With the ongoing crisis being faced by department stores & chains as well as independent outlets throughout the UK & Ireland, the face of retail has changed beyond recognition and multi-channel retailing has seen a huge shift in emphasis from physical store space to digital, exacerbated by COVID. Of course this was already happening as Generation Z (Zoomers) and to a slighter lesser extent Millennials are more used to digital interaction for shopping than any other previous generation. This is going to continue to have a big impact on the future of retail: Underlines examines what these consumers will expect and demand from retail.
To put in context, retail sales are estimated to decline by 3.5% worldwide this year by some US$500 billion (approx. £372 billion). And the effect on non-grocery stores is even more dramatic than this when you consider that the grocery and e-commerce sectors have over-performed. These effects will be felt long after lockdown ends or widespread vaccination is available. Taking out the ‘Christmas’ effect, consumers will continue to spend cautiously on non-essential products, due to financial and economic uncertainty and a low level of consumer confidence. And in fact, it is the department store sector which is now expected to have the longest recovery period amongst all store types (specialist retailers and smaller stores bouncing back more rapidly, as a large majority of consumers have stated a feeling of security and a high level of consumer service are welcomed more than ever before).
The generational shift of purchasing power to the Millennials and Generation Z (which will gather pace as the decade progresses) will be mirrored in a real shift of consumer behaviour. Figures suggest that about three-quarters of British consumers are modifying their behaviour and adopting more ethical shopping and eating habits (Walnut Limited) – the role of plastic, meat, diary, travel and clothes purchasing have all come under the microscope.
Just as fibre and fabrics producers have long realised the need for serious measures in sustainable materials and renewable resources, retailers have been planning for this new mood and demand. According to a recent survey* 85% of retailers will spend the same or more on sustainability initiatives in 2021 and these initiatives take many forms: selling second-hand items (17%), offering customers the chance to donate to charities (28%) and most popular of all, more sustainable packaging as a top investment focus (44%).
The necessity to shop local over most of the last 9 months has bred a new sense of responsibility (and indeed desire) to support local business and local products – a new sense of local community. Conversely as we have more digital access to virtually anywhere in the world from our laptop, tablet or mobile, our physical access is strictly limited to very defined boundaries.
The shift towards more online shopping sets a number of challenges for high street retailers – to change not just how they operate but also how they even stay relevant. We have seen those chains and store groups which have under invested in multi-channel or indeed their ‘brand’ over the last 4-5 years already going to the wall.
And once again we cannot underestimate the influence that Generation Z will have on future shopping trends. This is the first generation born into technology, which has a heightened sense of social responsibility and are ethnically diverse. The traditional gender roles within family will weaken further, so retailers will have to cater to a more unconventional buying audience where ‘traditional’ advertising clichés will have little place.
Of course with retail headlines largely being those of ‘doom and gloom’ it is easy to forget that physical outlets are still a critical part of the shopping journey, in terms of brand engagement and purchasing – consumers will still want to try before they buy. And though technology such as virtual reality of 3D imaging may mimic the in-person experience, it cannot replace other aspects of in-store shopping.
Two main challenges lie ahead for retail – providing exciting and personalised experiences that entice physical visits to stores, and increasingly ensuring their credentials in sustainability and recyclability are totally transparent. After all, they will be appealing more and more as time goes on to the well-informed, time-poor and internet-connected shopper. As our ability to travel has been curtailed (and will take some time and favourable conditions to recover) consumers are hungry for experiences, and if retailers and brands can provide these, they will be well positioned to survive and thrive.
One of those store groups which has taken up the challenges rapidly and effectively is Selfridges. It has launched its clothing rental and resale offer to sell second-hand products. Likewise in August it launched its Project Earth strategy – a long term strategy to change the way its customers shop by 2025. Not just selling an array of sustainable products but those with recycled materials, vegan or organic.
Ethical spending across food products and clothing has risen by record levels, rising to more than £41 billion last year. In clothing retail the main emphasis has been on reducing packaging or introducing sustainable packaging and more ethical product lines whereby they can communicate the obvious benefits. Large fashion retailers such as Zara have committed to make all of its clothing from sustainable materials by 2025. Other retailers such as John Lewis & Partners and Marks & Spencer have put philanthropy at the centre, encouraging shoppers to give back to charity. H&M has introduced a ‘repair and remake station’ in its flagship stores and has a long history in sustainable and recyclable fabrics targeted primarily at Generation Z.
However behind the scenes is the slightly less apparent side of the business – enabling businesses to use technology to reduce the amount of stock that remains unsold. Just as we used to speak of Butter Mountains, there is still a huge clothing mountain that is an issue that has to be tackled. With many retailers, small and large, having a surplus of stock (despite their best efforts to create more online sales) there is a huge responsibility to dispose of these items responsibly and this is where charity retailers can help (ASOS and H&M already donate excess stock this way). Mail order and e-commerce group Very.co.uk launched a partnership with second-hand clothes specialist, Re-Fashion, to reduce clothes waste and fashion items being sent to landfill.
Here we have suggested and assessed the movement towards more transparency and accountability in clothing at the point of sale (be that online or in store) but this movement will go hand in hand with digital innovations – checking in before check out (by facial recognition), emotion-sensing shopping and mass customisation (retailers offering customisation of a very wide range of products for consumer on site). These sort of digital advances which would have been forecast to reach consumers by 2050 are more likely to be part of our reality by 2030.
Source material: Shopping Reinvented by Euromonitor International
*Sustainable Shopping (Retail Gazette with Cybertill)
