This article is part of CMO.com’s November series about commerce and consumerism. Click here for more.
Retailers are hard at work deploying their holiday shopping strategies amid an industry unsettled by significant demographic, economic, and technological shakeups.
But wait! There’s more at play.
Consumers are shaking things up, too. Their perceptions, expectations, and, ultimately, behaviors are giving way to new shopping trends that retailers must recognize and be prepared to respond to.
Following are six developments that industry leaders suggest should be top of mind, now and for the year ahead.
1. Membership Is The New Loyalty
Many retailers are coming to realize that a key competitive differentiator going forward will be increasingly granular and precise customer data—which many still lack. While loyalty programs give companies the ability to collect intelligence on their customers, it might not be enough.
Paid membership programs, such as Amazon’s Prime or Costco’s programs, could be the answer. “The current loyalty program formats that most retailers are running really don’t give them access to the level of data they need to be effective,” said Douglas Stephens, retail futurist and author of “Reengineering Retail: The Future of Selling in a Post Digital World.”
Loyalty programs are a dime a dozen, but if you can get consumers to pay for membership, “you have a true commitment,” Stephens told CMO.com. “And consumers are much more inclined to share their behavior and data when they’ve made a commitment.”
An effective paid loyalty program, of course, requires that brands offer consumers something worthy of the annual fee—and that will look different for different companies. Nearly every retailer can find some membership angle to work, said Stephens, whether it’s providing access to new products or events, preferred pricing, or VIP service.
Bed Bath and Beyond opened up its Beyond+ membership program to all consumers in October. Retail futurist Doug Stephens said he expects more retailers to follow suit in 2018.
2. All Mobile Contact Matters
Adobe Digital Insights (ADI) predicts that, for the first time, the majority of visits to retailer websites this holiday season will come from mobile devices—specifically smartphones.
But mobile will have an impact far beyond December, and it’s not just mobile-enabled sales that retailers should focus on, either. High-growth companies see 23% more smartphone visits period, an indication that focusing on that mobile touch point overall leads to greater revenues.
“First of all, retailers have to be on the mobile device,” said ADI director Taylor Schreiner. “They also have to be ready for whatever part of the customer journey consumers want to execute on their phones. They need to think about mobile not just as a place where transactions occur, but a place to serve customers stock information, pricing information, and detailed comparison information.”
Because consumers tend to spend more money per visit on their desktops, some retailers tend to place more attention and investment in that experience. But that would be a mistake.
“Mobile is an important part of the customer journey, and retailers need to be there with consumers at every point leading up to the actual sale,” Schreiner said. “If you’re not growing mobile, you’re not growing.”
3. Omnipresence Trumps Omnichannel
While the vast majority of retailers are still trying to figure out how to offer a consistent customer experience across channels, companies such as Google and Amazon are harnessing their intelligent assistant technology to integrate themselves into every aspect of an individual’s life. Amazon’s Alexa, for example, is now embedded into non-Amazon devices, including smart home hubs, automobiles, bank interfaces, and even pizza delivery apps.
“We are moving toward a reality where we have a digital assistant with us at every moment,” Stephens said. “That goes well beyond omnichannel to the notion of omnipresence.”
More signs of the times: Sears is building Alexa-enabled Kenmore appliances, and Walmart recently partnered with Google to offer voice-based shopping. “We will see more and more retailers recognizing that Amazon is changing the nature of the game once again,” Stephens said.
“Our job at Walmart isn’t only about saving our customers money, but also about making shopping faster and easier,” said Marc Lore, president and CEO of Walmart U.S. eCommerce, in announcing the Google partnership.
4. The Rise Of Personalization Ecosystems
The impact of increasingly intelligent assistants from the digital giants points to a bigger shift ahead for retail and consumer brands.
“In order to compete, retailers must consider themselves data and technology companies first and foremost,” Stephens said. “A greater portion of our purchase behavior is going to be transported over to technology, whether that’s an in-home digital assistant, a smart TV, or a connected car.”
Advanced data and analytics capabilities will be required to deliver the relevant and customized customer experiences that shoppers now demand. “What’s notable is that those expectations extend from high-consideration items in the fashion world to low-consideration items in the grocery space,” said Jerry Wolfe, senior adviser in Alix Partners’ digital practice.
