With consumer spending declining, 2023 looks set to be a tough year for retailers (and consumers), especially as the lines between physical and digital commerce become increasingly opaque and complicated. As traditional, high-street, bricks-and-mortar brands try to maintain a lean and effective presence, over what many financial and retail analysts agree is likely to be a tricky 12 months ahead, here are three key areas they must navigate effectively if they are to thrive in 2023.
A mirror on the popular zeitgeist
Shoppers, especially those in Gen Z, are voting with their pounds, euros and dollars. Rather than buying on a whim, this influential group of consumers wants to support brands that align with their values. 51% of consumers surveyed in Manhattan’s recent research reported environmental/sustainability efforts were important or top considerations when choosing where and with whom to shop.
While retailers are reporting differing business priorities for the coming year, creating a more sustainable and environmentally aware supply chain ranked second on their lists at 26%, book-ended by focusing on customer service solutions at 28% in first, and offering customers the choice of couriers to fulfil their orders at 23%, in third.
“Whereas bricks & mortar spaces were largely seen as liabilities over the last decade, the perception of the physical store has been fundamentally changed by the impact of the pandemic,” commented Craig Summers, managing director, UK & Ireland at Manhattan Associates. “Today’s retailers are revaluating the role of their stores, recognising their added value as strategic hubs for online sales, not least as a fulfilment hub for click & collect, returns, endless aisles, same-day delivery and more.
“While digitalisation and frictionless shopping were certainly two of the big winners from the pandemic, the data suggests that we should not be too quick to discount the importance of human interaction or the role the physical store will play in the era of digital commerce,” Summers added.
A single view of everything, everywhere
Consumers today expect to shop on their own terms with 80% considering home delivery to be the most important delivery service when shopping online, followed by 34% wanting click & collect, and 19% seeing contactless/kerbside pickup as their preferred option. This finding highlights the importance of retailers offering consumers a choice when it comes to fulfilment options, and the need for inventory transparency.
“It should be that if you’ve got it (regardless of where in your network it might actually be), you should be able to sell it, and 74% of surveyed retailers said that they provide shop assistants with handheld devices that show a consolidated view of inventory across the entire retail network. That said, maintaining a single view of inventory and keeping those all important customer promises just got a whole lot more complicated in an increasingly hybrid retail landscape,” Summers continued.
While the vast majority of surveyed retailers stated that they have a level of interconnection between their online and in-store functions (83%), only around half are offering buy in-store and return online (50%), or buy online and return in-store (46%). Interestingly, only 6% of retailers believed that they had an accurate overview of their inventory across their entire business (in-store and online) 100% of the time. These figures clearly bear out a disconnect between what retailer capabilities and what consumers are increasingly demanding as part of a hybrid shopping experience.
Reimagining retail
The global retail industry has grown accustomed to disruption. Over the past decade, it has witnessed seismic structural shifts as it transitioned into the digital era; the pandemic thrust billions of consumers into a more digital world; and more recently, pressures on consumer purses have seen shopping habits upended still further.
Industry headwinds and uncontrollable macro-economic factors are forcing a period of evolution and reinvention for brands as physical and digital retail spaces bleed into one.
“With 83% of retailers now claiming they operate a level of interconnection between their online and in-store functions, the crucial task ahead, certainly in the short-term given global economic pressures, will be finding new ways for the physical and online presence to coexist.
“As the retail industry braces for the anticipated headwinds of 2023, the ability to navigate disruption, while aligning the physical and digital customer experience will become table stakes: the technologies that allow retailers to fulfil in-store and online orders in an agile, sustainable and profitable fashion will no longer be seen as a ‘nice to have’, but rather as a necessity,” Summers finished.
