The year 2023 saw array of challenges in retail sector, including a surge in the cost of living, supply chain disruptions and increased energy prices. Amidst these adversities, constructive breakthroughs were witnessed — the Frasers Group and Next expanded, the Chinese online giants Temu and Shein stepped into the UK market, and Oxford Street revived as the ubiquitous American candy stores were replaced by recognised world-over brands like Dr. Martens and Krispy Kreme.
However, let’s look forward to some of the future trends and developments.
Will AI lead the way?
The development of ChatGPT brought forth a slew of AI models from think tanks like Google’s Bard, the Chinese Academy of Sciences’ WuDao 2.0, DeepMind’s AlphaFold and Gato, Meta AI’s Jurassic-1 Jumbo, and more. From health to automotive sectors, AI was seen making its waves into every nook and cranny and the retail industry has been no exception. Naming a few: M&S rolled out AI-powered chatbots in customer services to provide impeccable shopping experiences with a touch of personalisation; Tesco integrated AI-driven demand forecasting systems to streamline stock levels, and curb unnecessary waste; Sainsbury’s, harnessed AI-powered image recognition tech, the captivating marketing campaign product availability; John Lewis made a savvy move and employed AI for tailored promotions to surpass its profit margins; meanwhile, The Very Group crafted a captivating marketing campaigns using generative AI.
2024, likewise, will continue to see a boom in AI use cases. Brands must not be afraid to explore AI but must do so with consideration and within rules and boundaries – we’re looking at you DPD.
Since AI is the golden ticket to better CX, the AI adoptees have discovered that better CX requires intricate personalisation for which a human touch is indispensable. This strengthens the fact that AI is the only driver of excellent CX if coupled with human value and thus cannot be acknowledged as a substitute for human services in their entirety.
Another vital observation made is that personalisation requires personal data of the shoppers. Consumer’s preference can be a tightrope here as a survey by Retail Economics found more than half of shoppers at unease while disclosing their personal data. The younger buyers, however, exhibited a threefold increase in the propensity to disclose highly sensitive information in contrast to their older counterparts. If that’s the case, then how retailers could provide excellent experience to their older consumers using AI? That’s the crucial juncture where retailers should give meaningful thought to the working of AI! Similarly, despite AI’s ability to generate copious content for brand marketing purposes, the human role in content creation cannot be denied due to its authenticity. Hence, sole dependency on AI could compromise the authenticity, thereby jeopardising genuine CXs. Therefore, balanced human creativity and AI efficiency should be given the top priority.
Recommerce will be a game changer.
Recommerce will be the green flag retailers would flutter this year. Call it a ‘resale boom’ as it appeals to cash-strapped consumers who seek affordable alternatives, fostering a thriving market for pre-owned goods that benefits both buyers and the sellers.
On the flip side, its pivotal role in addressing environmental concerns shapes it a champion of ‘sustainable commerce’. By reducing the carbon footprint associated with product manufacturing, this business model extends the lifespan of existing items, minimising waste, and preventing products from ending up in landfills.
Selfridges is aiming to generate 50% of sales revenue from this business model by 2030. Harrods launched a dedicated hand-me-down luxury fashion platform in partnership with Reflaunt, further bolstering their recommerce presence. Also, Uniqlo and H&M expanded their offerings by allocating more floor space to resale programs. A burgeoning consumer demand for secondhand goods on platforms like Vinted, Vestaire, and Depop are also witnessed, signaling a surge in the resale market.
Livestreaming will continue to be in the spotlight.
Consumer behaviour has experienced a considerable change as they seek authenticity and look for personalised connections over simple product descriptions. To cater to these evolving demands, retailers have embraced the idea of livestreaming social events. This approach serves as a gateway for shoppers to a real-life engagement with the products. The brands partnered with niche specific micro-influencers, especially those preferred by Gen Z and Millennial consumers — rather than iconic celebrities to spotlight the products or services.
Some of the brands leading the way include JD Sports – hosting regular “Live Drop” events on Instagram for exclusive product releases, ASOS – spearheading “ASOS Fashion Finder” to share styling tips through interviewing influencers, and Charlotte Tilbury — using Instagram Live for product tutorials and online consultations. Considering this backdrop, livestreaming will continue to trend through this year.
Genuine Loyalty Programs will keep shoppers hooked.
The higher cost of living made many consumers frugal. And so, they won’t spend much on luxury items. Instead, groceries dominate their shopping list. But even for these growing needs, they hunt the best deals withiscount offers becoming the mainstay for establishing and retaining a strong customer base. A recent survey showed that 77% of the Britons are members of at least one loyalty program. 59% of them believe that every brand should offer discounts. While 47% are willing to spend more with program affiliated brands. Last, but not least, 28% feel a stronger emotional connection to a brand through such incentives.
Commercial Titans like Sainsbury’s, Tesco, Waitrose, JD Sports, Robert Dyas, and Ryman have either revamped or introduced exclusive pricing or cashback offers. The Co-op has launched ‘Co-op Membership’ program for discounted prices, committed to donating £25 million to such loyalty programs. Morrisons relaunched ‘Morrisons More’ discount card for loyal consumers. Retailers will need to continue to facilitate inflation-wary consumers.
Besides these, there’s a whole lot that retailers will adopt according to market shifts and consumer preferences. However, we will come around them in our next blog. Stay in touch!