The last 12-18 months for Retail has seen some significant changes in marketing and transacting with consumers online and in-store which has led to exciting new developments. The need for some retail therapy has remained top of mind and will continue into 2021 along with the easing of restrictions. What does this mean for brands and retailers? It means greater opportunities available across digital channels and new ways of connecting with consumers on a deeper level. Let’s dive a little deeper into the world of retail and see what we can find!
Dean Vocisano, Country Manager, Shopfully
How has retail shifted in the last 12-18 months and what do you think has been the biggest opportunity for marketers to tap into?
The retail industry has been undergoing a transformative shift for some time, though the global pandemic accelerated the digital transformation path almost overnight. Over the past 12-months, retailers across the globe moved from traditional trade marketing tactics like flyers distributed through letterbox drops to digital communications.
One of the most talked about shifts was Coles’ decision to cease its catalogue distribution and instead focus on a new digital experience through its app. Coles, like many other retailers, saw a phenomenal year-on-year increase in the use of digital catalogues. In fact, at ShopFully we’ve seen an 88% increase in in-app new sessions from consumers searching our catalogue database and a 35% increase in engagement.
Moreover, more and more Aussies are tapping into the smartphone as an anywhere remote control for in-store shopping—they’re spending an increasing amount of time online to plan their shopping in advance, in addition to seeking information like opening hours and product information for an easy experience. This presents an exciting opportunity for retailers and brands to re-evaluate their digital experience through a customer-centric lens while considering additional means to surprise and delight consumers.
The pandemic has also increased consumers’ hyper-experimentation—leading them to reconsider their ‘go-to’ stores and preference for the nearby shops, like neighbourhood supermarkets or independent boutiques. Additionally, the shelter-in-place and social distancing restrictions over the past year have led Aussies to trial new shopping times and change up the frequency of visits as they’ve sought to avoid crowds or simply deviate from routine. New habits have been formed and local store loyalty forged, opening the door to hyper-localised marketing tactics and even in-store activations as restrictions ease.
Looking ahead at the next 12 months, what exciting opportunities are coming for brands to be involved in within the retail space?
The great news is that the retail digital revolution is not slowing down any time soon. Consumers will continue to seek increasingly simplified shopping experiences that save time and money, creating opportunities for brands to innovate and cut-through.
Based on trends ShopFully is seeing both in Australia and globally, we can predict that consumer demand will continue to drive two core trends:
- Purchase preparation from home, as consumers continue to search for products from their couch, seemingly exploring supermarket aisles and sourcing more information with a simple tap before saving the best offers for later reference. Instead of making a call, Aussies will keep preferencing the ability to book appointments with experts online at their leisure.
- Simplification of the in-store experience, as customers look to find products and source additional information on their own, before paying without cash— ‘tap and pay’ purchasing will continue to rise.
Savvy marketers, in retail and across industries, who double down on the digital experience in new, exciting and expected ways will reap the rewards. However, the in-store experience should not be overlooked—digitisation is an inclusive phenomenon that must not leave physical stores behind.
In fact, the intersection of the two will create a new ‘sweet spot’ for marketers who seek to influence all stages of the path to purchase. This is especially true for proximity stores, which are today at the centre of a real digital revolution and hold untapped potential.
Mark Mansour, Director, Client Partnerships & Sales, Cartology
How has retail shifted in the last 12-18 months and what do you think has been the biggest opportunity for marketers to tap into?
The past 12 months saw a remarkable shift in our customers’ buying behaviours. As communities went into lockdown many customers experienced our e-commerce platform for the first time and we saw our daily visits and searches increase significantly. In 2020 we saw a 55% increase in traffic to Woolworths.com.au, contributing to weekly visits of 20.2 million to the Woolworths Group’s digital assets in the second half of the year.
We have also seen that our digital storefront now represents the ‘front door’ to our business. Whilst many shoppers have migrated back to stores, online continues to grow both as a purchase and a discovery platform and has become an essential part of our customers’ shopping experiences, with 60% of those who visit online going on to purchase in store. We know that close to half of our customers look at Woolworths.com.au for inspiration.
With customers interacting with our digital platforms in different ways along their shopping journey, brands have multiple opportunities to engage with them to inform purchase decisions.
TikTok
How has retail shifted in the last 12-18 months and what do you think has been the biggest opportunity for marketers to tap into?
The pandemic has meant the last eighteen months have been extremely dynamic for the retail sector, forcing many to use online platforms to discover and purchase new products. In fact, according to McKinsey 57% of Aussies have tried a new shopping method over the pandemic, showing a clear opportunity for retail marketers to tap into this year. Over the same period, TikTok’s popularity increased significantly, as it was the most downloaded app globally in 2020.
This combination means marketers need to shift their thinking, as consumers are looking for brands to authentically and creatively give them information that both generates culture and is relevant and timely.
On the platform, we’re seeing a trend we call community commerce, which is where a community connects and creates content focused on specific brand and product. This trend is being driven by the democratisation of creativity, as TikTok allows anyone to freely share what they think about a product and recommend it to their community.
