This year, savvy retail companies will focus their business strategies on engaging consumers and inspiring their devotion, as loyal customers are seven times more likely to test an offering, five times as likely to make a repeat purchase and four times more likely to refer a brand. 1The Ultimate CX Infographic, 2018. Qualtrics. October 2, 2018.
The following five 2020 retail trend predictions will affect retailers and consumer packaged goods (CPG) suppliers in their efforts to get closer to consumers, earn their trust and, ideally, embed their brand into shoppers’ regular habits.
1. Social Commerce
Social commerce is the evolution of e-commerce, as it integrates e-commerce, social media and digital marketing to boost brand awareness, consumer engagement and sales. Social commerce also encompasses resources like product reviews to strengthen consumer confidence and online forums that help consumers feel like they belong to a bigger community with a common interest.
According to eMarketer, social commerce among North American retailers nearly doubled from 17% in 2017 to 33% in 2018.2Lipsman, Andrew. Social Commerce 2019. eMarketer. June 5, 2019. Although Facebook drives the majority of social referrals to e-commerce sites, the more visually appealing platforms – Instagram and Pinterest – are more effective at sparking sales through social commerce. Hence, 41% of e-commerce brands use shoppable Instagram posts.3Kanwar, Satish. Here is why retailers need to invest in social commerce. Digital Commerce 360. February 21, 2018.
A global example of social commerce is China’s popular, pervasive WeChat platform, which is used by more than 1 billion consumers. WeChat seamlessly integrates e-commerce, social media, mobile pay, group buying and livestream video functionality for compelling retail marketing that grips consumers’ attention, keeps them coming back and drives loyalty.
2. Marketing Influencers
Marketing influencers are often charismatic high-profile public figures – including celebrities, thought leaders and bloggers – who strive to engage consumers, influence their purchase decisions and earn their loyalty with their authoritative knowledge in a particular niche.
Now that more than 3 billion people (40% of the global population) actively use social media, more of us turn to influencers as trusted advisors to simplify our product purchase decisions amid abundant choice.
Influencer marketing is flourishing. In 2015, only 190 influencer platforms and agencies existed; by 2018, that figure ballooned to 740. Recent research estimated influencer marketing would grow in market size from $1.7 billion in 2016 to $6.5 billion in 2019, with 69% of influencer campaigns directed to the business-to-consumer (B2C) market.4The State of Influencer Marketing 2019: Benchmark Report. Influencer Marketing Hub. May 28, 2019.
For instance, leading beauty blogger and makeup artist Huda Kattan has attracted more than 40 million Instagram followers to her Huda Beauty business account, where she shares beauty tips, product reviews and photos of global retail events to help consumers decide which products to buy.
3. Speed
Shoppers are increasingly impatient. Consumers have come to expect and demand fast, if not immediate, service as they crave convenience and time savings.
A recent survey found that 43% of consumers expected companies to have “much faster” delivery times in 2018, up from 35% in 2017.5Griffen, Marie. The Race Is On: 43% Of Consumers Expect ‘Much Faster’ Deliveries In 2018. Retail Touchpoints. April 2, 2018. In response, 51% of e-commerce brands offered same-day delivery.6Morgan, Blake. 50 Retail Innovation Stats That Prove The Power Of Customer Experience. Forbes. May 21, 2019.
In 2018, soaring from only 16% in 2017. Experts predict that within the next two years, 65% of retailers will offer same-day delivery.
Amazon recently accelerated its free Prime two-day delivery to free shipping in one day to delight Prime members and encourage them to stay loyal with prompt service.7Howland, Daphne. Amazon ‘morphing’ free Prime 2-day shipping to 1 day. Retail Dive. April 25, 2019. To help consumers speed up their shopping trips by skipping checkout lines, Amazon also plans to expand its cashierless Amazon Go format in 2020.8Day, Matt. Amazon Is Planning to Open Cashierless Supermarkets Next Year. Bloomberg. November 20, 2019.
4. Subscriptions
More retail companies are embracing a subscription-based business model, which involves charging consumers a recurring fee, typically monthly or yearly, to receive their products.
As Fast Company reports, 3500 subscription box services existed in October 2018, up 40% from the previous year. In addition, a survey found 25% of respondents currently receive a subscription box, and another 32% of respondents plan to subscribe in the next six months.9Petro, Greg. Why Subscription Boxes Are Here to Stay. Forbes. April 12, 2019.
Many consumers stay loyal to companies offering subscriptions for the convenience, time savings and variety they offer, especially if shoppers want to replenish products they have already purchased.
Subscription model superstar Dollar Shave Club has earned impressive loyalty, as 69% of Dollar Shave Club’s customers come back and transact in the first month after their initial purchase, and one-third remain subscribers 24 months later.10Booth, Barbara. What happens when a business built on simplicity gets complicated? Dollar Shave Club’s founder Michael Dubin found out. CNBC. March 24, 2019. Beauty brand Birchbox recently expanded its target market beyond beauty enthusiasts to “everyday” men and women to fuel future growth.11Warfield, Nia. Birchbox CEO is looking beyond beauty connoisseurs for its next phase of growth. CNBC. October 27, 2019.
5. Pop-Ups
Pop-ups are short-term physical shops that offer unique, immersive customer experiences to generate buzz and drive both in-store and online sales.
Temporary retail is expected to generate $80 billion per year by tapping into consumers’ fear of missing out (FOMO) and invigorating retail and fueling consumer loyalty with exciting multisensory experiences consumers can’t get from e-commerce. Retailers benefit from interacting with customers face-to-face in pop-up shops for richer customer service, as well as the ability to collect data on consumer behavior and discover which products perform best.
Notably, Amazon plans to open small pop-up stores as early as the first quarter of 2020.12Vincent, James. Amazon reportedly plans bigger cashierless supermarkets for 2020. The Verge. November 20, 2019. As consumers demand more premium products, luxury brands like Hermès and Chanel are investing in pop-ups to generate excitement and a sense of scarcity around new products.13McDowell, Maghan. The new rules of luxury pop-ups. Vogue Business. August 5, 2019.
Overall, retailers and CPG suppliers can consider how these trends affect their 2020 business strategies to make consumers happy and loyal, and stay competitive over the long term. Looking to the year ahead, which emerging retail trends would you add to this list?