Incubeta has put together an insights deck to run you through some of the key trends we're seeing emerging in the retail space, in particular, the return to brick and mortar.
2. In this edition...
In this edition, we will be looking at what we can expect from the
retail industry as brick & mortar stores re-open, consumer
confidence increases, and eCommerce is challenged.
As we start to transition back to physical till points, brands are
re-thinking their online and offline strategies yet again, focusing
on retaining the customers they acquired so competitively in
2020, and acquiring for continued growth.
We’ll be answering the following questions:
● How ‘normal’ will normal actually be?
● What does this mean for experiences in retail?
● How will brands use digital to adapt?
Contents
3. Retail 2021 Outlook
● Consumer purchasing behaviour during the pandemic drove a
74% rise in online shopping, forcing retailers to change how
they operate.
● Whilst long term this adaptation is set to continue, in the short
term it is crucial to understand to what extent consumers will
return to their pre-pandemic habits.
● As restrictions ease and consumer confidence returns, there
will be strong competition between retail and the hospitality
and leisure sectors as people decide where to direct their pent
up demand and savings.
● The urge to reconnect with family and friends is likely to see
leisure and hospitality prioritised for many people. However
strong footfall increases pre-Christmas suggest there will be a
large demand for physical shopping experiences this year.
● Overall retail is set to see a growth of 4.5% for the year with
recovery levels varying across different categories.
Retail 2021 Outlook
5. Challenging the status quo
● With the majority still WFH, there’s no saying on how the return to
work will impact retail but there’s a big argument that eCommerce
will maintain its strong presence compared to pre-pandemic years.
● Some of the effects of Covid are yet to play out, such as the
impact on city centres where commuters were a big proportion of
customers, but retailers should still be adapting an omni-channel
approach to meet the needs of those starting to return to work and
entering the workforce again.
● Recent research has found that UK retailers have reported their
strongest seasonal sales in four years, however it’s clear the sector
remains a long way from a full recovery. The return of demand is
patchy, with inner-city footfall still well down.
● Even as consumer demand returns, the legacy of lockdowns on
retailers’ balance sheets remains. Although the moratorium
extension will be welcomed, more support is still required.
How ‘normal’ will normal actually be?
6. Consumer confidence is creeping up
How ‘normal’ will normal actually be?
Consumer confidence indicates the
degree of optimism that consumers
feel about the overall economy and
their personal finances, which
strongly impacts consumer
purchasing behaviour.
Consumer confidence has been
tested over the past few years
following Britain’s exit from the EU
and the coronavirus crisis.
With levels slowly returning to
‘normality’ the impact of the
consumer on retail is uncertain due
the economic backlash and a ‘time to
save again’ mentality.
8. How will in store experiences change?
What does this mean for experiences in retail?
● Shopping local will continue to be top of mind after seeing a
resurgence during the pandemic.
● Consumers will return to physical retail, but for now they still
favour health and safety measures such as hand sanitiser
and capacity restrictions for a safe shopping experience.
● Top benefits of browsing in store will remain and draw
people to shop in store such as physical interaction with a
product, browsing for new ideas and trends, social aspect.
● Stores will become more conceptual and experiential with
people heading to stores to be inspired and seek expertise.
● The synergy for offline to online will be crucial with aspects
such as ability to access online customer and order
information in store becoming more important.
● Technology will create further retail evolution, for example AI
store assistants supplementing experience with product
information and recommendations.
9. How will the offline-online experience change?
What does this mean for experiences in retail?
● Where previously shopping online and shopping offline were seen as
separate journeys, there is growing evidence and understanding that
these purchasing methods are often one customer journey.
● The customer journey will inevitably become more complex as
online and offline shopping become more interwoven with
consumers moving between online and offline before buying.
● Technology will be key to allowing shoppers to eg. research online
and then purchase in store.
● Many physical focused retailers experimented with increasing their
online presence amid shop closures in the pandemic, this mix of
online/offline is a trend here to stay.
● This year, the role of technology will have a large influence on the
customer journey, enhancing shopping experiences by making it
easier for shoppers to shop with physical stores but they must still
provide a captivating experience not attainable online to draw in
shoppers.
