Parallel shifts in retail commerce over recent years have been driven by global events and the rapid emergence of technology that is transforming the way retailers operate and customers shop.
Walmart founder Sam Walton often spoke of change, saying, “You can’t just keep doing what works one time; everything around you is changing. To succeed, stay out in front of change.”
But in a world of generative artificial intelligence, autonomous vehicles and automated fulfillment systems, staying ahead of change is more complicated than ever.
Data analytics firm Commercetools notes in a recent white paper that customer expectations are at an all-time high because they have more options than ever before. Technology has made it easier to compare prices, products and services across a wide range of retailers.
The report found that 76% of U.S. online shoppers want free returns from retailers. Also, 67% of U.S. customers prefer self-service over speaking to a customer service representative. Commercetools notes these as opportunities for retailers. However, they also need help with cart abandonment, which is as high as 70% among global shoppers.
With more consumers starting to shop online, 75% said they rely on product photos when deciding on a purchase. Likewise, half of U.S. consumers use social media to discover products — also an opportunity for retailers to market shoppers where they are. However, 55% of U.S. shoppers say a bad mobile shopping experience will make them less likely to engage with a company again, which is a challenge for retailers and restaurants.
The report found that 73% of consumers say customer service is the top thing they consider when deciding to buy from a retailer or brand. Also, 71% agree that augmented reality tools — such as virtually trying on clothes or seeing what paint or furniture looks like in their home — would make them shop more frequently from a retailer. With more mobile shopping, 70% said they use retailer apps on their phones or tablets to do their online shopping.
More online shopping has created returns and inventory management challenges for retailers. Some online retailers use partners for brick-and-mortar returns at no cost to consumers. The report found that 30% of U.S. online purchases are returned.
More than one in three U.S. retail stores miss sales because of out-of-stock products. That is especially true in stores where online orders are also fulfilled.
While sustainability and cybersecurity are concerns for shoppers and retailers, their degrees of importance can vary. The report found that 32.4% of all attacks target the e-commerce industry, making it the most vulnerable to attack.
The report recommends that retailers extend efforts beyond traditional segments and explore additional customer groups to grow revenue. Older generations have become more digitally savvy, forced by the COVID-19 pandemic. It’s not just age demographics but also cultural and ethnic groups that command retailer attention.
Using data analytics, retailers can identify and understand the preferences of untapped shopper segments. Investing in hyper-personalization tools can help retailers craft and curate experiences that resonate with diverse shopper groups, the report notes.
“The challenge today is delivering hyper-personalization while respecting customer privacy, protecting data and giving customers what they want in real-time. While artificial intelligence holds tremendous potential for retailers, they must be intentional about the powerful tool,” the report states.
Retailers also have opportunities to prioritize data security to safeguard consumer data and privacy. Safeguarding payment processing is paramount, whether in brick-and-mortar or online. Four major data breaches in 2023 affected Ace Hardware, Staples, VF Corp and JD Sports. According to a report by ITGovernance, millions of customers’ personal and financial data were stolen in the breaches.
Retailers also have opportunities to bridge online and offline commerce. Walmart is focusing on omnichannel commerce, and it started pre-pandemic by merging the two shopper apps into one and marrying the inventory data into one view. The retailer remodeled hundreds of U.S. stores to use mobile connectivity for finding an item in a store, scanning a QR code in-store, putting it in a virtual shopping cart, and having it delivered to their home.
Obsessing about post-purchases is also becoming more critical for retailers as a way to stay in touch with customers. The report said post-purchase contact fosters lasting connections and maximizes customer lifetime value.
To garner the best results from post-purchase services, retailers need to include a simplified return process, request reviews and provide support for questions that may arise. Consumers also respond to loyalty programs that provide rewards, discounts or opportunities to win prizes for writing and posting reviews, being a return customer or taking part in surveys.
Loyalty programs can pay dividends to retailers, according to a report from Zeinrelo that found 75% of consumers will favor a brand if there is a loyalty program. Also, 60% of loyal customers will purchase more frequently from their preferred companies, and 57% of consumers spend more on brands to which they are loyal. A 5% increase in customer retention correlated with a 25% increase in profit. Lastly, 84% of consumers say they are likelier to stick with a brand that offers a loyalty program.
Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Firebend.