As we look to 2022, we grow increasingly bullish about the retail industry, in the US and around the globe, both in what we have seen and heard from consumers. A recent survey conducted by The Industrious of 2,000 retail shoppers helps buoy our optimism. The survey confirmed a few truths that we had observed over the past year:
IBM’s 2020 U.S. Retail Index augments our findings, reporting an accelerated shift to digital – not just ecommerce -- shopping by roughly five years.
As the retail landscape evolves to digital shopping, this coming year will be pivotal for advancements in the following key areas:
We wrote about this in our whitepaper, Gen-Z and the Retail Middle Class: A Path Forward. We predicted that the confluence of pandemic isolation, influencer culture, and rapidly proliferating platforms like TikTok would substantially change consumer behavior. Millenials and Gen-Z are establishing the rules for new retail, with new retail is conducted in-store and online in equal measure.
The evidence is everywhere. The recent PWC consumer insights survey reports that smartphone shopping keeps growing. The lure of the convenience, access, and immediacy is expanding its hold on the shopping consciousness, with over half the survey respondents indicating that they have become even more digital.
Shopping experiences on a social media platforms offers shoppers an even more seamless way to shop online. We believe that the next natural wave is the integration of in-store and online. We have all heard terms like “Instagrammable moments”, but this rarely comes to fruition in retail. Why? Because people want to share experiences on Instagram, not just product. And too often, retail offers just product.
An excellent opportunity for retailers is to integrate their social storefronts with retail activity. Social media campaigns today aim to drive intending shoppers onto their websites and apps. A progressive digital shopping experience will eliminate the traditional sharp divide between online and physical retail. Retailers can drive doorswings with campaigns that promote experiences that can happen only in-store. Adidas provided an interesting template: a campaign that drops clues and leaks information about a coming in person event. Coming into 2022, people are craving these types of experiences that combine online life with offline encounters.
Augmented reality (AR), machine learning, and artificial intelligence (AI) have reached a technological maturity and level of affordance that makes them accessible for almost any retailer with a vision and compelling use case. At the Industrious, we believe that the way to prosper with this technology is to activate it in the retail environment.
In 2021, AR understandably made its mark in online channels. There are compelling examples, like Wayfair allowing you to view furniture within your home before your buy and modify color and scale. Home Depot shows higher conversion rates by 2 to 3 times for shoppers engaging in the AR within their mobile app. These are excellent executions, but in our view, they are just the beginning.
Using the mobile device as the medium, brands like the Home Depot will be bringing AR experiences into actual reality. For example, pointing the mobile camera at a vanity on display will permit you to view different sink and faucet combinations. We will see a layer that will display the tools you will need for a proper installation. Clicking on the AR icons will add these additional tools and supplies into your shopping list and direct you to the proper aisle.
In short, AR has the potential to be a most informative and helpful sales aide. This is also a great way to integrate the online content into a retail environment, something most retailers struggle with.
Experiences are what get people through the door. Sure, convenience and availability are drivers of shopping behavior, but if your strategy is to compete on convenience and availability against the online channels, you are playing their game.
There is a reason that DTC companies like Casper and Warby Parker open retail stores: the successful entertaining and serving a customer with intention, personalization, and care leads to lasting loyalty. Face to face remains the most powerful means by which brands can make lasting relationships.
We have explored some brilliant examples of this, whether it be American Girl or Crayola or any of the dozens of other retailtainment brands. And whereas such approaches seem natural for these brands, we are finding it in places you may not immediately expect. We are seeing dozens of new and exciting executions: connected cars at mobile telephone stores, virtual design studios at furniture stores, self-curating clothing experiences to build the best look – the possibilities are almost endless. But they all have one thing in common: the mobile smartphone serves as the personal connector to all online and offline experiences.
The other two trends lead us here: merging online and offline worlds, activating mobile in store, and providing experiences that give immediate positive emotional feedback are the means for retail to propel itself into the next decade.
Successful retailers recognize that it is time to put an end to the artificial separation between the online and the physical channels. We see 2022 as the year when online and physical complement each other to really bring brands to life.
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