The past year has been a wave of change in the retail space. With consumer habits upended by a pandemic, long-term shifts have accelerated in mere weeks and months.
Ideas and technologies that were only being considered have suddenly launched, causing retailers to switch from wondering whether or not they should adopt to asking “by when?” and “how?”
Our survey of over 700 U.S. retailers found that not only are shopping habits formed in the past year here to stay—the same goes for the technologies and services that retailers have implemented to meet strong demand.
In this report, we’ll discuss five shopping trends accelerated by the pandemic that are here to stay and hear from small and midsize retailers who have adapted to these shifts with new technologies, and new ways of meeting shoppers’ needs.
Small/midsize retailers should keep these trends front-of-mind when making future technology investments to ensure a continued great customer experience that, in turn, drives revenue for their business.
Trend 1: The future of shopping is omnichannel shopping
The overnight, distinct shift to ecommerce was one of the biggest stories in retail over the past year. House-bound consumers took to online shopping, and retailers adapted swiftly by rolling out technologies and services to meet that demand.
What were these services? When asked what business goals and strategies they’ve permanently prioritized, omnichannel customer experience (40%), delivery and fulfillment (39%), and ecommerce optimization (38%) were retailers’ top three priorities.
Across the board, nearly 40% of retailers have permanently increased priority of their investment in technology-enabled services with the goal of providing an omnichannel customer experience.
Retailers are permanently pivoting to services that facilitate meeting their customers’ needs at every touchpoint. They’re doing so by selling products and services through their websites and social commerce, providing online delivery as well as buy online, pick up in-store and click-and-collect offerings. That is the true essence of omnichannel shopping.
Over the next 12 months, we expect to see retailers continue to ramp up investments in their delivery and fulfillment methods and ecommerce presence.
What is omnichannel retail?
Omnichannel retail is an approach that focuses on providing customers with a unified and frictionless shopping experience across digital and physical channels at every stage of the customer journey, from browsing/discovery to order fulfillment.
What this means for your retail business
Gone are the days of picking and choosing to do business on just one channel. In 2020, retailers with only physical stores scrambled to reach customers through alternative online channels like newly-built ecommerce shops or social media marketplaces.
To succeed today, retailers must have a unified omnichannel strategy to meet the needs of the newly evolved customer.
When it comes to implementing your omnichannel strategy, providing a range of communication and shopping channels is key.
“Small businesses need to diversify their channel mix and adapt rapidly to this historic shift in consumer behavior toward digital-first,” says Jacob De Geer, vice president of small and midsize business (SMB) products at PayPal.
How jewelry retailer Foamy Wader implemented omnichannel retail
After Alexa Allamano’s advertisement for an open retail role drew just one applicant, she turned to tech to help reopen her jewelry store Foamy Wader.
She placed QR codes next to each item in her window display so customers walking by could scan and view that exact item on her website to purchase, facilitating fast and easy impulse shopping.
“Windows are now an active shopping space. Since poor searchability is the top reason people abandon a site, this method is a total game changer, like discovering the holy grail of retail. I also use QR codes on the store door to book appointments as well as grow my email list and social media followings.”
Allamano received positive customer feedback for both the QR code window shopping concept as well as her buy online, pick up in-store (BOPIS) option.
“One shopper said my booking site was the easiest appointment she has ever made,” she says.
Other technologies implemented:
- Shopify: When Allamano enabled pickup as a fulfillment option, she used Shopify to tailor post-purchase emails that direct the customer to a calendar to schedule pickup once their order is ready.
- Square Appointments: At her small new location, Allamano is offering private shopping in-store by appointment only with the help of Square Appointments.
Put it in action:
- Find out which platforms your customers use to know which channels to focus on. Use Google Analytics to identify the most effective channels that are driving traffic to your website.
- Ensure every available physical and digital retail channel/touchpoint is shoppable. Make it easy for customers to find and buy items directly no matter the channel they’re using.
- Ensure a frictionless, unified experience between your online and offline channels.
Trend 2: The future of shopping is a triple threat of ecommerce, BOPIS, and curbside pickup/click-and-collect
With a voracious consumer appetite for ecommerce, retailers have had to rethink how in-store operations can support online demand to drive overall sales and revenue.
This sparked a meteoric rise of services like BOPIS/click-and-collect and curbside pickup over the past year. In our survey, BOPIS, online delivery, and curbside pickup emerged as the top three fulfillment services that are driving sales.
