Despite their efforts to get closer to customers, retailers still miss the mark on prioritizing what’s important to consumers, according to new research from First Insight. That gap could prove detrimental to merchants already contending with economic volatility and an uncertain retail landscape.
Nowhere is that disconnect more evident than in the smart speaker arena, First Insight CEO Greg Petro told attendees at the WWD Apparel + Retail CEO Summit in New York City on Oct. 30. Consumer adoption of the voice-activated devices grew 100 percent year-over-year from 2017, and the gadgets live in 42 percent of American homes. Just 2 percent of retail leaders described smart speakers as having the most significant impact on their business, according to the newly published Pricing Disconnect Between Senior Retail Leaders and Consumers report, and that pales in comparison to the 80 percent preoccupied instead with mobile. But Petro pointed out the market for digital voice assistant-powered smart speakers looks very much like the mobile landscape did a decade ago, and 2015 was the first year that the number of cellular phones eclipsed the global population.
In short, ignoring the fledgling voice market is short-sighted—especially considering that 59 percent of smart speaker owners use the devices to research product pricing. That’s a notable climb from the 49 percent who claimed the same behavior in a survey a year earlier.
These searches are great for those with leading brand recognition, Petro said, but for everyone else, voice queries present a bit of a conundrum. There’s an algorithm powering those searches behind the scenes and it can deliver only so many options to listening, impressionable consumers.
“There are implications that you need to think about and get ahead of as it’s related to technology adoption,” he added.
Where else are retailers and brands out of step with the shoppers who line their coffers? Where else but: price.
The U.S.-China trade turmoil, and four tranches of tariffs announced so far, have had what could be a long-term, sustained impact. Petro shared anecdotally that many companies have expressed plans to adjust their sourcing strategies, but given the West’s overreliance on China for raw materials and manufacturing, an increase in prices is all but inevitable. What’s more, equity analysts are suggesting this increase is not just for the short term, he added.
Whether it’s accurate or not, twice as many consumers as retailers believe online prices are creeping higher, the First Insight report revealed. “Perception becomes reality because she’s going to transact based on what she perceives in the marketplace,” Petro explained. That often contributes to the peaks and valleys pockmarking the stock market.
Retailers and consumers cited product quality as the most important decision-making lever in nearly equal numbers, 54 percent to 51 percent, respectively. However, just 20 percent of retailers felt low prices were an influential consideration, compared with 38 percent of consumers for whom low prices are top of mind.
“That 20 percent is growing at such a fast rate that it’s going to surpass product quality as the No. 1 decision-making factor, while again retailers are looking at it from a 20 percent perspective,” Petro warned.
So what can retailers do to remain competitive today? Companies should educate themselves with new skills, embrace new tech so that consumers aren’t always one step ahead and ensure that information can flow unimpeded between teams. No more silos, Petro said.
“Transparency of information interdepartmentally is going to be critically important to understanding how to respond to the consumer,” he concluded.