar. They’ll also aim to focus on providing unique, one-of-a-kind offerings that are specifically keyed to serve the needs of their customer base or local community, and its particular interests or cravings. This may mean stocking more foods, accessories or housewares inspired by signature history and traditions, or adding a unique personality twist or aspirational element to the clothes, novelties and keepsakes being sold. If the items a business is selling can be found elsewhere, shoppers will inevitably seek out the most convenient and cost-affordable alternative. To thrive, make sure that there’s no quickly-implemented substitute.
A World of Innovation
The future of retail lies in more than just online ordering and curbside pickup. Going forward, retailers that will excel will be those who make a point to reimagine the retail experience and reposition themselves around offering better value, not just better prices.
Just a few potential future retail experiences include drones and self-driving vehicles that deliver orders straight to the customer’s doorstep, augmented reality apps which point out which stores are closest and have the best prices, and virtual reality headsets that let customers browse simulated aisles.
But a business doesn’t need to have a fleet of self-driving trucks or artificially-intelligent chatbots at its disposal to move the needle with innovation either. Sometimes, establishing clever partnerships with other local businesses, repackaging solutions in fun or funky bundles or experimenting with store formats (e.g. adding a café or event space) is all it takes to reignite shoppers’ interest. Staying ahead of the curve is about being more creative and resourceful, not having more resources. Those retailers who continue to survive and thrive in the new normal will be those who seek to actively partner with others in the community, experiment with fresh ideas and mix and match new tools and technologies to singular effect.
While brick-and-mortar operations may be facing mounting pressure to make the shift to digital and online experiences in coming months, there’s still plenty of room for retailers to play with real-world strategies and formats going forward, as long as they find clever ways to connect with and reengage tomorrow’s customer.
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