This post is a follow-up on an article I wrote last week, where I laid the foundation for how the retail experience got into the state it’s in. In no means is that a bad state, we have become accustomed to some luxuries not seen prior to 2020, but that doesn’t mean there aren’t things I’d like to change (read improve).
So below I’ve compiled a list of things that I would like to see change for the better. Some of these are just flat out complaints (everyone’s entitled to their own opinion right?) and some are trends I believe will shape the retail industry. At the end of this article I have also included some predictions of things we’ll see in 2024.
My Top 10 Things I’d Like to See Change
First things first - For clothing retailers, the first step in the registration process should be size information or measurements. I’d would love to see retailers go back to in-store measurements as the first step in the engagement process but that often requires skilled labor and extra associates to accommodate. In the mobile-first world, there are plenty of platforms, like True Fit, using analytics and AI to drive a personalized sizing experience. According to Statista, clothing was by far the most returned category of online purchases in 2023, with over 70% citing wrong sizing or fit.
Often joining loyalty and reward programs comes with an incentive - especially with first time buyers but there’s always a catch. Promo Codes and Incentives should not require a phone number and email address. Either one should be sufficient.
Small footprint retailers (think boutiques and niche stores) should not have to leave the store floor to check inventory. Their inventory levels are slower turning and often managing far fewer SKUs than their large retail counterparts. The technology exists to have real-time visibility and leaving the store floor should be reserved for fulfilling orders or retrieving to be purchased product.
Get away from the cash register - the technology exists to process orders and engage customers mobily. Especially if you fall in the boutique footprint. Save the checkout lanes for grocery stores and big box retailers.
We need to rethink self-checkout. According to studies about half (53%) of retailers in the food and grocery segment have mature self-checkout adoption vs. 34% of retailers in convenience and fuel industry. My definition of mature, means that it is effective, not just an alternative, and many retailers are now putting exceptions around SCO such as item limits, and contactless payment. Reserve self-checkout for “pop-in” items and invest the time to improve order pickup/delivery. There are few things worse than watching someone try to key in produce codes.
Big box retailers offering same day local shipping should be the logistics gold standard - if it is in stock locally, there should be a mechanism in place to get it delivered locally. This was the power of regional retailers at one time, but it seems the more technologically advanced we become, the more difficult it is to get product to local customers’ doorsteps. It is easier said than done but it shouldn’t take 7-10 business days to receive consumer goods.
Price Match Needs a Revamp - AI and analytics should be leveraged by retailers to show price comparisons against the competition and updated in real-time.
Invest, Invest, Invest in proper inventory tools - this goes for every aspect of retail but I should be able to pop-in, go to the exact location advertised and find exactly the product I want.
If your email confirmation allows for a link to track my order, retyping the order number and email shouldn’t be required.
Free returns should be the gold standard - by investing in proactive tools to reduce returns, the cost burden of returns is significantly less.
Some Prediction for 2024
Retailers will dive into mobile payment to drive efficiencies in line busting/checkout, customer loyalty and improve cash on-hand. Retailers can use mobile payment to operate like a mini bank, and I predict we will see an uptick in retailers offering incentives to use an account balance “reload” feature, similar to Starbucks. While Apple Pay dominates, Starbucks for example, accounts for more payments than Google Pay and Samsung Pay and are holding over $1.8B in customer cash according to Financial Times. According to Deloitte, customer acquisition cost increased 222% in the past decade, so leaning into loyalty programs will be more important than ever.
A large e-commerce or retail player will invest in the “Marketplace” space. Etsy, eBay and Facebook Marketplace dominate the arena, but there has often been a sense of skepticism in the person-to-person space. Consumers must place a ton of faith in the seller, and the seller is dependant on customer satisfaction and reviews to build credibility. Combined Etsy and eBay generated over $13 billion in 2023. Looking at some Facebook Marketplace stats, Over 1 in 3 small and medium-sized businesses on Facebook in the US use the Facebook marketplace to sell their products. The market is strong and I would be surprised if a larger player wouldn’t want a piece of the pie.
AI will be the most valuable tool for retailers in 2024. Shopping will become incredibly personal, predictive, and the in-store experience will feel closer than ever. I believe customer service will be dominated by chatbots and e-commerce and retail players will rely heavier on predictive shopping than ever before.
Retailers will lean into bargain offerings and secondhand more in 2024. Retailers will need a way to become flexible and offer a diverse product offering without relying on fast-fashion and trendy consumer goods. Retailers have seen the success of organizations like The TJX Companies, who’s net sales were $54.2 billion last year, an increase of 9% over the previous year by relying on a flexible product line at extremely competitive products. According to FMI, the secondhand apparel market is estimated to be valued at $43.49 billion in 2024 and reach $125.18 billion by 2034. It is expected to rise at a CAGR of 11.1% from 2024 to 2034. The demand for secondhand clothing is mostly driven by their higher quality and cost effectiveness. We are already seeing this trend start to take shape with H&M, who’s latest retail locations feature a secondhand shop-in-shop concept.
Last not least - I expect to see more retailers adopting the membership model. Typically membership programs have included free shipping or added discounts during loyalty shopping periods but with digitization driving retail engagement, membership programs are now offering additional perks like access to in-person or digital events, or early access to new product launches or brand-curated services. Social selling will continue to skyrocket, and retailers need a way to keep consumers engaged outside of just shopping patterns.
As always, if you enjoy reading This Week in Retail, please feel to comment below and share your thoughts.