In the last four years, the retail environment has shifted to the point where a more expansive conversation is needed about ‘commerce’ rather than ‘shopping’.
I recently attended a talk by Jamie Peate, Global Head of Retail Strategy at McCann Worldgroup, on the key trends in retail today. Whether you’re a marketer operating in the retail sector or somewhere completely different, many of the points highlighted cuts across industries and provides a unique insight into human behaviour.
Back in 2015, McCann launched the Truth About Shopping, a longitudinal research project to study the dynamics in retail across 26 markets. Four years on, the team revisited the research and noticed that in this short time the retail environment has shifted to the point where a more expansive conversation is needed about ‘commerce’ rather than ‘shopping’.
Today, customers are thinking about everything from where their ingredients are sourced, through to how technology is used in factories, all the way to the final mile of product delivery. In many ways, the ’product journey’ has become just as important as the ‘customer journey’.
In this context, McCann’s research exploration has covered everything from Blockchain, subscription models, m-commerce, drones, GDPR, voice, chatbots, automated tracking, programmatic to cookies and more.
With the above in mind, brands and agencies working in this space must have a ‘commerce lens’ rather than a ‘shopping lens’ when they approach the sector.
The fundamentals of retail
Over the course of the last four years, the key fundamentals of retail have remained the same:
- The joy of discovery
- The pleasure of great customer service
- The satisfaction of convenience
However, the way in which we interpret and experience these three pillars have changed and forms the basis of the five ‘truths’ of commerce:
The emotional landscape of shopping
Shopping is fundamentally a human act - children have been playing ‘shop’ for generations. Some 60% of people in the UK say that companies that focus on people represent the future of shopping, so there is a huge premium on creating an experience that resonates emotionally with shoppers.
The truth: Shopping can still bring tremendous joy to our lives but on completely new terms.
One of the challenges retailers face today is that shopping has started to feel a lot more functional. One in three people in the UK says that if they could, they would use a subscription service to buy everything. Once upon a time, it was “I’m going shopping”. Then it became “I’m always shopping”. And now it’s “did I just buy something?” - an indication of how seamless and integrated the shopping experience has become.
When we look at the data, it suggests that we've lost something human. Even with all of the data retailers are collecting, over half of people still feel that shopping is too impersonal and an additional 54% think that shopping used to be more fun.
However, the cultural lens is also important as our appetites for more social/ human shopping experiences vary depending on who we are and where we are in the world.
The people of India are social shoppers, whereas the people of Russia are not!So how can we protect the joy of shopping for future generations? McCann has identified two ways:
1. Find the perfect blend of human and machine
We need to figure out where technology (and humans) add value.
McDonald’s is currently in the process of adding touch-screen ordering kiosks to thousands of stores to supplement in-store employees.
The kiosks aren't a substitute for human workers, but rather a new way to bring the benefits of technology to the fast-food industry. This will help customers avoid waiting in long queues to order and instead spend more time in front of the kiosk deciding what they actually want in an interactive way. Food looks more delicious on the screen and you don't always want to interact with a human.
Where the kiosks have been installed, they have had to redesign the kitchens to cope with additional demand!
2. Distinguish between ‘shopping’ and ‘buying’
When McCann spoke to consumers as a part of their Truth About Street research, they found that the best way to understand how they think about the world of retail is by their end goal. They speak about two distinct activities: shopping (recreational, human, and exploratory - the ‘joyful’ part) and buying (transactional and efficient - the ‘boring’ part).
Sometimes we end up in situations where customers might be looking for a shopping experience and a retailer only offers up a buying experience and vice versa.
On Amazon, if you’re trying to ‘shop’ for Mother's Day gift ideas, it’s almost impossible to find something unless you already know what you’re looking for. This is an opportunity to introduce something more human, emotional and inspirational to an online experience that is designed for people to ‘buy’. At present, the Amazon algorithm is designed around the category rather than the individual, hence the blunt experience.
At Flying Tiger, on the other hand, regardless of what you’re buying, you have to walk through the entire store, past all of the products, in order to get to the checkout. If a person is in ‘buying’ mode, they may not want human interaction and they’re most certainly not looking to queue or waste time.
