The GDS Group summit season in H1 2023 kicked off with a bang, and the North American Retail Summit was a resounding success. We had over 100 delegates and speakers join us across three days, and the combined delegation had a truly incredible wealth of knowledge and experience on the shifts happening in this space. Their collective project budget was over $522 million, and the average project spend was a whopping $15.8 million. So, here we dissect all the latest trends, future predictions, and hot takes in retail from those three days.
First up, we talked a lot about getting creative with customer experience. In today’s world, customer expectations are shaped by best-in-class experiences across all industries. As a result, customers expect nothing less than a great service. In fact, 83% of consumers cite good customer service as the most important factor—outside of price and product—when deciding what to buy.
Customers anticipate this level of service across every touchpoint, but elevated expectations make differentiation in customer experience both more important and harder to achieve. According to a recent TalkDesk report, 33% of retailers provide interactive, ongoing engagement with their customers across interconnected channels, while an additional 25% of retailers plan to go even further by delivering these experiences through next-gen channels, like metaverse and virtual reality, just two years from now.
And when it comes to boosting loyalty, Jess Blount, the VP of Loyalty and Engagement at National Vision explains, “Loyalty is more than just a programme, it’s a feeling, and it takes time to build.” One way to do this is investing in in-store experiences. And a recent Shopify report found that 40% of retailers want to train staff to interact with customers using technology, to improve the in-store experience.
Speaking of multi-channel experiences, our second theme was omnichannel shopping experiences. We are entering the world of “phygital”—physical and digital at the same time, where there is not a physical, nor digital world in retail, but rather a completely connected one. Harvard Business Review observed the shopping behaviours of 46,000 consumers and found that 73% of consumers do prefer shopping through multiple channels. To shed some light on this, only 7% of consumers shop exclusively online, and 20% of them shop only in-store. So, able to maximize the value of each experience, across both platforms, is incredibly important.
In recent years, retailers have aspired to better serve customers by shifting from solving their service needs at scale, to understanding and addressing the context behind each issue. Xingchu Liu, SVP of Enterprise Data Analytics and Technology at Macy’s explains, “The data shows we need to build broader and deeper customer relationships.” As a result, retailers are prioritizing bridging disjointed channels and processes and delivering a seamless, omnichannel service. Research shows on average, companies that successfully maintain omnichannel customer engagement retain around 89% of their customers. And companies that don’t only retain around 39%.
The Power of Content
We also discussed unlocking the power of your best content. Customers want relevant content at a time that suits them, while teams want the flexibility to deliver tailored experiences. As the demands for hyper-personalised touchpoints increase, the need for a unified approach to customer experience grows. Shopify’s consumer trends report shows that 54% of consumers say over the next year, they’re likely to look at a product online and buy it in-store, and almost equally, 53% of shoppers are likely to look at a product in-store and buy it online. As Cecilia Zalazar, VP of Creative at Bluestem Brands explains, “You must meet customers where they are in different channels and different formats. Think outside the box like: blogs, podcasts, magazines, clubs, location rentals, delivery services.”
Then when looking at retail media, even in a challenging macroeconomic environment, US marketing dollars are shifting towards it, in what Insider Intelligence are calling ‘The third wave of digital advertising’. While it will represent only about 16% of the US digital ad market this year, spending on retail media will continue to grow by double-digit percentages through 2024, when it is forecast to top $55 billion. What’s more, retail media was the fastest-growing digital ad channel worldwide in Q3 2022, with spend increasing 45% versus a year ago. With all of this though, it means it’s becoming more difficult to compete and ensure content can stand out among the noise.
It was surprising to learn that a whopping 79% of retailers do not capture data about customer sentiment. And for those that do have those insights, a recent IDC survey revealed 68% of data available goes unleveraged. A truly staggering amount. But at least retail executives are self-aware because nearly 50% of brands say unifying online and in-store operations and data will be their biggest challenge over the next year. And some advice on how to execute this successfully from Scott Toborg, VP Global Data Science and Analytics at Nu Skin is, “Don’t think you can just hire a data scientist and then you’ve solved a business problem. It takes a whole cross functional team to make it happen and that’s a small piece of it.”
Lastly we looked at sustainability, a crucial topic in the retail industry. The demand for sustainable goods and services is becoming increasingly important in US consumers’ purchasing decisions. A 2022 sustainability study by Simon-Kucher & Partners found 65% of US buyers consider sustainability when making purchases, a 14% increase from a year ago. This shift in consumer behaviour coincides with a uptick in sentiment toward sustainability over the past 12 months, as 73% of US consumers view environmental sustainability to be ‘as important’ or ‘more important’ to them than a year ago.
But Shopify’s Consumer Trends Report revealed that only 53% of retailers made sustainability one of their top priorities for 2022, including improving the manufacturing process and using more sustainable packaging. But action can’t come quick enough for customers, business models and of course the planet!
Like what you’ve read? Why not join us in that conversation! To learn more about the future of retail, and why we should take pride in it, listen to our podcast with author, Ron Thurston, here.
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