Retail, like all other business sectors, is changing under the pressure of new technologies and the arrival of a new generation of customers. This is reflected in the style of doing business and its profitability. Below we outline 10 key trends that have already taken effect and those that are just gaining momentum.
Retail trends: urgent move to online
Despite the fact that 90% of retail sales today come from traditional stores, retailers are losing ground en masse, while online is growing rapidly. The main reason is that mobile internet penetration is growing. At the same time, less than 20% of global retailers have developed separate mobile applications for their online stores.
Most business players are seeing the positive impact of online sales, with 75% of all retailers expecting online sales to continue to grow (at an increasing rate). Statistics show that retailers who do not invest in e-commerce will soon face serious problems. This is proved by Amazon’s capitalization, the indicator of which is higher than the total figures of all competitors. At the same time, the network continues to grow.
Most business representatives believe that the ideal scenario for development is to have both an offline and an online store. For example, online retail leader Amazon opened its first offline bookstore in 2015 (the giant started with this product), and in December 2016 it opened its first offline supermarket without cash registers. Andrei Trubnikov, founder of Natura Siberica brands, also spoke in an interview with RBC about the fact that it is still important for consumers to touch the product.
Ukrainian and Russian retailers are not lagging behind their foreign colleagues. The founders of the Azbuka Vkusa chain comment that online generates about 7% of profit, and the figure is growing. The average check online is higher than in retail, in Azbuka Vkusa it is 4 times higher. Consumers are replacing a trip to a hypermarket with a purchase on the website, ordering online oversized goods. In Ukraine in 2016, online retail showed growth in dollar terms for the first time since 2014, although it did not reach the figures of 2013.
Online retail market in Ukraine (2012-2016)
Offline retail trends: the importance of consultation
A special feature of the American chain Giant is the presence of its own cooking school. This is a popular trend in the USA, and about 30% of chains have a similar feature. A special feature of Giant, is the presence of the position of a nutritionist, an hour of consultation which costs 20 dollars. However, this is not a net amount, because after purchasing a consultation, a person is given a coupon for a similar amount, which he can spend on purchases at Giant.
Giant’s marketers have also made preparing a healthy menu as easy as possible. There is a device in the sales area that, after scanning the product, offers recipes for preparing the dish. All you have to do is select a key ingredient for a future dish and bring it to the scanner. The computer will analyze the goods and offer recipes. Then there are 2 options: print the text directly in the store or send it to your e-mail.
Retail branding: atmosphere and merchandising are key to success
The specialty of the American grocery chain Trader Joe’s, which belongs to the ALDI conglomerate, is organic and healthy products. Trader Joe’s is a chain of small stores which belong to the “store at home” segment (by American standards). Their peculiarity is a non-banal approach: special goods at reasonable prices. On a small area of 900 meters it is possible to earn 2 million dollars a month.
Image, such as window dressing, helps to achieve success. All posters, price tags and POS materials are drawn by an in-house artist. The supermarkets of the chain are divided into zones, each of which is assigned to a certain part of the world (Trader Giotto’s – Italy, Trader Jasquer’s – France, Arab – Islamic world). The sellers there are dressed in special costumes, and the shop windows are also decorated thematically.
The brand has built itself away from the competition because it has been able to create value that makes customers choose in its favor. The retailer gives the consumer an emotional experience and that’s what it’s worth coming here for.
You can order the development of corporate identity and storefront design in KOLORO. We know how to make a store a magnet for consumers.
Read also: What color to decorate the store: a guide to color perception
Global retail trend: from store to marketplace
It was Amazon that set the fashion for listing other companies’ goods on its site. The company’s profits and market share, which are growing from year to year, have convinced its colleagues to do the same. In Ukraine, the most prominent representative of such a strategy is Rozetka. In Russia, Ozon operates according to this scheme.
The number of marketplaces will continue to grow, but not all stores should turn into a marketplace. For some, a good option may be to establish cooperation with existing marketplaces.
Read also: How Rozetka is turning into Amazon
Trends in commerce: fast delivery
In addition to low prices, speed and convenience of delivery are now important to consumers. Amazon remains the undisputed leader here, and it is very difficult for other retailers to keep up. Amazon Prime now offers free delivery within two days in the United States.
The retailer plans to simplify logistics, and for this purpose the company has patented the construction of a logistics center in the form of a tower. There are no windows in it, but there are plenty of openings for drones. So far, this is only a patent development, not all of them are realized in the future. However, it is a good indication of the company’s development strategy.
B2C trends: fair discounts for the holidays
Mass sales came to us from the West. In America, the discount season begins with Thanksgiving, followed by Black Friday and Cyber Monday, which smoothly flow into Christmas discounts. In Europe and America, the discounts during this period are real. In particular, on Black Friday discounts reach 70-90%.
