There are a number of key changes and challenges that retailers (both physical and eCommerce) will face in the coming years, to ensure they meet both consumer and shareholder expectations. Alice Rose, Managing Director at Fountain Partnership, takes a closer look at the shifting landscape of retail and ecommerce.

Solving logistical and supply chain issues

According to eMarketer, eCommerce sales surged 27.6% in 2020 to $4.28 trillion. It is predicted that 2021 will have seen the same rapid growth, with Covid forcing the world to go digital.

Despite this growth, the lacklustre implementation of Brexit paired with the logistical challenges of Covid have created huge challenges for businesses in securing (the sustainability of) their supply chains.

All this to face just in getting the product into the UK. Once on UK soil, the key competition is now being fought over the last mile. Amazon has led the way in driving consumer expectations for delivery to next day, but it is becoming increasingly difficult to fulfil this – both logistically, but also sustainably. With Covid again rampant in the UK, transportation is likely to become a key barrier for retailers in delivering products to both their physical stores, as well as their online customer. We could see panic buying making an unwelcome return in 2022.

The gap between sustainability & the current reality

Retailers are facing a growing problem around sustainability, inherently tied to logistics. The vast majority of consumers are facing the dilemma of sustainability vs. convenience. Whilst most say they are looking to buy from brands that are sustainable, consumers will often opt for cheaper products, delivered sooner. However, we predict that this will shift as consumers look to buy from brands that have similar values to them, especially Gen Z.

Meeting the need for sustainability is going to be hard. In a report by Foolproof, they found scary statistics:

• In the last 6 years, the number of parcels sent internationally went from 43bn to 131bn (in 2020).
• In the UK alone, 4.1bn parcels were sent in 2020.
• According to WHO, by 2030, the pollution from ‘last mile’ logistics is expected to grow by 78%.
• The average distance travelled for fashion returns in the USA is 1,200 miles.

All retailers are shifting to a total retail solution

The concept of Omnichannel was first introduced to marketers in 2010 and, like the word ‘Mobile’, should now be seen as a given.  Businesses are looking for a retail solution that moves seamlessly from the digital to the physical, a solution that can interact, engage and bring value to consumers. Fully understanding and leveraging your assets, especially your own data, is going to be crucial to delivering this solution.

Retailers, particularly fashion brands, are also exploiting their existing reach by setting up their own third-party marketplaces. Harvey Nichols, for example, have launched their own feedback marketplace.

Physical stores still have a role to play

Online retailers are still investing in physical stores. Once again led by Amazon, online retailers are using their high street presence to:

• Give consumers a brand experience that’s currently lacking online.
• Help with the last mile, for both delivery and returns.
• Raise brand exposure – creating the right window experience can provide a meaningful and enduring out-of-home advertising experience for consumers

This shift is also prompting the rebirth of Augmented Reality shopping experiences. AR has finally come of age, and is giving businesses the ability to show a customer how their product will fit into their lives. It is also seen as a possible cure for reducing the number of returns.

Social commerce is driving the next shopping generation

According to Tipser, 11% of China’s eCommerce sales comes from Social Commerce. In Thailand, between a third and a half of all eCommerce is driven by social platforms. This trend is picking up in the UK, especially with younger generations, and in May 2020 this trend was reinforced by Facebook introducing Facebook Shops as well as Instagram Checkout.

This trend is, in part, driven by the world of influencer marketing. In a Mckinsey study, word-of mouth marketing was found to have a 37% higher retention rate than traditional paid advertising.

FOMO is driving down the excitement of key events

Key events of the year are also seeing major changes, and brands could be missing out of opportunities by ignoring consumer sentiment.

• For the likes of Black Friday and Christmas, brands are now starting their marketing campaigns earlier than ever – but in a rush to get the first-mover advantage, could brands risk alienating consumers by starting their campaigns too soon?
• Going early for key calendar events has its advantages, but you need strategic knowhow to guide you on when to start your activities. During Black Friday week, for example, costs – like CPCs – go through the roof. Start any offers or sales early to maximise performance and profitability.
• With the current logistical challenges, it is important when planning your retail sales that you are as strategic as possible. As marketers, you need to liaise with product and supply chain teams to understand how best to approach maximum profitability. Don’t promote and sell all your high margin products at bargain prices and find yourself out of stock for December and January.
• The anti-Black Friday movement is gaining momentum, with more sustainable brands looking at matching contributions to charities that matter to them. Finisterre is a great example, matching every purchase made by donating customised wetsuits to their Charity Partner, Bodyline.
• Finally, brands are missing out on huge opportunities by not considering key cultural events and holidays such as Diwali, which is seen as a shopping extravaganza. According to Statista, online shoppers are expected to spend the equivalent of $9.2bn during Diwali this year. Geo-targeting areas where large celebrations are known to take place (for example Eid in Leicester) could help companies take advantage of this.

The metaverse and its role in society

The metaverse suddenly took on a more significant meaning after Facebook announced they were rebranding to Meta in 2021. The metaverse is alternate digital realities where people work, play and socialise. There are various expectations on its worth, with Bloomberg predicting it will be worth $800bn by 2024 and Morgan Stanley estimating it at $8trillion! What we do know is that Covid has accelerated this adoption, and it will continue to increase as the younger generation adopts this into their daily lives.

What is loyalty anymore?

Loyalty is something that no one has really got right yet. As we move towards a retail experience that is seamless, personal and engaging, loyalty is becoming increasingly important in both real and virtual worlds.

What next?

There are so many fascinating trends happening in the world of retail and ecommerce that it can feel overwhelming keeping ahead of them. Thanks to data, brands are able to deliver almost seamless experiences wherever the customer is, meaning the role of marketing has never been more complicated.