Every day people are creating genuine and spontaneous content with brands at the center. These TikToks often resonate with the shopping communities and are dictating the retail trends on the platform. Retail brands can participate in these trends, so where possible, lean in and capitalise on these moments. Aussie streetwear retailer, Culture Kings is known for doing just this, as the brand recently took advantage of the shoe flip and phone drop trends to show off its products and connect with the TikTok audience. Forward-thinking brands should harness this connection and at the same time demonstrate how they are meeting consumer expectations of what it means to be a good business in 2021 and beyond.
To convert this and be successful, retail marketers need to explore new possibilities for an audience that is asking for something different. Maximising your presence on TikTok is a mix of art and science, and it’s smart to have a holistic approach. Leveraging a unique blend of organic beats, paid peaks, and authentic creator partnerships allows for continued meaningful engagement with your audience, and also helps to create a community.
Aston Darley, Senior Global Performance Manager at Finder – Retail, Travel and Entertainment
What trends have you seen in the Retail space?
Two major trends worth calling out are the enduring popularity of major sales events like Black Friday and Cyber Monday (despite the financial impact of COVID-19) and the growth of BNPL services.
Shopping sales days
The retail sector endured a rocky first half of 2020. ABS data shows that retail spending dropped 3.4% in the June quarter – the biggest fall since the GST was introduced in 2000. This put a dampener on EOFY sale spending, with Finder data from July 2020 showing that 27% of Australians planned to shop the EOFY sales, down from 76% in 2019 (a drop of 49%). Despite this, those who intended to shop in 2020 still planned to spend $922 on average.
Although retail spending dipped during the first half of 2020, ABS retail figures reflected a significant uplift by October. Finder’s research shows that by this time, nearly half the population (46%) planned to shop the pre-Christmas sales such as Black Friday, Cyber Monday and Prime Day, with the average shopper intending to spend $191. Boxing Day remained the number one sale Aussies intended to shop (29%), however Black Friday (26%) came in at a close second, despite being a relatively new retail event in comparison.
As life in Australia returns to “normal” post-COVID, so too will consumer spending. ABS data from January 2021 shows that the nation’s household finances have recovered for the most part after the peak of the pandemic. We can therefore expect consumer interest in major sales days to continue its upward trajectory in 2021.
Already at Finder, we’re seeing that shoppers are hunting for early deals in the weeks leading up to sales days. Over these sales periods, Finder uses a mix of different content types such as news, editorial selections and offers lists to educate users and help navigate all of the sales. We also help our partners to target shoppers offsite across our email and social platforms that have niche audiences with different interest types.
Retailers are also offering discounts and promotions earlier than years gone by, with most big brands launching their offers the Monday before Black Friday. We’re finding that Black Friday isn’t about the day itself anymore, but the month as a whole. We expect these extended sales periods to continue and expand into the future, with this increased sales activity leading to the blurring of major shopping events like Black Friday and Click Frenzy.
The future of credit
Another emerging trend is the rise of Buy Now Pay Later (BNPL) services in Australia. The eruption of BNPL has altered the credit landscape for retailers and consumers alike. There has been a notable slump in credit card usage as more consumers gravitate towards BNPL as their preferred payment option – especially when shopping online.
According to RBA data, the value of payments processed through BNPL services has tripled over the past 2 years, to almost $10 billion in 2019–2020. The number of credit cards in-market also fell by 7% from March 2019– March 2020 as more consumers turned to BNPL during the pandemic.
However despite this strong growth, BNPL platforms still only account for a small share of overall payment flows (equivalent to less than 1.5% of all card purchases over the past year). The area where BNPL has gained the most traction is in the online retail sector, where it’s market share is notably higher.
BNPL platforms allow retailers to benefit from more immediate sales, both online and in-store. They can also incentivise customers to spend more than they initially intended. Nielson data shows that the top reasons consumers use BNPL platforms are to purchase something they can’t immediately afford, along with making the most of interest free payments.
While this is highly beneficial for retailers, it can potentially lead to spiralling debt cycles for consumers, especially the younger generations. RBA data shows that 60% of BNPL users are aged under 40, while a Finder survey from August 2020 found that 67% of Gen Z have used a BNPL service within the past 6 months, followed by 56% of Millennials.
It is in this sense that BNPL can be a double-edged sword—consumers who have accrued credit card debt in the past will have the same problem with BNPL. However for those who are responsible and are able to keep on top of their repayments, interest-free BNPL payment solutions can be a useful budgeting tool, and a hassle free way to shop online.
Although credit cards remain the dominant payment option for now, the future of BNPL looks bright. An IBIS World report predicts the BNPL industry will grow by 9.8% annually over the next 5 years, eventually exceeding $1 billion. Most retailers who implement this payment service already see improved customer lifetime value, increased conversions and a better customer experience. But as emerging generations become increasingly tech savvy, retailers will need to continue exploring new and emerging payment products such as BNPL and mobile and digital wallets to stay relevant in the marketplace.”
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