Alas, this trend has not affected the domestic market; marketers in the post-Soviet space deceive buyers. In reality, promotions and pre-holiday sales in Ukraine and Russia usually turn out to be a sham. Buyers do not stop complaining about the fact that posters on the eve of Black Friday promise discounts of 70%, but the goods with such a discount is a minority. For the bulk of things the discount is usually 20-30% of the cost.
The screen shot below shows the results of the Vgorode portal’s investigation, which the journalist of the publication conducted on Black Friday 2015. In the upper part are the discounts on the day of the event, in the lower part is the cache. It shows that before Black Friday the prices were even lower than on the day of the event.
In addition to letu.ua, Vgorode checked several other Ukrainian online retailers. Citrus did not change prices at all, although it promised a “collapse”, and the price of Iphone 5S was even raised by 100 hryvnias. Rozetka provided discounts by coupon. They did not exceed 15% of the cost, and some products were cheaper by only 2% (Lenovo tablet cost 2222 before the discount, and 2199 UAH after). At the same time, such coupons the store sends out regularly, if you are subscribed to the newsletter, then and now you can find a letter with a similar one in your mail (below is a screenshot of the letter that came to the author at five in the morning, 05.07.2017).
Retail trends: creating your own holidays
Celebrating birthdays and coming up with new reasons for discounts is beneficial. In 2015, Amazon celebrated its twentieth birthday with a bang. The financial results of the holiday broke all records and exceeded the revenue from Black Friday 2015. Domestic retailers should take an example from the leader.
It is important that such a holiday requires considerable preparation. The warehouses must be full, the staff must be well-trained. The event itself will not be able to attract mass consumers, it will not surprise anyone. Therefore, it is worth thinking about activities for visitors. Concerts, food court, active games, a zone for children and the like will help to increase the CA of the holiday. We wrote about this in our article.
To conduct a desk study and determine the milestones of business development, contact KOLORO. We will prepare an analysis and propose options for retail business development.
Retail business trends: the course to additional services
If the main advantage that a company offers to its customers is not the lowest cost of goods or services on the market (Walmart in America, ATB in Ukraine), then additional services are needed to attract customers.
For example, the Ukrainian cosmetics online retailer Makeup offers free delivery of goods anywhere in the country. At the same time, it does not limit consumers to the minimum order amount. Grocery retailers attract consumers with a wide range of goods and their own imports.
The Good Wine chain holds fairs with a variety of activities that build a community of consumers and increase brand loyalty.
Retail trends: Walmart is a trendsetter
Cross-docking as a way to save money
Cross-docking is one of Walmart’s innovations that helps to save on logistics. The point of the reception is that suppliers send goods to specially equipped distribution centers, where it becomes clear where the products should be sent. Then the goods are immediately redistributed to stores, bypassing the stage of storage in warehouses. The method significantly reduces storage and transportation costs, helping Walmart to remain the retailer with the lowest prices on the market.
Self-haul has helped boost profits
Walmart increased sales by 29% in the first quarter of 2017. This was due to the introduction of a new delivery system. The giant offered discounts on online orders to customers who choose self-delivery instead of home delivery. This significantly reduces costs.
Another innovation was the gradual introduction of free shipping within 2 days instead of paid shipping (for orders of $35 or more).
It should be noted that not all consumers are happy with such promotions, queues at self-delivery points are quite long, and people respond negatively to the promotion online. Against the background of Amazon, with its free two-day delivery (2 days is the maximum possible period, usually the goods arrive faster, especially if the region of shipment coincides with the region of receipt), Walmart’s offer loses.
Read also: List of distributors in Ukraine: who to let sell your product to
Neuromarketing is a key retail trend
Neuromarketing is a method that allows you to manage the mind of the consumer by studying and influencing people’s behavior.
The methods that neuromarketing employs:
- psycho-linguistic research (study of human thinking, construction of logical connections, emergence of associations);
- positron emission tomography (the scanner studies the brain’s bioactive connections and how they work);
- studying reactions (eye-tracking, facial expressions, heart muscle contraction, pulse rate, etc.).
All this helps to put pressure on the subconscious mind of a person, not by awakening existing desires in him, but by creating new ones that the producer needs. There are debates about the ethics of the methods, so far it is not regulated in any way, but legislation will clearly be needed, it is only a matter of time.
Read also: How to influence customer behavior in the supermarket: 11 tips
The sales industry is changing rapidly, and a new generation of consumers is clamoring for quality service and high speed of service (with minimal contact with staff). To keep up with the times and not lose customers, contact KOLORO. We will develop a market strategy for your business that works.
