The retail industry is still dealing with the effects of the pandemic that lasted almost three years. In addition to this, further global events are causing disruption to the supply chain or financial stability of many retailers globally. As the industry confronts new challenges shaped by economic and geopolitical factors, it also faces trends influenced by changing customer expectations and needs. Here are 5 developments and trends to watch.
While all these factors are changing the way consumers shop, one thing is certain - people have bought, are buying and will continue to buy. Retailers simply need to adapt to changing retail market conditions. With in-store sales limited by the pandemic, the retail industry has developed an online sales channel, for example, to meet customer expectations. And e-commerce will undoubtedly continue to grow. What else can you notice in retail trends that are shaping the present and future of retail?
Trend 1: Deferred payments
The purpose of deferred payments is to postpone the date of payment, e.g. when a customer does not have sufficient funds in their account. While immediately after the introduction of the deferred payment option customers approached it with a lot of reserve, a clear shift can be seen in the last two years.
Data from the European Retail Banking Radar 2022 signals that as many as 61% of Poles used deferred payments in 2021. The buy now, pay later option increase compared to previous years might bring many positive effects to online shops.
Of what kind? The Twisto research points to:
- an increase in the average value of the purchase basket (79%),
- increased revenue from online sales (76%),
- opportunities to attract new customers (75%),
- higher sales conversions (75%).
Trend 2: striving for cost optimization
Inflation is not leaving out the retail industry, which is struggling with the ever-increasing costs of production, maintaining physical stores, keeping employees paid, marketing activities or delivery services. Therefore, in addition to creating a business plan, cost optimisation will be extremely important in the coming months.
Retail must look even more vigorously for new solutions that reduce the costs associated with running the company. However, cost reduction must go hand in hand with maintaining the quality and range of services that customers expect.
Already by the end of 2022, we could see that many companies have increased the value of unit orders, while at the same time reducing their frequency. This trend is due, among other things, to the new trend towards stocking - i.e. customers are buying several units of the same product each, fearing the unavailability of particular groups of goods (e.g. due to pandemics, economic or political situations). In addition, in the coming months it will be even more valuable to review inventory holdings, with the search for new, more cost-effective collaborations in supply and storage.
Trend 3: even greater popularity of e-commerce platforms
E-commerce in Poland and worldwide is doing well. The report E-commerce in Poland 2022 indicated that already 77% of Internet users regularly make e-commerce purchases, reaching for this form of shopping even 2-3 times a month (ARC Rynek i Opinia, 2022). Interestingly, there has been an increase in interest in Polish shops (75%), which clearly win in popularity with cross-border shops (32%).
Based on this data, there is a forecast that in 2023 the value of Polish e-commerce will reach as much as PLN 104 billion, and in 2024 - already PLN 118 billion.
Trend 4: New expectations of generation Z
Generation Z has joined the group of active consumers, distinguished by specific needs (and, importantly, completely different from those of millennials, which should not be forgotten when building a sales strategy). Born after 1995, they place clear expectations on producers and retailers, which in turn generates a number of additional challenges.
Generation Z demonstrates:
- a need for open and direct communication,
- a love of digitalization and technology,a desire to build consumer loyalty via social media,
- high expectations regarding products,
- a desire to use deferred payments (in the US, it is estimated that up to 75% of all deferred payment users are customers born before 2000),
- desire to watch live streaming,
- interest in "shoppable media" - i.e. digital content that encourages shopping,
- awareness of the risks associated with the online world.
This goes along with pro-environmental measures that respond to the expectations of older millennials. To attract this audience, brands need to use recycled materials, offer more sustainable shopping and thoughtful, eco-friendly production.
Trend 5: Customer service is paramount
Customers increasingly need dedicated, carefully crafted communication. No one is interested in mass communication anymore - customers now value loyalty programmes, newsletters with direct phrases, a quick response to emails and the ability to get in touch via social media.
So far, estimates suggest that up to 46% of all companies worldwide plan to employ customer service specialists. These are tasked with responding efficiently and professionally to complaints or resolving payment issues, for example.
The data shows that:
- 48% of consumers expect to be treated as an "exceptional customer" (Accenture),
- almost 93% of customer care employees in Poland confirm that customers are becoming more demanding regarding customer service (BOTWISE report),
- only 12% of customer service departments in Poland use chat bots (BOTWISE report),
- 84% of customer service professionals are urging companies to introduce modern technology to improve their existing work (BOTWISE report).
An increasing number of companies are now targeting end-to-end solutions that involve both the customer service team, chat bots and the customers themselves. Such solutions in the form of contact centres - contact platforms - provide the customer with assistance 24/7, as the customer has an employee at their disposal during working hours, a virtual consultant to serve them at non-standard times and a self-service portal with a rich knowledge base and materials where the customer can find the answer to their query themselves. Among the platforms most frequently chosen by customers (data from the 2023 Gartner Peer Insights report 'Voice of the Customer' for CCaaS) is the Talkdesk platform.
Being aware of the above trends and practical solutions is a major opportunity and a significant advantage for the entire retail market. Especially as we are entering a challenging time, verifying previous actions and errors in strategy. Therefore, it is already worth reaching for these comprehensive and modern tools, which will streamline your business and allow you to gain an advantage in the race against equally resilient competitors.
