The global retail industry is evolving rapidly, especially post-pandemic. The latter has emulated a new normal that is filled with uncertainty and pent-up demand. In order to stay ahead, businesses need to take charge and stay on top of customer expectations. Here’s a round-up of key retail trends by a report published by Mastercard Data and Services:

Economic Outlook

The global economic recession posits various challenges for consumers and businesses alike. Rising inflation levels have impacted consumer purchasing power. According to Mastercard Economics Institute, people are responding to hyperinflation by opting for inexpensive brands and also by staying on budget. Not only this, the Mastercard report suggests people shop more in person and spend less. Through this, consumers seek to better manage their finances. Similarly, demand for discretionary retail items such as furniture and electronics has fallen as compared to perishable goods. People are now reflecting on their choices and buying goods that suit their budgets.

Understanding your customers

Drastic economic changes are now impacting how customers spend. People look for inexpensive ways to stay happy and spend quality time. For instance, street food and live music have become very popular. Not only this, but consumers now stick to a budget for ease and accessibility. For retailers, understanding consumer purchase decisions is the key coupled with effective communication. Vying for customer attention is easy, thanks to digitization. From social media to reading emails on the go to texting, advertising your product this way has become agile. Businesses can now reach globally in a matter of seconds. But this is just the tip of the iceberg. Communication may be easier but then again meeting customer needs and wants is still challenging. Here is how businesses can counter this:

  • With rising inflation, many consumers look out for offers and discounts. Retailers would want to optimize this as the audience has become more offer driven. In this case, marketing channels such as promotion via sms are very useful.
  • The key to innovation is personalization. Retailers need to collect customer data but in lieu of privacy and use it to come up with products. The best way to do this is to understand how customers interact on social media. A lot of people rely heavily on Instagram for better understanding. Influencer marketing is another way to ensue personalization. Not only this, but retailers can change their advertising dynamics to suit their customer preferences and encourage “cross-selling”. This term refers to highlighting complementary products to customers. For instance, if you buy a wing chair at IKEA, the website will highlight a few products to go along with it such as side tables and lamps.

Reaching Customers

Retailers are now opting for an omnichannel approach to reach customers effectively. Retailers are now diversifying to retail-media networks and social commerce to reach a wider customer base. The Mastercard report suggests a 160 billion global spend on retail media networks. Via such networks, digital channels owned by the retail company are offered to third-party businesses for advertising and marketing purposes. In this way, retailers are able to reach captive customers (those who are willing to spend), opening a new stream of revenue for all parties involved. Famous companies such as Ulta beauty sell their advertisements to vendor brands that can effectively reach willing customers.

Not only this, but social commerce has taken precedence over the years. In this way, retailers are able to reach Gen-Z on the go. Spending time and investing money on social media channels such as TikTok and Instagram have increased over the years. Makeup giants such as MAC cosmetics, Fenty Beauty and Rare Beauty interact with customers through influencer and content marketing.

Keeping Customers

Retaining customers amid economic uncertainty is key. Businesses now realize, optimizing customer experience goes beyond loyalty points. A whopping 53% of consumers have sought cheaper alternatives to suit their budget in 2022. This shows that retailers need to opt for innovative ideas to keep customers. Retailers might be looking to cut back expenses as well. But they will have to juggle with ideas to retain their loyalty budget. The report suggests that loyalty programs are not a cost but rather a profitable tool for businesses to ensue.

The report further emphasizes going beyond the ‘points for money spent’. A useful way to retain customers is to opt for small yet meaningful gestures. Such as, offering an off on the next purchase or promoting a reward system for referrals or early access to new products and services. In this way, customers become actively engaged and also feel a part of the brand’s family.

Retailers should also look into sustainability. Social efforts and environmental conservation has taken precedence over the years. Generation Z has become increasingly aware regarding what their favorite brands represent. Consumers support businesses that care about the environment and the carbon footprint they leave behind. For instance, Nesvita offers a paper straw with their calcium-enriched milk. IKEA promotes its People and Planet Positive sustainability strategy to ensue waste management tactics.

Paying for Purchases

Technological advancement has paved way for better ease and accessibility. Previously, people only had three ways to pay for their purchases; cash on delivery, card, or check. With increasing privacy concerns, retailers are now opting for gateways that ensue better experiences and secure transactions. This includes paying via QR codes during the point of sale or opting for installments.

The report emphasizes that 25% of consumers are interested in paying for their purchases through installment options. Many leading giants including Samsung offer the ‘buy now, pay later option’. This approach ensues a strategic maneuver pertaining to the economic crisis. Not only this, but small businesses are also using this payment approach to increase customer satisfaction and ease such as Zayfied cosmetics.

The Mastercard report further suggests people opt for a better-tailored retail experience via mobile apps. They conducted research that indicates users opting for a ‘super app’ that lets them shop, order and pay swiftly.

Privacy is important to customers

As e-commerce continues to grow rapidly, consumers are demanding more privacy pertaining to their data. This is especially in lieu of social media. Customers are aware of third-party data collection companies. Cyberattacks have surged post pandemic and the retail industry has been targeted the most. Many customers are prioritizing online safety in lieu of phishing attacks. In order to curb this, businesses now need to use effective measures such as reliable payment gateways, ensue fraud prevention tools, and invest in IT professionals for security practices.