Over the last decade, consumer behavior has shifted dramatically in response to the rapid integration of technology into society at large. Technology powers every facet of our lives. Almost every consumer has a smartphone, smart speaker or even a smart fridge… The expectations of seamless experience is higher than it ever has been. On the retailers side, as of right now, many brick-mortar businesses can’t achieve the level of speed and convenience that customers are accustomed to in the other areas of their lives. On their phone they can instantly purchase from Amazon, they can check the weather on their fridge, or ask Alexa for a shopping list reminder. When customers interact with eCommerce they expect a similar level of convenience, and in store they demand a more creative approach to reduce friction in the shopping experience. But, retailers are not matching up, because they lack the toolset that is available in different areas of life.
The New Retail Trend
“Over 50% of marketers, believe that new trends driven by technology will be the most significant trend in 2021”
Rapid tech advancement is one of the most important trends to watch as a retailer, eCommerce & brick-mortar alike. As technology tools advance, the levels of enhanced convenience and consumer flexibility are expected to advance at the same rate. Ecommerce interfacing directly into other platforms allows retailers to create a more cogent vision of their shopping experience, keeping consumers engaged and comfortable throughout the sales experience. With enhanced technology brick-and-mortar retailers can keep up, provided it is integrating with tools in the same way as eCommerce channels.
Technology advancement is almost directly impacting consumer behavior, it is important to understand where platforms are going in the future so as to gauge the key business & investment decisions that will be advancing. Industry leaders need look no further than Moore’s Law, which states that computing power effectively doubles every two years, furthering that gap between tech enabled businesses and laggards not looking to evolve. We are already seeing this, with contactless shopping becoming offered around the world, innovative in store technology and a variety of evolved digital experiences. Consumers want convenience, and technology is one of the ways that businesses can give customers expedience in their shopping experience.
Failure to Adapt
In 2010, Blockbuster closed its last location and went out of business. If you had asked industry experts 10 years earlier they would likely have been very surprised. But, the outcome should have been expected, the business model never evolved. Technology was rapidly gaining momentum and within that short timeframe, tools and customer behavior had evolved, competitors like Netflix & Redbox focused more on reducing consumer behavior, empowering a more convenient and engaging experience. For example Blockbuster charged $800 million in late fees to their consumers, increasing consumer frustration and leading to a lack of customer retention.
An inability to integrate with the latest technology tools and an ignorance the changing expectations of consumers will invariably propagate business failure in the long term. This combination slows down a retailer's ability to act and thus results in a reactive approach to enhancing customer experience. Think about the start of the COVID pandemic, retailers that already invested in omnichannel even to the slightest degree were able to rapidly expand their fulfillment capabilities, rather than expending large portions of their operating budgets to create a patchwork omni-solution.
Where Is The Trend Going?
With all this said, the most important question for many retailers is: Where is this trend going?
Technology will continue to define the retail landscape, customer expectations are increasing rapidly, and this is forcing retailers to meet their needs. The benefit for retailers in the 20’s is that technology enhancements are coming at a slower rate. Mobile devices are staying functional for 2-3 years as opposed to initial 1 year rapid revolutions during the start of the 21st century.
But retail will be defined by technology, because consumers are defining their lifestyles around the technology tools that are available to them. While industry leaders look at the chart below and focus on the “10 years of growth in 10 weeks” that occurred during Q1 2020, the important jump actually came during 2018 - 2019 we can see a pretty significant trend shift upwards during this year…. Far more consumers started shopping online.
While the whole retail pile grew (up $500 Billion from 2018-2019), eCommerce grew 13% more than in store retail. Consumers were taking advantage of the tools offered by Amazon, Target and other big box stores. Retailers adapted and began implementing more tools to enhance the customer experience. When it comes to 2020 & beyond, we can expect this to mirror 2018. Retailers are offering creative new experiences online and consumers are already accepting, leveraging & engaging with these tools.
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