This year has been a rollercoaster for the retail industry.
During the first three months of COVID-19 lockdown, we saw a downturn in retail sales across most categories. However, this was rapidly followed by a surge in consumer spending from July, which has maintained through to Q3.
While confidence has stabilised, habits have changed.
Basket size generally has decreased, with consumers tending to purchase lower-value feel-good items or ‘treats’.
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So while there are downturns in some categories and price brackets, there are bright spots, as customers continue to treat themselves after a turbulent year.
Enter the term ‘shoptimism’ — something I think will continue into 2021.
Shoptimism describes the low-value, feel-good products consumers are purchasing, where the experience of the purchase is bringing them joy, as well as the product itself.
And it represents a great opportunity for brands, particularly those with price points under $100.
Phones in hand, pre-research is on the up
Consumers are now much more considered in their purchases.
Across the board, they have demonstrated a new habit of thorough pre-research, which has meant that while foot traffic in stores is down, conversion to purchase in-store has increased.
This presents a unique opportunity for retailers to provide a more experiential online interaction to try to maintain an emotional and engaged connection through the digital journey.
By providing bespoke online experiences that recognise the difference between a brand new customer with a returning customer, and designing customer-friendly websites, especially on mobile, customer confidence with online purchases will be fostered.
Notably, 73% of online sales will be conducted via mobile by the end of 2021, so thinking about designing a seamless mobile experience for users is key.
Digital personalisation continues
Digital personalisation continues to be a growing trend in retail, and will continue into 2021.
We’ve seen the fashion and beauty sectors lead the way here, enabling shoppers to try new products online before making an offline purchase.
This year, Snapchat launched a try-on ‘Lens with Guccil, allowing its young shoptimistic audience to try on Gucci sneakers in augmented reality.
The company has also launched partnerships with Ralph Lauren and Jordan brands, allowing users to dress their Bitmojis in new product lines.
This is a great way to deliver high brand engagement from the palm of the consumer’s hands.
One challenge faced by retailers this year, as they pivot more heavily to online, is maintaining an emotional connection with customers.
So brands that invest in bridging the gap between the in-store experience and the online one, with AR or other experiences, will continue to see growth.
Younger audiences are the most shoptimistic
While generation Z has been the hardest hit during the pandemic, in terms of income and job security, these young Australians have also expressed optimism about the future, with recent research showing they’re the most likely to be travelling overseas when restrictions lift.
The rise in usage of post-payment platforms is up to triple in some sectors, suggesting gen Z is still shopping, however, they are being more considered about how they will pay, choosing to spread the cost and risk.
As well as being at the forefront of shoptimism, with a rise in lower-value purchases, gen Z has been the most demanding in terms of experiential retail, and is looking for brands to go the extra mile and entertain them during their shopping journey.
There is a strong appetite for digital experiential engagements. For example, on Snapchat, over 75% of daily active users engage with AR every day.
Time is of utmost importance for this cohort, with two-in-three consumers saying it’s more important for retailers to save them time.
The increased usage of e-commerce and m-commerce, including subscription services and delivery services, will continue as part of everyday life for gen Z and millennials.
E-commerce and m-commerce are here to stay
The impact of lockdown on retail has accelerated Australia’s e-commerce industry by about three years.
Online sales now make up approximately 15% of the retail market, up from 9% pre-COIVD-19. This is only expected to grow, with forecasts citing 25% by 2025.
Consumers have now grown accustomed to convenience, and being able to purchase what they want, whenever they want.
This has been seen with the growth of click-and-collect, with one-in-five consumers having utilised this service in the last month.
I expect to see the trends of click-and-collect and ordering online for in-store pickup or to-your-car drop-off to continue, as customers embrace the frictionless experience.
Brands can capitalise on these changes in consumer behaviour by investing in online experiences, similar to how retailers previously invested in the traditional retail experience to engender an emotional connection.
Consumers are now spending in excess of four hours a day on their smartphones. They are now more educated than ever. And almost 90% of purchases are pre-researched on a device.
By focusing both on the online shopping experience and building an emotional connection with pre-research functionality, retailers can be sure to capture consumers who are intending to complete a sale online, and those who are visiting the online store before they go in-store.
Shoptimism is here to stay. And it could be your greatest opportunity for 2021.