Retail is changing. Here's what merchants need to know...
Retail has always been trend-driven and fast-paced, but the past few years have been tumultuous, to say the least. Now, after a global pandemic, surging e-commerce rates, followed by a swing back to in-store shopping, retailers are facing historically high inflation rates.
As we enter a new year, many retailers may well be wondering: what’s next? The answer, say experts, is plenty.
Here are the 2023 retail trends that merchants and retailers need to know…
As online shopping becomes more entrenched, expectations around delivery are also maturing. In 2023, consumers will only expect faster, more convenient shipping and delivery .
“Next-day delivery is fast becoming the minimum standard with same-day delivery gaining huge popularity,” Paul Zahra, CEO of Australian Retailers Association says, adding, “The move to a seamless, contactless and speedy customer experience is now what’s expected.”
“Next-day delivery is fast becoming the minimum standard."
For retailers, this means offering more shipping options in 2023, from standard shipping to express and same-day delivery options, as well as click-and-collect if possible. (Australia Post’s e-commerce Industry Report for 2022 found that demand for click-and-collect had grown by 13.6 per cent across the year.)
To avoid being stung by higher delivery fees, retailers should consider staggered pricing options and implementing strategies to reduce returns, says Shippit CMO Brett Chester.
While physical stores took a major hit during the height of COVID-19, the scales are beginning to equalise as consumers return in store to shop. The net effect – a hybrid of online and in-store purchasing – has been dubbed ‘bricks and clicks’ by Australia Post’s CEO Paul Graham.
But while in-store shopping may have returned, it’s evolving too. Ana Piteira, the founder of Reliquia Jewellery and Blanca, opened a store in Sydney’s Bondi Junction two years ago and says she view her brick-and-mortar presence as “an extension of our online presence,” she continues: “It’s not only about the sales that you’re generating; it’s about having a showroom for your product where people can go and see, touch and feel the range.”
Her sentiments are echoed by AllBirds co-founder Tim Brown, who has described the brand’s 54 stores as a “powerful word-of-mouth awareness” tool that drives loyalty and “a customer acquisition vehicle” for the best customers that we have within our ecosystem.”
Experts predict that for brick-and-mortar stores, the emphasis will be on experiences rather than simply sales.
For some retailers that means hosting events in-store (lululemon, for example, holds yoga classes in-store); for others it's about enhancing the day-to-day customer experience with interactive features such as touch-screen mirrors or product demonstrations).
As inflation rises – along with customer acquisition costs – attracting and retaining consumers will become more important than ever in 2023.
While the outlook may seem ominous, Zahra says there is still plenty that retailers can do to stay one step ahead.
“Shoppers will be savvier – looking to make the most of sales and promotions throughout the year, and [they will look to] use BNPL (Buy Now Pay Later) options to spread out their financial commitments.”
In addition to Afterpay, Zahra recommends going back to the basics of retail – tailored incentivisation and relationship building.
“The use of loyalty programs, for example, is a great way to reward and incentivise customers for their continued business. And having flexible returns options are another great way to incentivise shoppers,” Zahra says, explaining, “shoppers will feel a lot more comfortable buying goods if they know they can change their mind should something unexpected happen.”
Self-service isn’t a new concept in retail – but, traditionally, it’s been the preserve of discount retailers and supermarkets.
That’s slowly changing thanks to the rise of online shopping, which has seen customers become accustomed to having complete control over their shopping journey. As a result, growing numbers of brick-and-mortar retailers are offering self-serve features that mimic the convenience, speed and autonomy of online shopping.
For some retailers, like Uniqlo, that looks like self-checkout; for others, it’s about allowing customers to easily find and access products (rather than having to ask staff or requiring assistants to bring the product out from storage). Bunnings, for example, offers an omnichannel shopping feature where customers can navigate to the exact aisle and location of products, so shoppers can head straight there rather than ask for directions.
Contactless click and collect is another form of self-service, by giving customers more control over checkout and when they pick up their products.
Zahra says that self-service technology will also help alleviate ongoing labour shortages. (The number of retail vacancies was 41 per cent higher in 2022 compared to 2020.)
“Self-service technology can often provide quicker and better service. Think about an ATM or internet banking versus queuing and waiting for a teller in a bank,” he says, adding, “It’s a great solution to fill gaps left by labour shortages, particularly post pandemic.”
"Self-service technology can often provide quicker and better service."
However, Zahra notes that it’s important to still offer customers the face-to-face experience, and points to the way that Bunnings offers a mix of self-service and staffed checkouts, and also has support staff positioned throughout its stores.
“We know that some customers value interaction with retail staff, so we see self-service technology complimenting face-to-face service, not necessarily replacing it."
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