The New Retail Landscape You Should Worry About
Looking back on the last 3 milestones in retail, Singles Day in China, Black Friday and Cyber Monday, I feel that we’ve finally hit retail convergence in our society - a moment where consumer behavior and transaction requires something more from the companies they purchase from. It’s no longer an e-commerce versus brick & mortar world; it’s a world where they seamlessly work together to create a better experience for the consumer.
“Online retail has grown 300 percent between 2000 and 2018. During the same time period, department store sales have dropped almost 50 percent.”
The solution to combat this massive transformation will require a new perspective on satisfying consumer goals and the value we provide as an organization. But first, we need to understand the landscape in which we’re playing.
Reduced barriers to entry: Technological advances have made it easier than ever before for anyone to enter the marketplace. Whether it’s a single person in their garage or a large organization vertically integrating their supply chain, barriers to entry are no longer a deterrent.
Easy access to market demand: Consumers are now able to access products, services and inventory at the unlock of a phone. This behavior creates a new moment of truth, even beyond the Zero Moment of Truth into a negative moment of truth.
On demand fulfillment: The barrier of instant gratification is slowly going away by new logistics technologies and processes. With companies like Amazon prime offering within an hour delivery, the instant gratification, now becomes on-demand gratification.
Digitally driven consumer relationships: More and more consumers are expecting personalized relationships with companies both online and in-store. They expect companies to know about what they’ve purchased, what their preferences are and how they want to pay - not only online, but in-store.
Private label: As marketplaces like Amazon and Jet.com continue their quest for retail dominance, the rise of the marketplace private label will take hold. Search any major category on Amazon and you’ll slowly start to see Amazon labeled products in that category. Combine that with the fact that 70% of all Amazon searches are generic terms, retailers and brands should be nervous.
Fragmented / Interconnected Channels: We all know brick & mortar and e-commerce, but the rise of mobile and social commerce is starting to shift behaviors and purchase triggers. Not only that, but the omnichannel behaviors of consumers are calling for more interconnectivity between these channels to create a seamless and continuous relationship.
Influenced purchases: The rise of the social influencer may be plateauing, but in its wake is a new way of product launch and consumer purchase. As new social commerce technologies take hold, the trigger to purchase from influence to checkout will become a simple page load.
The solution we’ll explore is shifting our perception of retail strategy - one that is focused on the consumer experience. In fact, by 2020 it is expected that the number one factor for a purchase decision will be the consumer experience, moving beyond product efficacy and price. Having a focus on the experience a consumer has with your business while they are shopping, purchasing and owning will give you the insights needed to make the right strategic decisions in this new age of retail convergence.
Ready to chat more, feel free to reach out.