The Future of Retail: Hyper-convenience, connectivity and personalization

In the last few weeks that separate us from the end of the year, retailers around the world are already busy optimizing their strategies for next year and trying to figure out which ones to bet on. Warren Mills, Yahoo's Platform Client Lead, shared his opinion. The pandemic has accelerated the trends already underway in the retail sector, causing e-commerce to explode and, consequently, the digital transformation.

Leading retailers are using the experience gained over the past 18 months to implement changes to accelerate a digital-first, customer-centric strategy that leverages data and insights to understand their audience behavior, and then make the best online experiences available.

Innovation, The Driver of Digital Experience for Retail

The increase in stores with a 5G connection increases hyper-connectivity that allows retailers to have a better understanding of their warehouse, customers and, more generally, the trends that are affecting the sector.

A recent Yahoo survey of 2,000 adults in the UK reveals that 50% of Gen Z are interested in retailers who are able to deliver more engaging shopping experiences, such as personalized locations or interactive in-store experiences -  ( as we see it being even higher for the Italian Gen Z where 63% say they are interested in this type of experience) .

Dynamic floors are now able to measure the passage of customers almost in real time, detecting the points of the store where shoppers linger the most, thus helping retailers to maximize product positioning.

We are also seeing the rise of personalized and intelligent shopping: customers, by bringing their phones closer to the shelves, can access product information, ratings and reviews on items on display using augmented reality.

These are excellent examples of the convergence taking place between the world of digital retail and the physical store, a convergence that is creating new opportunities for retailers to make the entire customer journey even more engaging.

The First Part of Retail Data: The New Media Commodity

The customer experience is the beating heart through which brands have the opportunity to understand their customers. We know that consumers expect a high level of personalization and a smooth and enjoyable shopping experience.

For sure, with the growth of e-commerce, competition will become increasingly fierce, but retailers and brands that have built a solid relationship with their customers, and can leverage their first-party data, will be able to face 2022 with a something extra.

We Live in a World Dominated by Hyper-Connivence

Customers respond positively to companies offering hyper-convenience, which translates into four main aspects:  

1. What I want
2. When I want
3. As I want
4. Where I want

The what and when are reflected in the huge boom in online shopping over the past two years that has taken over all generations. Despite the easing of restrictions, more than half of UK adults say they shop more online now than before the pandemic. (This figure is close to the Italian one where 47% of the population says they buy more online, compared to before the pandemic).

As for the "how" you want to shop, we find a confirmation when we analyze the rise of buy now, pay later (BNPL) services such as Klarna. Our figures show growth of over 1,000% over the past two years, with over a quarter of UK consumers having used a BNPL service and 39% looking to use these services for some of their Christmas purchases. A growth that is destined to continue. ( Also in Italy, one in four Italians claims to have used BNPL forms of payment).

Where I want to buy concerns the flexible delivery options now offered by all operators in this sector to align with the new hybrid working models - whether it is click and collect, or deliveries to safe places / lockers or alternative addresses to that principal.

The flip side of this phenomenon is the increase in product return volumes: our data show a 100% increase in return volumes year after year.

This is where immersive technology such as AR / VR comes into play to solve the problem of returns and, more importantly, to transform the online from a purely transactional space characterized by images and text into a place of connection between the experience . digital and in-store.  

Looking to the future, it is clear that purchasing behaviors will evolve further, making the purchase path even more complex and fragmented. Retailers and brands can get closer to their customers through careful data analysis, identifying trends and moving ahead of the buying path curve, and partnering with leading technology providers to deliver memorable experiences.