What this means for your retail business
Now that a large percentage of sales have permanently shifted to ecommerce, small and midsize retailers need to ramp up execution of their fulfillment operations and ensure they deliver unified, consistent shopping experiences across physical and digital channels.
According to Gartner, several tier-1 retailers have more than half of their online orders handled by a store through click-and-collect or shipping from the store, demonstrating shoppers’ desire to search, transact, and receive products and services across both physical and digital channels (full content available to clients).
To compete, small and midsize retailers should continue investing in on-site/in-store fulfillment and curbside capabilities. This amplifies the convenience of online shopping and ensures customers have another way of getting your product in their hands (such as BOPIS, verus shipping).
How My Supplement Store launched BOPIS
After being online for 20 years, nutritional store My Supplement Store launched a BOPIS option at the beginning of 2021. The initiative stemmed from in-store customers asking about it.
“They wanted to be able to see what was in stock before they drove out to us and just be able to quickly pick up and leave,” says owner Brian Anderson.
While the retailer already had an online store, they didn’t have the BOPIS functionality. My Supplement Store found free software that changed this.
As soon as a pickup order was created, the store would be notified and the team would get the item ready. “Once it was ready, we set up an automated trigger that would email the customer letting them know,” says Anderson.
Since the pandemic, the store’s online sales have grown about 40% (compared to 2019). The store has also gained a significant following of local customers who order online and pickup in-store.
“The biggest issue was getting the process down. We had a lot of customers showing up to pick up orders right away. Some were even ordering on the way to our store, expecting it to be ready right away. We had to add additional messaging and instructions in the ordering process to stop this from happening.”
Put it in action:
- Identify what technologies and software you need to support the demand of cross-channel processes such as BOPIS and buy online, return in-store (BORIS).
- Assess how you manage existing inventory and make improvements to ensure you’re clearing the shelves to make room for new products. Technologies such as radio-frequency identification (RFID) and smart shelving can help you avoid dead inventory.
- Optimize your order fulfillment processes by improving visibility of real-time inventory with predictive visibility technology. The better you can manage and track the movement of your products, the more control you’ll have over things like where to find items and the speed and accuracy of order fulfillment.
Trend 3: Flexible payment types/options like buy now, pay later gather steam
As ecommerce sales continue to grow, so too have flexible payment choices that offer shoppers interest-free ways of paying. According to our survey, as much as 40% of retailers are currently rolling out buy now, pay later (BNPL) options for their customers.
Digital payment companies are making moves to capture that market. Square is purchasing BNPL company Afterpay in a $29 billion all-stock deal while Apple is reportedly working with PayBright to provide a payment installment plan for its products in Canada.
Square’s acquisition of Afterpay and its plans to dominate the small business payments space is a clear sign of what is to come for small and midsize retailers.
What is buy now, pay later?
Customers complete an online transaction and, instead of paying an upfront total amount, make installment payments over a period of time.
What this means for your retail business
It’s evident that BNPL will continue to gather steam. Consumers want payment choices, and small and midsize retailers should respond by providing a wide range of options. According to eMarketer, the top three reasons consumers use BNPL are:
- Clarity of fees/interest rates (42%)
- Ability to monitor spending (39%)
- Convenience (37%)
BNPL also paves the way for more traffic, increased transaction values, and a higher bottom line. Multiple payment options mean more ways to attract new customers and drive sales.
In an increasingly crowded ecommerce space, offering flexible payment options to meet consumers’ financial needs is now an essential and expected part of the shopping journey.
Put it in action:
- Consider the pros and cons of implementing BNPL. Benefits include the opportunity to increase revenue, while risks include transaction fees that may decrease margins.
- Find out which providers integrate with your existing POS system. This will ensure a smooth checkout process that reduces manual work on the back end.
- Research fees that BNPL providers charge for processing payments. This typically takes the form of a sale percentage, and includes a transaction fee.
- Analyze your customer base and orders, then decide on your BNPL model. For example: will you offer a split payment option (e.g .,four payments over six weeks) or customized installment loans (e.g., $40 over 24 months)?
- Inform and educate consumers early in the purchase journey using on-site messaging to make them more comfortable and aware of the new payment option.
How Moriarty’s Gem Art launched BNPL
Family-owned Moriarty’s Gem Art has been in business for over 40 years and online for about 10. In 2020, it launched a financing option on its website.
