Following nearly two years of headwinds, retail companies must evolve in order to better serve shoppers whose values and priorities have changed. That’s according to new guidance from digital consultancy Publicis Sapient, which last week released a report designed to push retail forward into an era of increased sales, better margins and customer satisfaction.
“As retailers adapt to changing customer behaviors and strive for transformational growth, it is critical for them to consider how they incorporate new customer needs and expectations into their current business models,” Sudip Mazumder, North America retail industry lead for the Boston-based company, said.
Publicis Sapient’s 2022 Retail Guide to Next report, developed in collaboration with McGuire Research, was based on an online survey of 1,000 shoppers across France, Sweden, the U.S. and U.K., as well as a global questionnaire sent to 9,300 consumers in those locales and in Denmark, Germany, Australia, Canada, Hong Kong, Thailand, Singapore and the United Arab Emirates.
“In 2022, retailers must continue to reimagine their businesses for the new age of retail,” Mazumder added, noting that they must augment in-store experiences by integrating online and omnichannel capabilities, learn to monetize data effectively, invest in financial services products, and lessen the cost of returns.
Blending e-commerce and physical retail
During the pandemic, shoppers have learned to rely on e-commerce to obtain goods of all kinds—and their dependence on digital is not likely to wane even as the world inches back toward normalcy. In fact, the surge in online shopping has changed expectations and the role of physical stores, Publicis Sapient said.
Still, 52 percent of consumer survey respondents said they plan to make the majority of their department store purchases in physical stores this holiday season—and Publicis Sapient believes brick-and-mortar offers the best venue for consumers to truly experience a brand. Because of this, integrating online and offline experiences will be “critical to success” heading into 2022, as multiple touchpoints are currently impacting consumers’ purchasing decisions.
Data showed that 55 percent are apt to visit a physical store to assess a product before ultimately purchasing it online. Even when an interaction doesn’t result in a purchase in the moment, the in-store data can be put to good use, Publicis Sapient said. “By seamlessly integrating data across web, mobile, storefront and inventory channels, retailers can digitally expand their physical footprint while providing the connected, personalized experiences shoppers want,” it added.
Using data to drive consumer experience
Data should be monetized to drive brand engagement and sales, as many consumers actually want insights to be used to provide them with a more streamlined experience, it said.
Thirty-seven percent of respondents who shop online said they wanted targeted offers based off of their historical spending, while 31 percent desired personalized content to help guide them in their shopping journeys. While 60 percent of respondents said they prefer to remain anonymous online, 45 percent said they currently feel “in control” of their personal information and are content with the way it’s used.
Still, just 40 percent of retailers Publicis Sapient surveyed in 2020 said they were actively harnessing data to create a “customer genome” based on users transactions, on-site behavior and impressions. Half of those polled said they used data to geolocate where consumers are transacting—a basic data function—and 55 percent said they were analyzing data from previous transactions to try and predict customer intent.
“Retailers must break down data silos within their organizations to gain a clearer view and better understanding of their customers’ preferences,” Publicis Sapient said. Insights from point-of-sale transactions, web traffic, email engagement and media impressions can help retailers build more targeted campaigns and products, while customizing offers for specific consumers.
Examples include loyalty programs and transactional insights, which can help retailers tailor personalized credit card offers, auto-replenishment or subscription services that keep the shopper engaged and coming back to a brand over and over again.
Leveraging financial services
Retailers can also play into shoppers’ desire for convenience and personalized service by furthering their relationships with financial services providers and those that offer installment payment plans. By leveraging tools like PayPal, Afterpay, Klarna, Quadpay and Affirm, “they’re creating a new ecosystem that serves a large demographic that they currently cater to in retailing,” Publicis Sapient said. Digital wallets and banking tools can help shoppers that are under-banked shop online, it added.
The rise in online shopping has led to an inevitable rise in returns, however—and that’s something retailers need to address in order for the channel to remain effective and profitable. The National Retail Federation (NRF) reported that in 2020, $428 billion-worth of merchandise was returned, amounting to about 10.6 percent of total retail sales in the U.S. That number more than doubled from the year prior, with $102 billion attributed to online returns alone.
The industry has a ways to go, Publicis Sapient said, noting that only 38 percent of shoppers are satisfied with the ability to try on products virtually. Knowing that they may have to ship products back to retailers because of fit or quality issues, 46 percent said they are more likely to shop with brands that offer easy ways to manage returns.
Rather than just optimizing the returns process, retailers should get ahead of the issue by using data to improve the browsing and buying process and drive efficiency, Publicis Sapient said. Insights about which products are being returned and why can be used to prompt shoppers to make decisions that are right for them in the first place. For example, feedback gleaned from consumers on the way that a certain product fits can be used to guide others in sizing up, down, or purchasing another product altogether.
Not addressing the issue can significantly impact a brand’s bottom line—and the environment. The cost of shipping items back to a retailer or warehouse eats into profits, especially when shoppers expect return shipping to be both free and easy. Many items are unable to be resold at their original price because by the time they are restocked, they’re out of season, while unsalable product ends up in a landfill.
“The returns process is critical to the overall customer experience, so if you focus only on minimizing costs you could create a big issue from a sales perspective,” said Guy Elliott, North American retail lead for Publicis Sapient. “Retailers must balance cost impact with sales impact and brand impact as they’re thinking about optimizing the return process.”