Understanding these broad-brush emotional need states can provide some guidance on when we need more or less ‘humanness’ in the customer journey.
The implication: Brands need an array of experiences that shoppers can choose from depending on which mode they are in
Nike’s flagship store in New York City is a perfect example of how a brand has blended both shopping and buying into one experience:
- Highly functional ‘buying’ experience at one end (where you pre-order trainers and collect them out of a locker) versus….
- Highly emotional/human experience at the other (where you can play basketball in your new trainers)
Privacy and the price of innovation
Just as we need to deeply understand people and the mode they are in to facilitate discovery, we also need to understand their willingness to share data and adopt new innovations in order to ensure that we’re serving up the best possible experience for the individual.
90% of Chinese people feel positive about voice-activated shopping. In the UK, this drops to 50%.
The truth: Data can be the key to unlock deeper relationships if handled with care.
In more privacy-conscious cultures like the UK, how can we unlock the future of retail innovation in a responsible way?
Much of the difference we saw in the earlier statistic is driven by cultural attitudes.
Chinese attitudes towards privacy are driven by this one thing: progress. What might be lost by the invasion of personal privacy is gained in technological advances - whether it's the ability to connect with friends and family or get access to products and services previously unavailable.
So in China, giving away data to get access to more brands and experiences is seen as progress. Contrast this with the US, where the surveillance and usage of our data is seen as an invasion of our rights.
This video from the New York Times sums up perfectly the technological development the cultural backdrop in China has enabled, all through the lens of Chinese super-app WeChat:
This convenience-driven, highly-connected approach represents a real value exchange for the Chinese shopper. As a result, from driverless cars to voice to chatbots, Chinese respondents are far more enthusiastic about AI products than people in other markets:The implication: every brand needs an approach to privacy in order to address the new value exchange
McCann has created a Hierarchy of Compensation (taking inspiration from Maslow’s famous Hierarchy of Needs) to demonstrate the different ways in which brands can use data to add value to people’s lives. Retail brands should think about where they want to be on the pyramid (and also where it makes sense for them to be on the pyramid):
The new ecosystem of influence
65 per of people in the UK say that sometimes it’s difficult to know if an online influencer actually uses the products they endorse in real life.
The cult of the “social media influencer” and their much-chased-after followings has been a hot topic. However, trust in influencers appears to be in decline, and we only need to look at the recent aftermath of Fyre Festival to wonder whether influencers themselves have reached ‘peak influence’ (Kendall Jenner was paid $250K to promote the event on Instagram – she later deleted the post).The scepticism we’re seeing around influence is far broader than just social media influencers. From the rise of fake news through to the never-ending war on fake reviews, to what seems like a never-ending cycle of fraudsters, it’s becoming harder to know who to rely on. The culture of influence is becoming increasingly toxic.
The truth: People are seeking truth to guide them in a world where truth seems harder and harder to come by.
On average, people in the UK believe they need to review three sources in order to feel like they know the ‘truth’. And 61% of people believe it’s more important to put the truth before other factors in all situations.
A testimony to this fact, one in four people say that they sometimes buy clothing just to wear it on social media and then return it. The proliferation of social media as a platform to influence others is still very much alive, even for those without a huge following.
The broader universe of ‘influence’ might be shifting and evolving, but the humble review remains an essential currency in the retail world. In this context, we tend to be less focused on the ‘people we know’ and more focused on ‘people like us’. What does the death of stranger danger mean for the world of commerce?
Reviews are ubiquitous across all categories. Regardless of whether you’re buying a car or a lipstick, reviews matter:The implication: There’s an opportunity to drive affinity and advocacy by putting the authenticity back into influence.
Asos works with numerous Instagram micro-influencers called Asos Insiders - all with their own Asos Instagram handle, e.g. “Asos_(their name)”.
