Retail is changing at an unprecedented speed. The industry faced large-scale business restructuring: only 85,000 jobs lost and 9,169 stores closed in the US in 2019. Despite this, online sales continued to grow, reaching 21% of total sales. COVID19 is also transforming the consumer world by increasing the importance of digital innovations. Additionlly, millennials and Gen Z actively drive the retail industry, demanding their voices be heard. In this article, you can find several powerful trends that will impact the retail industry in the upcoming 3-5 years.
Subscriptions are no longer just for movies and gyms
A new generation is embracing subscriptions to achieve affordability. Subscription used to mean committing to pay in advance for an agreed number of uniform products, in exchange for convenience and bulk savings over time. The new iteration of subscriptions differs from previous models in that it’s flexible enough to allow consumers all the variety they seek. The ecosystem for a subscribed life may be most advanced in Japan, where you can now subscribe to everything from bar drinks to hair and beauty treatments, cars, suits, and even stays in charming rural homes.
Social media and search engines are becoming one-stop-shops for brands
From social media to search engines, consumers can shop just about anywhere online and the process is becoming more seamless than ever before. Consumers are undoubtedly using Instagram and other online content spaces for product discovery. Instagram is on its way to becoming a one-stop-shop for brands thanks to the launch of Checkout in spring 2019. According to Instagram data, 130 million users tap on shopping posts every month. Following Instagram, Google introduced an update in October 2019 that allows users to shop and make purchases from thousands of vendors directly through its search engine.
Brands exclusive to the e-commerce open up pop-up activations
Brands within the e-commerce industry are testing retail locations temporarily by offering pop-up spaces for their products. With temporary retailers, consumers are able to feel a sense of exclusivity in being “in the know” about a brand’s offerings, and therefore more likely to purchase. Businesses across industries are also using pop-ups to highlight local causes (that are also globally relevant) in order to market their personal brand. In an age where consumers are increasingly in-tune with both regional and global issues, brands create Women-Supporting shopping pop-ups, Small Business-supporting pop-ups, Waste-Reducing pop-ups to engage their customers.
Augmented reality (AR) is entering retail
Right now, most retailers are experimenting with AR in one-off projects, but AR shopping experiences could reach uncharted levels of immersion, giving new meaning to the online shopping experience. In the long-term future of AR glasses — and later contact lenses — our eye view will become our screen. More brands are investing in AR’s boundless potential for creating immersive shopping landscapes. In New York City, Italian furniture company Natuzzi has followed Ikea’s lead and opened a showroom where shoppers can wear Microsoft’s HoloLens 2 headset to enter an augmented version of their own home. In China, Armani’s cosmetic customers can already use their WeChat app to virtually try on makeup at home and make immediate purchases. In June 2019, tech startup Coolhobo demonstrated how customers at Walmart’s store could use AR navigation to pick up everything on their shopping lists by following floating arrows that point the way to each item. Along the way, they encounter product information and friends’ recommendations in real time, and interact with brands via fun, immersive games.
Streaming channels and games as a way to reach out the Gen Z
Global brands are embarking on partnerships that blend worlds to create innovative retail discovery experiences for Generation Z. It seems that games are a way to draw them in and keep them engaged in e-commerce platforms. In October 2019, Alibaba’s Taobao Life launched a 3D avatar game where users can customize their character’s outfits with luxury streetwear apparel and accessories that are also available for purchase on the platform. Streaming experiences have also expanded into uncharted spaces. For instance, Victoria’s Secret colaborated with Amazon to stream its New York Fashion Week runway on Amazon Prime, giving the video service’s members the opportunity to shop the lingerie collection without leaving the platform.
Millennials and the Gen Z are disrupting the market and placing greater importance on the social and environmental impact of their purchases than previous generations. Rising generations tend to believe that newer brands are better or more innovative. Moreover, they are buying with less frequency and more mindfulness, creating a better model for consumerism. Therefore, we might expect the appearance of new value-creation models in the retail industry that will attract new generations and ensure stable growth. Good luck shopping!