A look at the top 5 predictions for retail and ecommerce companies in the coming year
McKinsey refers to the Covid-induced shift to digital as a “decade in days.” Overnight, we started ordering groceries instead of going to the store; having telemedicine appointments instead of going to the doctor; and working out in our living rooms instead of going to the gym. While the digital shift has been happening for years, this acceleration is like nothing we’ve ever seen before. Even with a vaccine rolling out, the shift we saw in consumer preferences and behavior will be longstanding. To effectively compete, capture loyalty and grow revenue, retailers will have to adapt to a few key trends in 2021.
2021 Retail and eCommerce Outlook and Predictions
1. Catalogs and search will be replaced by AI-powered experiences
Online search replaced the print catalog for product discovery, with a few retailers like Ikea and Restoration Hardware keeping their catalogs alive. But recently, after 70 years, Ikea announced that its stopping print on its catalog – which at its peak was printed 200 million times in 32 languages in 50 markets in a year. This is one indicator of a drastic change coming to the shopping experience: AI-driven shopping. We’re starting to see more retailers roll out AI-powered visual product search, which lets customers upload a photo or a screenshot to find similar items. Companies like ASOS, Walmart’s Hayneedle brand and Uniqlo are among retailers doing this. We’re also going to see virtual 1:1 shopping assistants assist customers along the customer journey – providing an in-person associate experience at scale – curating unique product recommendations and creating a highly individualized experience. An example of this is The Yes, an AI-powered app that’s completely tailored to the individual consumer, creating a personalized feed of products that rich algorithms suspect a person might like.
2. Consumer loyalty is fickle, but can be solidified with omnichannel experiences
According to Deloitte: “Modernization, globalization, and digitalization have made it easier for consumers to explore, research, educate, and empower themselves throughout the decision-making journey.” COVID-19 accelerated this even further, which has led to less brand loyalty. Sixty-nine percent of Gen Z and millennial consumers report becoming less loyal during the pandemic and 78% of consumers have changed stores, brands and the way they shop during the pandemic.
This lack of loyalty is not going to change any time soon. According to McKinsey, “We expect these changes will shape consumers’ habits even beyond the effects of COVID-19. In…the U.S., upward of 60% of consumers who tried a new behavior plan to stick with it post-crisis.”
Having fluidity between channels can help build loyalty and retain over 89% of customers, compared to retailers with a weak omnichannel strategy. Retailers must carry the context forward from one channel to the next as discovery, research, purchasing and post-purchase interactions happen on different channels. For example, suppose a product is out of stock when a person is browsing the Web but is back in stock when they open the app the next week. A retailer should alert the customer with a personalized and actionable message.
3. Trust becomes the ultimate non-negotiable
Consumers build trust in a brand when it delivers what it promises it will. According to Forrester, “consumer trust has always been important. But for 2021, consumer trust is underlined and bolded — nothing is more important for a brand’s survival.” Perhaps this is because during the pandemic, 66% of consumers could recall when brands acted in self-interest—such as raising prices on essential items, spurring 1 in 4 to walk away from a brand. Trust has been shaken – and it affects more than a company’s reputation: 53% say ‘whether you trust the company that owns the brand or brand that makes the product’ is the second most important factor when purchasing a new brand, second only to price.
PWC acknowledges that building brand trust, though, is no easy task, but “understanding individual consumers and consistently meeting their expectations is essential to making it happen.” Retailers that take a customer-centric approach – prioritizing personalization, convenience and open communication – will be the ones that are able to establish and maintain trust.
4. Predictive and proactive experiences will take off
With 85% of consumers wanting brands to ‘solve my problems,’ the proliferation of machine learning and AI to power predictive and proactive experiences will take off in 2021. We’re finally going to start to see AI truly integrate with the Internet of Things (IoT) to allow retailers to act on signals and sensors from the physical world and marry it with seas of consumer behavior data to anticipate the ideal times to suggest a sale, recommend a product or urge a person to repurchase.
Companies like HP are doing this today. In HP’s case, the company is automatically triggering repurchasing journeys based on signals from a printer that ink is running low. The company reaches out at the exact moment of relevance with a frictionless reorder experience. AI is sensing when a customer is about to need something or when their life is about to be disrupted, which opens the door for a retailer to be a customers’ hero – helping them avoid, in this instance, the annoying reality of running out of ink.
As consumers, we will have to think a lot less about finding the right products or remembering to purchase things. Brands will become our advocates – anticipating needs and providing a seamless way to get it.
5. Anticipation will drive customer service
Consumers today expect convenient, personal customer support on their channel of choice. Even the superstars of customer support in the retail industry still by-and-large are reactive: responding when a person reaches out with an issue. In 2021, though, we’re going to see predictive customer service emerge as the new standard.
Leveraging AI that is tuned in to various back-end systems like CRM and order management, retailers will communicate with a person before they even realize there’s an issue (i.e. your delivery is going to be delayed due to a snow storm) or prevent an issue from ever happening in the first place (i.e. the best way to clean your new cashmere sweater is to fill a tub with tepid water and add a squirt of a cleanser that’s specially formulated for wool). This eliminates the need for a person’s life to be disrupted having to reach out to report a problem (i.e. My order should have arrived today; where is it?) or a customer ever encountering a problem in the first place (i.e. my new sweater is ruined after I washed it).
In 2020, the rate-of-change that occurred in the retail industry was expedited by the pandemic. We saw consumer behavior change overnight. In the coming year, retailers will need to adapt to the change in customer preferences and behavior in order to build trust and capture loyalty. The retailers that leverage advances in AI and other technology to truly become the customers’ hero and advocate, anticipating issues, will be the ones that are able to establish long-term relationships and thrive.
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