Consumers' shopping behaviors are shifting, and as many businesses are struggling to adapt to the changing habits of consumers, there are five key retail trends that have emerged and been discussed in the latest KPMG International 2018 Global Retail Trends report.
Over the last few years, we’ve heard about the upcoming age of disruption. In reality, we are already being disrupted. At a global level, one of the most affected sector is the consumer and retail industry, especially in terms of online shopping and changes in customer behaviors, resulting in a big shift in the way companies need to stay competitive.
According to the 2017 Thailand Internet User Profile by ETDA, online shopping ranked fifth in the rankings of the most popular online activity among internet users in Thailand; while in the previous year, it only ranked eighth. Consumers' shopping behaviors are shifting, and as many businesses are struggling to adapt to the changing habits of consumers, there are five key retail trends that have emerged and been discussed in the latest KPMG International 2018 Global Retail Trends report.
Firstly, customer experience is more important than ever. In fact, what makes or break a retailer isn’t whether or not they are selling through online channels or physical stores. By January 2019, 90 percent of all retail will still be operating from physical stores. What is more important, however, is the experience that meets or exceeds customer expectations. The new Nike store in New York is a good example of this; it opened a five-story store that is comparable to a theme park for sports lovers. Among other things, it features a mini basketball court, treadmill, system that simulates runs in different locations, and a shoe bar where customers can customize their own Nike shoes. This demonstrates how a brick-and-mortar retail can create a memorable customer experience in the age of e-commerce.
Secondly, Artificial Intelligence will gain more dominance with some executives predicting that 85 percent of all transactions will be AI-based by 2020. In 2018, we will see AI adoption continue to rise, with chatbots being one of the leading technologies. Due to increasing ease of deployment, instant availability and improved quality, chatbots will become more and more common to manage customer service queries and to make intelligent purchase recommendations. Alongside having the technology available, retailers now also have a significant amount of data to power AI and deliver personalized, customized and localized experiences to customers. This will be able to answer to the demands of customers for better, faster and personalized experiences.
Thirdly, the rise of the conscious customer will continue as consumers base their buying decisions on many factors beyond price. Customers are demanding transparency as they take an increased interest in the ethical practices of the brands they buy from. They need to stand for something and reflect that message consistently throughout the entire business from senior leadership through to front line staff. For example, research from YouGov and the Global Poverty have shown that many customers are willing to pay more for a product if there are guarantee that workers were being paid fairly and working in safe conditions.
Fourthly, the retail world we were promised is now here – it has changed and will continue to impact the path to purchase. This is the consequence of significant behavioral shifts over the last few years. New technologies have put the power in the customers’ hands. With instant messaging applications, instant gratification has had a deep impact on customer expectation. Brands that can offer immediacy, instant gratification, personalization, authenticity and accessibility will win.
Lastly, a tale of two hemispheres is playing out as traditional and non-traditional retailers expand businesses and services. The juxtaposition between what is happening in the West and the East will dominate the retail landscape. China has developed a unique innovation ecosystem that has resulted in a revolutionary approach on a mass scale. Already today, more Chinese consumers use mobile phones to access the internet than those in America, Brazil and Indonesia combined. About half of China’s online sales take place via mobile, compared to barely a third in the US. In China, users can shop and pay within the apps. Advances in the East could be an indication of how retail will change in the West.
As the global consumer and retail industry is being transformed by three revolutions at once –geographic/geopolitical, demographic and technological – the tools, strategies and technologies required to be successful in this new world are available, and it’s up to retailers to choose the right tools from the toolbox in order to grow their business.
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