Digital Trends in the Retail Industry
Technology and digital trends in the retail industry, as with most other industries, have changed dramatically over the last few years—not to mention 2020, too—as retailers continue to implement and adopt tech solutions to get an edge over their competitors.
From the mid-2010s to today, the accessibility of new tech, both in terms of availability and affordability, to SMBs in particular, has had a profound effect on the business processes of retailers today.
Today, we’re going to be taking a look at what trends are influencing the industry, and how the events of 2020 have further shaped how the retail industry is approaching technology implementation.
The Effects of 2020
Let’s first start by addressing the elephant in the room—the pandemic. It has had an enormous impact on the retail industry, shuttering stores and forcing business owners to expand their online customer base to pick up the slack.
As you might expect, the industry saw a massive shock during the early spring months, with sales plummeting in April, picking up significantly in May and June, before returning to normal levels by August.
As you might expect, some sectors were far more affected by the pandemic than others.
Retail performance by sector in August, 2019 to 2020:
- Nonstore retailers: 22.4%
- Sporting goods, hobby and bookstores: 11.1%
- Food and beverage stores: 10%
- Health and personal care stores: 5.6%
- Furniture and home furniture stores: 3.8%
- Total retail: 2.6%
- Electronics and appliance stores: –2.4%
- Gas stations: –15.4%
- Clothing and accessory stores: –20.4%
There have been some clear winners and losers in 2020. Even the worst performer, the clothing sector, has rebounded from its low of –87.3% back in April, but nonetheless is still in a very difficult position.
Unsurprisingly, those sectors that are the least reliant on traditional means are the ones that have seen the most growth.
The question is, how has the industry come back for those positive sectors, and what will enable the retail business to continue to respond in 2021?
With the effects of the pandemic lockdowns at their most significant earlier this year, but still persisting strongly for many sectors, organizations have had to reassess their ability to adjust their business model to react to unforeseen events.
For most retailers, this meant looking at their digital and ecommerce abilities and analyzing whether strategies for both are good enough to cope with the retail industry as it currently stands and in the future, too.
It’s still anyone’s guess as to how much of an effect COVID-19 will have had on the industry when things are back to normal, but retailers have to contend with the increased digitization as a result, and the possibility that consumers will have heightened expectations for digital experiences after normal circumstances resume.
According to the Global Connected Consumer Index Report, when asked what their shopping preferences will be when life returns to “a new normal”, 39% of respondents said they will conduct a mix of online and in-store shopping. 28% will shop mostly online, 24% say “they can’t wait” to shop in a store and 10% haven’t planned that far ahead.
Retailers Must Be Able to Respond
For many businesses, COVID has been a test of their capabilities to respond effectively to disruption.
In other words, is the organization agile enough to meet the demands for the customers?
Related Post: Infographic: 10 Benefits of Business Agility
As far as digitization goes, this means addressing key aspects of ecommerce that a retailer needs to be competent at.
Are online channels being utilized to their fullest extent? Does the site have a chatbot to improve customer service? How is social media being used to engage and retain potential and current customers?
These are the types of questions that SMB decision makers should be asking themselves as they formulate their strategies for digital retail.
More than two-thirds (70.7%) of respondents agree that digital transformation is an essential part of their future plans.
Most Significant Digital Trends in the Retail Industry
Digital Maturity in Retail
Most retailers view digital transformation as a central part of their future plans. The maturity of technology areas within organizations varies, but indications suggest a clear emphasis on certain areas of focus.
Financial applications of technology are considered the most mature form of digitization across the industry, with 63.7% of retailers stating a mature implementation of associated tech.
Sales follows at 62.2%, then customer service (59.7%) and finally frontline retail operations (59.2%).
Tech Budgets Are Increasing
As online growth continues, so too do the IT budgets of retailers. 40% of them predict an increase for their technology spend, compared to 18% who predict a decrease.
This is in spite of the economic effects that the pandemic has had, with businesses recognizing that investment in digital technologies will be crucial to making sure they’re agile enough to deal with future disruption, as well as adjusting to current consumer behaviors.
Importance of AI
70% of retailers see artificial intelligence as an opportunity to invest in. AI has a number of uses for a business, chiefly the ability to automate processes that are typically manual and predictable in nature.
For practices that are more frequently being taken online, automation can play a vital role, whether it’s a customer service bot to reduce time spent by employees on customer queries, or an automated system for fulfilling orders from start to finish.
Customer Experience Is Key
Customers are more frequently desiring positive and personalized experiences from retailers online.
This includes a number of different approaches in regards to technology, including buying online and picking up in-store (BOPIS) and offering real-time in-store recommendations to customers via smartphones.
48% of shoppers have left a brand’s website and made a purchase from a competitor because of a poorly personalized experience.
This also means providing a positive experience through an omnichannel approach through social media, digital marketing and dedicated apps.
The pandemic in 2020 has quickened the pace of digital transformation in retail, and businesses have been tested on their ability to respond effectively to disruption.
Those who were already in the process of or had completed a level of tech maturity tended to be the ones who were affected the least, though it’s notable that many retailers already acknowledged the need for better digitization, only for 2020 to speed up their plans.
The principal areas of importance have been bigger investment in technology, getting better control of business finances through software and improving the customer experience through a multiple channel approach and the use of AI.
Impact Networking has been helping small and midsize organizations achieve their business goals for over 20 years. Having gone through many successful digitizing projects ourselves, we believe we are the best-placed organization in the country to help SMBs. Take a look at our approach to digital initiatives and how we can help you here.