Asos_Joshua is an Asos Insider with about 16.7k followers. His audience is formed of skateboarding fans and he often posts images of himself wearing Asos products, sharing the codes of the products he wears so that his followers can easily look them up on the Asos website:
So if they want those Converse shoes for themselves, they can copy and paste the code into the Asos search bar and find them in seconds.
Asos’s micro-influencer strategy is effective because the brand collaborates with influencers from all over the world, who have different styles and hobbies, thus enabling them to promote their entire collection of products. Some of the influencers they work with even have their own Asos page where their fans can shop the influencers’ look.
A world of shopkeepers
The notion of entrepreneurship has fluidly infiltrated the global mindset, promoting an attitude of experimentation, risk-seeking behavior and a desire for change (whether you’re an actual entrepreneur or just maintain the mind-set within your company).
The truth: Shoppers used to be ‘outsiders’ but now they’re more like ‘insiders’.
Today you can be any kind of entrepreneur you like:
- Infopreneur: Someone who sells his or her expertise and knowledge either on the internet or as a value-added service
- Techpreneur: Someone who launches and oversees a technology-based business
- Solopreneur: Someone who works and operates their business by themselves, and often without any other partners/investors or employees. Also, tongue-in-cheek known as “Chief Bottlewasher”
68% of people in the UK say that they like to make things with their own. What do they all have in common? They all gravitate towards building and making things with their own hands.
This trend has come off the back of two ‘generations’:
The first generation
A few years ago we saw a whole host of marketplaces like Etsy and eBay pop up which enabled these entrepreneurs to sell their goods (whether they were crafting them themselves or re-selling existing goods). This was the first iteration or generation of these platforms
The second generation
The infrastructure technology that allowed for the first generation to evolve into the second generation is Shopify.
Shopify provides not just a platform for them to sell their goods and services, but a value ecosystem. It enables any ‘mompreneur’ to create a beautiful online store with limited expertise. Shopify also has a curated selection of built-in marketing tools that let you optimize your store on your own terms. Plus, Shopify is integrated into popular social media platforms to help you promote your products.
The implication: We have an opportunity to see ‘shoppers’ as partners rather than just purchasers or users.
The Xbox Fanchise Model is a great example of a brand treating their customers as partners.
Xbox Design Lab sells customized controllers, but at a high price point. So to take cost out of the equation, and increase sales, Xbox asked gamers to claim ownership of their controller designs. The more people buy a design, the more it earns (and the designer/gamer earns too). It changed behaviour, turning gamers into entrepreneurs.
Creating meaningful retail relationships
74% of people in the UK think that stores care more about their data than their experience.
The truth: Creating meaningful brand experiences (regardless of whether they are online or in-store) means having a deep understanding of what really matters to people
Instead of thinking about sales per square metre, how can we craft unique shopping experiences by thinking about experience per square metre instead?
Intersect by Lexus is designed as a lifestyle hub that merges innovative programming, culinary creativity and masterful design for an immersive cultural experience. There are currently three locations: Dubai, Tokyo and New York City, all of which provide customers with an experience that shows the customer what the brand is about and allows them to live the Lexus lifestyle:
It’s worth highlighting that the growing importance of ‘experiences’ has implications far beyond the physical stores.
For brands like The North Face, loyalty is more than a points program. When it comes time to redeem rewards in their loyalty program, customers can use points towards unique travel experiences, like a mountain climbing adventure in Nepal.
But beyond the loyalty program, the brand creates loyalty at every touchpoint by hosting events such as the mountain festival, and championing under-represented groups like female climbers.
Too often, ‘loyalty’ within a retail organization is left up to the people who run the ‘loyalty program’. And yet, in a world of commerce, building loyalty is a much broader and richer opportunity that touches every aspect of the business.
Building brand loyalty should be a philosophy, not a siloed part of the business that is offered to specific customers.
The implication: retail brands are under more pressure than ever to focus on short-term sales and targets, yet it’s the brands with a long-term vision and a clear and meaningful role in people’s lives that are best placed to succeed.
If we allow human truths to guide us as we move forward, the future of retail is incredibly exciting.
It’s a world where people can access products with greater convenience, with better value, all the while with a sense of excitement, authenticity and connection.