Since the dot-com boom, retail has seen many evolutions, revolutions and upheavals as businesses embraced new digital possibilities. Now, in a post-pandemic world of metaverses, omnichannel shopping and augmented reality, retail is changing again.
It’s an exciting time to be in the sector but there are also plenty of challenges, the most pressing being keeping up with evolving competitors and new customer expectations.
It’s a new era of shopping. Let’s take a look at some of these innovations.
1. The rise of the pure play store
As physical interactions became limited, shopping online became normalized. We’ve spent years now ordering products based almost entirely on images.
It’s no surprise that consumers were keen to return to holding, touching, and smelling products as soon as they were able.1 In fact, 75% of consumers still visited brick and mortar retailers during the pandemic, despite the risks.2 Pandemic restrictions revealed just how important tactile, face-to-face experiences can be to sales and consumer satisfaction.3
These factors may have influenced the rapid growth of a new kind of shopping experience: the laser-focused pure play store.
Recognizing the demand for in-person experiences – and the fact that around 45% of consumers report buying a product online after seeing it in a physical store3 – some digital-only businesses have made investments in ‘experiential’ spaces.
For example, one fitness retailer in the U.K. – known for being previously online only – is creating a major retail space in central London. The company claims this space will help build a sense of community among its consumer-base, offering events, hangouts and workout classes.4
In similar cases, the physical store is less about selling products than it is about lifestyle and community. Physical spaces allow online brands to create new touchpoints in the consumer lifecycle, build stronger relationships and, ultimately, increase brand loyalty and advocacy.
This trend is being seen across the globe. One of the world’s biggest direct sale cosmetics companies has opened its first-ever store: a massive ‘experience center’ in Los Angeles, complete with a makeup bar, lounge area and regular events.5
Such openings could change the way people think about retail in general. Soon, it could be that a visit to a store or showroom becomes a vital touchpoint in the online sales process. Providing online customers with a physical place in which to interact with products could revolutionize the omnichannel customer journey, regardless of the business model.
2. An upgraded checkout experience
We often hear of retailers looking to reduce friction in the shopping experience. And one of the biggest points of friction is the checkout. Change is needed to stay ahead of the curve and keep customer satisfaction up.
Innovating the checkout experience with technology not only has the potential to reduce time to sale but can also add another layer of excitement to the journey.
One way of upgrading the experience is with RFID tags. These inexpensive tags allow stores to better manage stock and give shoppers the ability to check out faster – they can simply place items in an allocated receiver zone and pay.
Some brands, including a major French sports brand, combine this technology with a smartphone app. RFID tags are attached to 85% of the retailer’s items,6 allowing app-users to check out anywhere in-store. In addition to creating a unique experience, the retailer reports seeing a tripling of productivity and a 2.5% increase in revenue.6
RFIDs aren’t the only existing technology being used to reduce friction. The popularity of short-form video content has seen businesses embrace live shoppable video, unlocking exciting new purchasing options and blending entertainment with shopping.
Blurring the lines between the online and in-store experience, Firework is enabling retailers to use the video formats commonly used on social media on their own websites, create short videos, and manage Live Shopping events through which viewers can purchase products instantly. Whether it’s a fashion show that takes place in-store and broadcast online or a cooking skills masterclass, anyone tuning in or attending in person can see products in action and purchase immediately.
It all adds up into a stronger omnichannel experience powered by cutting-edge technology.
3. Retailers are looking beyond retail
In an uncertain world, many retailers have needed to stop relying on single income streams, instead diversifying what they offer.
Over recent years, we’ve seen supermarkets opening banks, cafés selling homewares, and sporting goods stores setting up gyms. Some of these moves have been more obvious than others, yet diversification and innovation provide businesses of all sizes new revenue and engagement opportunities.
In the U.K., two major department stores have recently expanded into new areas, aiming to widen their capabilities, reach new audiences, increase brand loyalty, and optimize their in-store spaces.
One is now offering optometry services7 and is opening a sustainable clothing rental service.8 Meanwhile, the other is looking to turn its unused and less-visited real estate into furnished rental housing, seeking to maximize long-term value.9
Not every retail business will be able to add ‘property development’ to their offering, but the lesson is there for all: diversify to thrive.
