Being a retailer in 2022 is hard. The yawning chasm between what retail was like pre-pandemic and what it is like now couldn’t be wider and for many retailers they are having to fight a battle to stay relevant on multiple fronts.
As today’s news shows, there are a raft of challenges facing retail: sustainability, environmentally-friendly packaging, increasing cross-border sales and, perhaps biggest of all, the generation of consumers that shape today and future retail are not like any consumers that have come before them.
Gen Z – or Zoomers – are the young cohort of 16 to 24 year olds that are already making retail look very different and, crucially, are the consumers that will continue to make it different for the rest of this decade.
These guys are wedded to social media, don’t tend to have bank accounts and don’t interact with anything the same way that all previous generations did. They are purely digital – probably mobile – natives and are looking to shop in very specific, omni-channel and hybrid ways.
To meet their needs retailers need to be mobile-first, flexible about how they take payments – mobile wallets, anyone? – and need to reach them through engaging content on social media, mainly TikTok. They also need to take the metaverse seriously.
The other change that these youngsters have wrought on retail has been an increasing focus on sustainability and ethics. This has been understood by retailers for some time, but it is spreading. Not only are Zoomers demanding it, but so too are consumers from other generations. In fact, a recent survey finds that more than half of consumers plan to stop buying goods that come in non-sustainable packaging in the next three years. A mighty 67% are already trying to buy more sustainably.
Building sustainability credentials has been on the radar of retailers since pre-pandemic times, but there has been a marked shift in consumer attitude towards it in 2020 and 2021. While most retailers get this, many are still struggling to make it happen. A separate study this week finds that fewer than 20% of retailers are likely to meet their environmental pledges unless they take drastic and rapid action ASAP.
Another trend among shoppers that younger consumers have driven – but which is being embraced by all – is that of cross-border ecommerce. Despite Brexit’s best efforts, consumers everywhere are borderless when they shop online, looking for the things they want at the price they like regardless of where they originate. This isn’t just a UK thing, this is global and gives a taste of what future retail will look like – though how the shipping and packaging for long journeys squares with consumer demand for sustainable packaging remains to be seen.
And then there is fraud. For many retailers, especially in fashion and apparel, the pandemic has proved to be an online sales bonanza. While this has been good news for retailers, it has come at a price: fraud. As online shopping has blossomed, so has cybercrime and a recent report suggests that false item-not-received (INR) claims and claims that a perfectly good item arrived damaged or not as described, increased by more than 100% in the first half of 2021 compared to 2020.
Anyone of these challenges for retailers would, in the ‘old days’, be seen as significant shifts that would dominate the industry’s thinking for a year. Right now all of them are coming to bear at once, and retailers are struggling to navigate their way through. The crumb of comfort in these hard times is that the industry is rapidly adapting and already retail is looking very different to how it did two years ago and for those that have pivoted, the rewards are great.
