The future of retail may seem harder to predict than ever, primarily due to how the coronavirus upended most of what we understood about the retail landscape. While retailers will certainly think about their businesses differently in the short-term, it’s also important that retailers think beyond the next few months to determine what new technology, products, and services they want to offer as part of their physical and online shopping experiences. As consumer behaviors shift, retailers and brands alike will have to adjust as well.
At Endear, it’s our job as a retail technology company to always be thinking about what the future of retail holds and how we play a part in that evolution. Technology and the future of retail are of course dependent on one another: trends inform what technology the retail industry needs, while technology helps the retail industry address those trends more quickly.
Given all the uncertainty surrounding us today, it seemed like a good idea to share our take on what’s to come. Below is a run-down of the trends and opportunities we believe the industry will have to embrace in order to succeed based on the consumer trends that have emerged.
1. Sales will become omnichannel.
The biggest missed opportunity in retail to-date has been in the sales department. While store associates have previously been confined to selling solely face-to-face, COVID-19 has taught anyone with a brick-and-mortar retail business that their salespeople are potentially even more powerful online.
There are a few critical reasons why salespeople should serve as online resources as much as they serve as in-store support. Perhaps the biggest reason is the return rate problem: e-commerce stores face an average 20% return rate (30% during the holiday season), nearly doubling the return rate at retail stores. Factoring in that customers expect brands to foot the bill for shipping returns, plus the cost of inventory that can’t be resold, the retail industry spends about a third of its revenue on reverse logistics.
When you think about how salespeople could dramatically decrease the likelihood of returns, it should be a no-brainer to brands to introduce their sales team to online customers. At Endear, we’ve already seen a number of our customers, such as Mansur Gavriel, Schutz, and Misha Nonoo, use the past few months as a time to leverage their store teams to drive online sales—with all this activity completely trackable (and commissionable!) through Endear.
2. Customers will prioritize convenience.
While customer expectations include free shipping and free returns, it doesn’t mean they won’t invest in speed and convenience. In other words, just because you offer free 7-10 day shipping doesn’t mean you can’t charge a premium for one-day or even same-day delivery.
Same-day delivery is coming at us quickly, primarily thanks to the infrastructure provided by food delivery and ridesharing apps. In fact, companies like Shipsi are making it even easier for brands and retailers to offer shoppers their goods within a matter of hours. Similarly, customers are more likely to offer information and data about themselves if it means receiving more tailored goods and personalized services in return.
Especially if you’re a retailer with tons of products to offer, you can no longer expect customers to scroll through pages and pages of results—they would rather you analyze their purchase or browsing history and serve up results that are most likely to appeal to them. Otherwise, you’ll likely lose them to a product they find on social media.
3. Customers will save through sustainability.
Customers may be interested in spending time and money on convenience, but they’ve found ways to save through more sustainable shopping options, a necessary balance seeing as growth in disposable income has dropped in the last year. For example, more customers are forgoing purchasing new items and instead participating in the “re-commerce” and rental world.
In fact, while spend on apparel overall has stalled, the “re-commerce” (the re-selling of previously-owned goods) market value is expected to approximately double to $51B by 2023. Re-commerce is attractive to the next wave of shoppers not just because it saves them money, but because it also extends products’ shelf life, a major priority for Gen Z shoppers in particular, whose loyalty is more likely to be influenced by a brand’s sustainability efforts than other generations’.
While the re-commerce industry has been popularized by resale brands like Rebag and The Real Real, even traditional brands like Rag & Bone are starting to offer discount programs to help ensure that products are properly re-used or recycled. Similarly, while rental pioneers like Rent the Runway have encouraged our education around the power and benefits of renting apparel, services like CaaStle have enabled other brands to offer rental options, thus also lowering the barriers to entry into the luxury market for potential customers.
Another major consideration for eco-conscious shoppers is in the form of fulfillment. For many, BOPIS and BORIS (buy-online-pickup-in-store / return-in-store, respectively) offer both a more efficient, cost-saving, and eco-friendly method of retrieving and returning items, by avoiding unnecessary shipping, packaging, and warehouse processing. While not all brands have brick-and-mortar stores, companies like Happy Returns make it easy for pure-play companies to enable this method of returns for their customers because of how the tech platform teams up with larger retailers.