Product manufacturers and sellers will need to collaborate in new ways with each other and other strategic partners in the consumer technology space—sharing, analyzing, and acting on customer data. The focus will be on solving problems, not pushing products.
“Today’s customers are tapping multiple devices and channels to research, purchase, ask questions, return merchandise, post reviews, and give feedback. This constant conversation with the brand, and the different expectations it creates, looks and feels a lot more like a relationship than a simple transaction,” said Kristi Knight, CMO at InMoment.
Looking ahead, brands will need to think of themselves as service providers at the ready for consumers. It’s a tall order, but some companies are leading the way. CPG makers such as Kraft, Kellogg’s, and Campbell’s are mining data in their massive registered consumer databases to initiate more in-depth conversations with customers and provide solutions to their needs, Wolfe told CMO.com.
“It sounds pretty basic, but it’s a really powerful thing, and what sits behind it are advanced analytic capabilities required to tailor and refine individual messages,” he said.
Likewise, in the fitness space, Nike, Under Armour, and Adidas are harnessing app, web, and sensor data from fitness trackers and performance apparel to help consumers manage lifestyle and fitness goals in a one-to-one way. In the grocery space, Kroger, WalMart, and Amazon are offering customized capabilities, including shopping list creation, personal shopping, and delivery. White-goods manufacturers, including Samsung, Whirlpool, and Bosch, are integrating customer data and technology embedded in their products to help customers manage their households.
“There are a range of options for what’s possible, and we’ll continue to see those evolve and scale in the year ahead,” Wolfe said. “The ultimate hybrid is where we’ll see these different entities interoperating with each other to be useful to consumers.”
5. Customer Care Gets Social
If a consumer brand or retailer messes up this holiday season—either on a large scale or by disappointing one little boy on Christmas day—chances are social media will be, if not the first, certainly the most powerful channel of customer complaint.
As a result, “social media is no longer just a ‘nice-to-have’ in a retailer’s overall strategy like it was in the past,” said Andrew Caravella, vice president of strategy and brand engagement at Sprout Social. “It’s now a vital element of not only marketing, but also customer service.”
In fact, social media is second only to in-person channels as the most popular channel for customer issues—and the No. 1 choice for Millennials, according to Sprout Social’s Q3 2017 analysis.
Of the 46% of consumers that used social to share disappointing experiences with brands, more than half (55%) were looking for a resolution or response from the company. Spout Social’s findings showed that CPG and retail were the two least effective sectors in their social media customer-service strategies.
“While every major retailer has a call center or hotline, brands that are truly taking care of their customers are building customer support teams that are just as responsive on social media,” Caravella told CMO.com. The ideal model is one that can deliver one-on-one conversations that quickly address a customer’s questions or issues, often within public view.
With the volume of customer-service requests that retailers are experiencing on social today, it’s crucial to invest in human and technology resources for real-time support. “Retail brands that aren’t able to keep up with the influx in social media callouts will suffer the consequences,” Caravella said.
Indeed, top-notch responsiveness can’t be overstated.
“All feedback, positive and negative, should be addressed transparently so that the individual and the larger audience witness the process firsthand,” InMoment’s Knight added. “Did the customer complain about the quality of the product, timeliness of its delivery, or a poor interaction with an employee? In any case, the concern should be seen as a chance to improve the specific experience for this customer—and future ones.”
6. Shoppers Will Spend More Money But Less Time
While holiday spending is expected to jump 13.8% this holiday season to $107.4 billion, according to ADI, website visits are expected to increase just 6%. That’s a big signal that could get lost in the good news of revenue growth. Consumers are buying more—and buying more online—but they are spending less time on digital channels to do so.
“They’re trying to buy more—faster,” Schreiner said. “They want to get to that transaction quicker and buy more in that one transaction.”
In the same way it was seen as a hassle to have to go from physical location to physical location to make purchases, consumers are less eager to hop from digital store to digital store. “It seems to be a lower barrier, but it can be truly irritating to consumers,” Schreiner explained. “They see the switching costs of going to another retailer as big.”
This trend will tend to favor large retailers with big selections available via a single checkout. However, there is an opportunity ahead for smaller niche players that truly understand their customers. Retailers in areas such as pets or jewelry are figuring out a way to delight customers in a way that is even more valuable to individuals than the single check-out advantage of the large retailer, Schreiner said.