Advances in technology are creating both change and opportunity for the retail industry. At NRF 2021: Retail’s Big Show – Chapter 1, Michelle Evans, senior head of digital consumer research for Euromonitor International, looked at the tech investments that will best align with consumer expectations in the coming years. As a basis for its projections, Euromonitor conducted two global surveys at the end of 2020, one of retail industry professionals and one of consumers.
The COVID-19 pandemic, with its accompanying boom in ecommerce growth, has accelerated digitization plans by one or two years, according to Euromonitor, with 21 percent of surveyed retailers fast-forwarding their plans by at least three years. Most prominent among the accelerated areas of investment are mobile applications and platforms, tailored marketing, website/search enhancement, omnichannel presence, logistics and digital payment.
Check out other ways retail tech is advancing here.
Overall, surveyed retailers projected global online sales growth of 25 percent for 2020, and 74 percent of industry professionals said they expected the increase to become permanent. (European retailers were an exception: They regard last year’s 25 percent increase as a spike and expect online sales to grow only about 8 percent over the next few years.)
With online growth comes heightened consumer expectations as to ease of site navigation, checkout, presence of reviews and other features, Evans said. The most preferred online features by surveyed consumers, however, are non-technological: free shipping (nearly 70 percent) and free returns (just under 50 percent).
As to how technology has already affected the shopping experience over the past year, the most common use cases to improve website performance involved use of the cloud (50 percent of surveyed industry professionals) and artificial intelligence, both to enhance website search (43 percent) and improve customer engagement (42 percent).
Payment and logistics
Evans said retailers and consumers alike are enthusiastic about removing friction from the payment experience: 41 percent of global industry professionals launched or expanded digital payments due to the pandemic, and 40 percent of connected consumers view easy checkout using a digital wallet as an important online feature. The leading payment technology currently in use is PayPal; over 67 percent of online consumers report having used it in the past year. Second in popularity was Google Pay.
And once they’ve paid for it, they want it delivered. “The last-mile experience is facing its own day of reckoning as ecommerce explodes,” Evans said. More than half (51 percent) of industry professionals viewed delivery as a key trend impacting their markets in 2020. This is not going to change; the share of all retail goods that will be sold online in 2021 is projected at 17 percent, nearly double what it was five years earlier. In terms of delivery features desired by consumers, cost outweighs speed; the top two were, once again, free delivery (70 percent) and free returns (55 percent).
Stores still matter
Stores are still important and will continue to be; Euromonitor projects that, globally, 76 percent of retail goods will be bought in stores in 2025. This is down from 81 percent in 2020, but it’s still overwhelmingly the majority. One reason for this, Evans said, is that 46 percent of connected consumers want to try before buying — the top motivator for in-store shopping.
They want the experience to be different in certain ways, however, chief among them ease of payment. The “select and walk out with purchase” approach, pioneered by Amazon and others, was the innovation from which consumers saw the greatest value (37 percent), closely followed by the ability to scan an item and make payment by mobile phone (35 percent). Evans mentioned virtual try-on — the use of 3D technology to scan a consumer’s body and match the findings to available inventory — and in-store assistance from robots as technologies that show some promise for the slightly more distant future.
The case for investment
Whatever a retailer decides to do about technology, the one thing they cannot safely do is ignore it. “Whether positive or negative,” Evans said, “a consumer’s tech experience impacts brand perception more than any other interaction.”
In closing, she offered some suggestions:
- Pay attention to people. Retailers say top reasons companies struggle to become digitally relevant include lack of talent and cultural or behavioral challenges.
- Know what you want to accomplish.
- Beware of technical hype: Companies often buy modern-looking things that have no noticeable impact on the business.
- Put the customer in the driver’s seat. Consumers are most comfortable with experiences that don’t feel intrusive.
- Set realistic expectations: Digitization is a multi-year process, so be patient.