4. Retail technology will become more accessible.
Endear prides itself on its easy-to-install, easy-to-learn platform. But the reason why we’ve been able to make getting started so quick and affordable for customers is that the core infrastructure that brands are building on, predominantly their e-commerce platforms, have also become more consolidated and more nimble.
While there are very robust solutions out there, once Shopify entered the scene and brought its app store with it, the company challenged every other player to make it as easy to start using a new app for your business as it is in your personal life. While there are tons of great apps that have benefited from Shopify’s ecosystem, there are tons more who have taken a page out of the world of digital marketing and made it a priority to offer plug-and-play solutions to retail businesses, once plagued with large up-front development costs and long-term licensing contracts. When we think about other companies like Dor or Fiddle, we see that we weren’t the only ones who knew that the SaaS model would catch up with retail eventually.
5. Subscriptions will thrive (though subscription boxes may fall).
Even before Covid, there has been a ton of chatter about the potential value of direct-to-consumer (DTC) brands—there have been big wins and flame-outs, and the question is still up in the air about what kind of exit these brands can expect to have. One major differentiating opportunity, though, is subscription. Similar to my comment above, most tech companies count on subscription models and their ability to scale their software across customers to justify their need for up-front capital and the potential return on the other side.
While even I’ll admit that subscription boxes feel sooo 2015, subscriptions may be the saving grace for a lot of brands. In fact, companies like Fabletics and Savage x Fenty bank on this model because it yields a much higher retention rate, which helps them overcome perhaps the biggest challenge facing retailers: constantly having to win back customers.
While subscription services may not apply to every category (e.g. mattress companies), basics brands and beauty brands alike have started introducing subscriptions as a way to keep customers happy and keep retention rates high. Subscriptions can also vary on the frequency, so that customers never feel trapped but instead feel comforted knowing that a product will reappear right when the original runs out or wears out. The more you can help customers feel this way, the better. For any company considering subscription, I would recommend investing in how you can demonstrate to customers the potential monetary advantages and their pre-existing behavior to encourage them to switch to a regular purchasing schedule—a discount on their subscription is encouraged!
6. Barriers to physical retail will continue to lower.
Today, opening a store is almost as easy as launching an e-commerce site. While some of this shift is due changes in the real estate market, a lot of it is because of the rise of retail-as-a-service companies and consultancies who offer turn-key solutions to brick-and-mortar operations.
These services, in tandem with new retail technology solutions like Endear, make the prospect of physical retail much less daunting and much less expensive. It also means that physical stores can see returns faster since the playbook has been written.
7. Brands will pervade our lives, not just our closets.
When we think of our own company, we know we offer a product, but we also hope that we can offer our customers a sense of community, a reliable library of resources, and overall be generally helpful to them in all things sales-related. Brands today, especially during and because of COVID-19, are taking a similar approach to how they operate.
It’s not just about how good their products are —in fact, depending on your sales strategy, customers could just as easily find that same item at another retailer, maybe even for less money. So how will brands shift to encourage more customer loyalty?
One trend that is becoming more popular is to create more opportunities to engage with both the brand and the other people who are as obsessed with it as you are. I wrote about this type of community building in a previous post, but when we think about what it will look like in the future, what we see today will be taken to another level. As brands become more customer centric, it will be less about “What do we make?” and more about “What do our customers want from us?”
And what customers want may be more than products—it may be in the form of events, services, or new types of content. All these things combined will still have to be “true to the brand” but a brand will no longer be a label you see on the inside or bottom of an item, it will truly be its own entity that customers will engage with through any channels it puts before them—likely, the more ways to engage, the more loyalty there is to be earned.
Technology and the Future of Retail
I’ve shared a lot of trends, ideas, and hypotheses here, but I’ve also included some of the technology we think will drive these changes forward. To make your life easier, I’ve recapped those solutions here. I hope it’s helpful!
Endear: Whether you operate entirely online or have a large fleet of stores, Endear is here to help you keep your customers and sales team happy. See for yourself with a 30-day free trial of Endear.