4. The line between digital and physical is blurring
If digitalization hit its peak during the pandemic, what comes next may be seen as a true blending of the digital and physical. The digitalization of life offers opportunities to create new revenue streams.
As consumers spend more of their time (and money) within digital worlds, savvy brands are inserting themselves. A global sport brand recently worked with developers of a popular video game to create a digital world in which players can win or purchase virtual clothing for their digital avatar.10
Though the items sold might not exist in the real world, they are important to consumers. Purchasing and using them in-game can reflect brand preference, style, and even social standing.11
This effect might become more visible as the concept of the ‘metaverse’ gains traction among a wider consumer-base. People entering these immersive virtual reality spaces to shop and meet with friends will likely contribute to the virtual economies within them, shopping for ‘cosmetic’ items to reflect their real-world personality. Here, then, is a new opportunity for brands.
To show how perceptions of value and consumer preferences have evolved, look to the recent resale of a digital purse (a 3D model of a real-life bag). The virtual asset was resold within a popular game world for the equivalent of over US$4,000, more than the physical bag is sold for in store.12
The future of omnichannel could include fully-realized digital worlds.
Payments for the future
Whether customers are doing their shopping in-store, online, or in a virtual world, it’s hard to deny that the future of retail looks very different to the past.
But this isn’t something to fear. With the right support, the right plan, and the right partner, retailers can evolve with the times.
Whether it’s enabling smarter payments, or improving the omnichannel experience, speak to Worldpay and see how we can help you progress.
1. Zenou, B (2021), Is Experiential Retail Still Relevant In 2021? Forbes. Available at: https://www.forbes.com/sites/forbesbusinesscouncil/2021/06/04/is-experiential-retail-still-relevant-in-2021/?sh=3119d7e4392c
2. Belpaire, L (2021), 2021 Shopper Study: 3 Key Findings Mid-Market Retailers Should Know. Silverback Strategies. Available at: https://www.silverbackstrategies.com/blog/retail/2021-shopper-study-3-key-findings-mid-market-retailers-should-know/
3. Luxe (2020), Why Digital-Native Luxury Brands Are Opening Physical Stores. Available at: luxury-reports/digital-luxury-ecommerce-brands-open-physical-stores/
4. Rydzek, C (2021), GYMSHARK to Open First Flagship Store on Regent's Street. Available at: https://www.theindustry.fashion/gymshark-to-open-first-flagship-store-on-regents-street/
5. Utroske, D (2020), Omnichannel Upgrade: Avon Opens a First Brick-and-Mortar Beauty Retail Shop in Los Angeles, California. Available at: https://www.cosmeticsdesign.com/Article/2020/10/28/Avon-opens-brick-and-mortar-beauty-store-in-Los-Angeles
6. Adhi, P (2021), RFID’s Renaissance in Retail. McKinsey & Company. Available at: https://www.mckinsey.com/industries/retail/our-insights/rfids-renaissance-in-retail
7. Young, K (2021), M&S Opticians to Roll Out Service to 55 Stores. Available at https://www.aop.org.uk/ot/industry/high-street/2021/11/04/ms-opticians-to-roll-out-service-to-55-stores
8. Marks and Spencer (2021), M&S Launches its First Clothing Rental Trial with Hirestreet. Available at: https://corporate.marksandspencer.com/media/press-releases/5ff7017fc6fe1bc26cb21d12/m-and-s-launches-its-first-clothing-rental-trial-with-hirestreet
9. BBC (2021), John Lewis Plans to Build 10,000 Rental Homes. Available at: https://www.bbc.co.uk/news/business-57712618
10. Nike (2021), Nike Creates NIKELAND on Roblox. Available at: https://news.nike.com/news/five-things-to-know-roblox
11. Howcroft, E. (2021) Crypto fashion: why people pay real money for virtual clothes. Reuters. Available at: https://www.reuters.com/business/finance/crypto-fashion-why-people-pay-real-money-virtual-clothes-2021-08-12/
12. Kelly, D (2021) A Virtual Gucci Bag Sold for More Money on Roblox than the Actual Bag. Hypebeast. Available at: https://hypebeast.com/2021/5/virtual-gucci-bag-roblox-resale