11. The High Street is open again - but who’s coming back?
● Retail lockdowns have undeniably supercharged e-commerce growth in 2020, but they’ve also conversely
revealed that digital shopping is incapable of fully replacing the physical retail experience - the
brick-and-mortar high street is still a huge draw for consumers.
● Queues outside stores on the first day of looser restrictions demonstrates that both physical and digital
channels are vitally important to reaching all demographics of a targeted audience.
● As a result, brands that deftly incorporate engagement strategies that harmonise the relationship between
physical and digital will see both channels drive growth and enhance one another.
How will brands use digital to adapt?
12. ● The pandemic has left us craving more social interactions than ever
before.
● The inability to engage customers in a physical environment has pushed
some retailers to bring more of the in-store experience online through
the use of virtual appointments and styling. This has become more
prevalent across the luxury retail sector.
● Leading the way is Dior who has began home fragrance consulting.
Hosted by Fragrance Ambassador Carl Groenewald, live from the Dior
Salon De Parfum in Harrods, London, clients are sent a fragrance tester
set, featuring mini samples of hero scents to their home. Groenewald
then talks clients through each perfume, in a bid to replicate the
in-store experience.
● Other face-to-face experiences which have pivoted online include the
recent launch of an online doctor service from Boots, and virtual
makeup try-ons via Instagram made possible thanks to a partnership
between L'Oreal and Facebook.
How will brands use digital to adapt?
Bringing an in-store feel to the digital
experience
13. ● In today’s fast-paced world of on-demand services, entertainment, and
products, customers have high expectations.
● Consumers now expect to have a good customer experience, an
experience that works for them based on their preferences.
● This is no easy feat for business, no matter how large or small they are.
There’s a lot that goes into creating a great customer experience, one
that will create happy customers and keep them coming back.
● One key element of great customer experience is ensuring there’s less
friction in the customer journey.
● From a strong UX, personalised messaging and creative and relevant
targeted content to a quick and effective customer service, brands
need to invest to identify where friction occurs in their user journeys
and tackle it to stay competitive.
How will brands use digital to adapt?
Introducing digital experiences that are truly
frictionless
14. ● Retail lockdowns have undeniably supercharged e-commerce growth in
2020, but they’ve also conversely revealed that digital shopping is incapable
of fully replacing the physical retail experience - the brick-and-mortar high
street is still a huge draw for consumers.
● Local campaigns have been a hot topic recently, catapulting businesses in
front of potential customers with the information they need about when and
how to visit their shops. This streamlining the customer journey from online to
physical store, is helping to grow the much-needed offline sales.
How will brands use digital to adapt?
Local Campaigns - put your store on the map, literally.
15. Brands that incorporate engagement strategies that harmonise the relationship between
physical and digital will see both channels drive growth and enhance one another.
How will brands use digital to adapt?
Utilise in-store sales behaviour to further
drive online growth
● In addition to Local Campaigns, store traffic can be promoted across Social
via Store Traffic Campaigns, allowing you to showcase information about
your business as well as a map location with directions.
●
● With a renewed focus on sustainability for the retail sector, digital e-Receipts
help eliminate waste paper from traditional receipts and can even have a
marginal impact on store budgets by sending purchase receipts to a
provided customer email address.
●
○ However, e-Receipts can also be a great tool for supercharging your
online growth by providing an in-store opportunity to sign up
customers to a mailing list - growing returning user pools online for
more effective CRM and digital advertising.
17. In an ever-changing industry, where are we now?
● The pandemic has drastically shaped shopping habits making it crucial to
understand the needs of customers and their behaviours as restrictions ease.
● In store experiences are changing. Be prepared for customers to be visiting
your store for the experience, to be inspired and to seek expertise.
● The connection between offline and online is greater than ever. Treating the
customer journey as one will allow retailers to capture audiences that for
example research online then go into store to purchase.
● Brands that harmonise the relationship between physical and digital will
see the most benefits.
● Bringing an in-store feel to the digital experience will engage and inspire
customers shopping online.
● Leveraging digital to showcase in-store offerings and drive people to stores
helps streamline the customer journey and grow offline sales.
● The long-term adaptation towards online focussed shopping is set to
continue but in the short term understanding the transition back to the till
and how digital plays a crucial part in the customer journey is key.
Summary