It’s safe to say that the past year has seen retail face some of its biggest challenges in recent memory. Macroeconomic headwinds, geopolitical uncertainty and supply chain stress has hit the industry hard. And that’s before you get to the hand-wringing artificial intelligence discourse that has caused deep anxiety amongst those at the top of businesses.
However, the retail sector has shown some remarkable resilience despite these challenges. And while we are not out of the woods yet, there are signs that the year 2024 could be one of optimism.
Despite these signs of fairer weather ahead, retailers cannot afford to rest on their laurels, there will certainly be more storms to weather in the coming months.
So what should retailers be looking towards to navigate these uncertain times? Here are three areas that could make all the difference:
- Loyalty is everything
Our research shows that 88% of consumers say they are part of at least one loyalty scheme. However, how many of them truly believe they are getting value from the loyalty scheme and a truly integrated part of their daily lives? Driving default cognitive shopping behaviours i.e. you immediately think of the brand/website when looking to purchase, bound to their love of the loyalty scheme is a huge opportunity for retailers, especially when budgets are going to be tight. You have a ready-made, eager and loyal customer base looking to spend money with you. But the biggest advantage? You know, or definitely should know, how they want to spend that money.
The challenge is that the majority of retailers will have a loyalty scheme – Clubcards, Nectar points, and Boots Advantage Cards. It has become an expectation rather than a bonus and so retailers now have to work harder/smarter to generate the stickiness of their offering.
That means that for customers to join these schemes and give you their data, the exchange must feel considered and worth it. Unfortunately, these expectations aren’t being met by a lot of retailers with 17.5% of customers currently not seeing the value in sharing their data with brands due to the experience they are getting in return.
This needs to change in 2024.
- (Commercial) Conversations Starters
2024 is the year which will reprogramme our expectations and behaviours when using search functions. The introduction of AI technologies into search processes will fundamentally change the way customers speak to retailers online, making it more akin to what you may experience in a physical store – making for a truly omnichannel experience for them.
Instead of searching for keywords and single SKUs online, customers are going to be transitioning towards more conversational language. DIY is a great example of this. Rather than, for example, searching ‘patios’, they will instead be describing the challenge – ‘I’m looking to build a patio on top of my existing lawn. It’s approx 10m square and I want it to have a beige look to it when I’m finished.’
You can almost imagine having this conversation with a store assistant. The result could be the ‘how to guide’ combined with the total list of products needed to do the job, allowing a one-stop purchase with the retailer and a wow factor experience for the customer.
Intelligent Discovery tools are already hitting many of the retail industries and your customers are going to start to expect to have different search experiences.
- GenAI and personalisation
GenAI has unlocked a new level of personalisation capability for retailers. Offerings such as ‘shop the look’, virtual try-ons, and recommendations to blending physical and digital experiences for the shopper can all be enhanced by GenAI. It is a buzz topic, but it’s not going away, so naturally there is a lot of excitement as brands try to understand the technology’s potential for their business.
GenAI could also be the game-changer when it comes to keeping customers in the aforementioned loyalty ecosystem. It can streamline data consolidation, shifting through huge amounts of information before offering up tailored offerings for individual customers or customer sets. Let’s not forget that often this data is unstructured, kept in disparate silos and not talking to one another. AI could provide an economical, and practical, way of providing value in that exchange between customer and retailer. It’s the compliment to your creative minds in your business, that is going to help them work more efficiently and free up the time to craft those delightful experiences unique to your brand.
Retail had a tough 2023, but with the right investment and commitment to core elements of the shopping experience, there is a good chance of not only survival but growth in the coming year. Keep customers in loyalty ecosystems, adapt to the ways that they want to shop and utilise new technologies such as AI, and 2023 will soon be a distant memory.
Contributor: Matt Hildon, Retail Portfolio Director, Kin + Carta