“Because our average sale is over $1,500, we needed to give customers more options for payment,” says marketing manager Jeff Moriarty.
Customers can purchase items and pay over weeks and months using Klarna, a free app build-in to Moriarty’s ecommerce platform. Klana then charges the retailer a small percentage of every purchase.
While the jewelry store was closed for about five months, 2020 ended up being “the best year” it ever had, thanks to ecommerce sales. The store is now seeing about 20% of its sales from customers using Klarna.
“These are sales we might not have gotten without it,” says Moriaty, noting that its conversion rate has grown as well.
“One unique thing we have seen is [the use of Klarna] on orders of small items that are less than $100. This shows that retailers can take advantage of this service, no matter their average sale.”
Trend 4: Adoption of cryptocurrency gains traction in mainstream retail
Another emerging trend is the growing acceptance of cryptocurrency as a form of retail payment.
Half of our surveyed retailers are already adopting and/or rolling out the adoption of cryptocurrency in their business, while a third are currently evaluating it. Those who have already adopted cryptocurrency cited faster transactions (66%) and wider access to a broader market (50%) as their top reasons.
What this means for your retail business
U.S. consumers are showing increased appetite for cryptocurrencies in daily commerce; 51% of crypto owners said they are more likely to shop with a business if they accept cryptocurrency as a payment option. Sixty-seven percent of cryptocurrency owners and 54% of nonowners agree that there aren’t enough merchants that accept cryptocurrency for payments.
As retail giants like Walmart and Amazon embark on long-term plans for cryptocurrency, it’s not a matter of if crypto will enter mainstream but when. Small and midsize retailers should begin exploring the possibility of cryptocurrency-based payments and learn how it could benefit their business in this rapidly evolving landscape.
How Astor Chocolate implemented cryptocurrency payments
New Jersey-based Astor Chocolate needed to start accepting cryptocurrencies as payment as more and more overseas visitors and tourists using foreign currencies became customers.
“I wanted something that could accept crypto payments while auto-converting them into USD,” said operations manager Samuel Klein.
Klein first shortlisted several top blockchain platforms and analyzed what they offered, then looked at reviews to determine the best fit.
“Before purchasing crypto, you should define your reasons for doing so,” Klein advises. “Understand the risk level your venture can tolerate and think about the cryptocurrency you want to buy.”
Klein says the use of crypto means that customers don’t incur extra costs when paying with a credit card. In addition, it ensures that the business has a secure money storage avenue, given the highly encrypted nature of a blockchain.
“However, since I don’t want to risk my business, I chose currency auto-conversion. And transactions are way faster … it takes a short time for money to reflect in my account.”
Put it in action:
- Evaluate whether accepting cryptocurrency as payment is the right fit for your business. Are you profitable enough to withstand the fluctuation of crypto? Is your existing customer base receptive to it? Offering alternate payment options should ultimately be driven by demand, revenue impact, and business goals.
- Assess the risks and rewards of accepting cryptocurrencies. Primary benefits include reducing transaction and payment processing fees, while risks include volatility and regulatory uncertainty.
- Explore ways your business can accept cryptocurrency as payment, such as P2P payments, ecommerce platforms, and crypto-specific payment terminals.
Trend 5: Social commerce will drive ecommerce
Social commerce was around before the pandemic, but it’s a much bigger business now. Between 2021 and 2028, the global market is expected to grow by 28% each year to reach almost $3.4 trillion. With such numbers, social media is a must-have in your digital commerce strategy.
What is social commerce?
Social commerce is the process of selling products directly to customers on social media. The entire shopping experience—from product discovery and research to checkout—takes place directly on the social media platform.
In our survey, 72% of retailers say they’re using social media for marketing, selling, and serving customers, compared to ecommerce (75%) and brick-and-mortar stores (49%).
When asked which platform is the biggest sales driver, retailers ranked Facebook first (49%), followed by Instagram (27%) and Twitter (14%).
Over a quarter of social media users within the Gartner Consumer Community (GCC) say they’ve made a purchase as a result of engaging with brands and influencers on social media since the pandemic. The number of social commerce users is set to reach 101.1 million by 2023, according to eMarketer.
What this means for your retail business
These impressive numbers present a huge opportunity for retailers to turn social media followers into shoppers and even loyal customers.
According to Gartner, 41% of consumers seek out promotional content about sales and discounts from brands on social media. This makes digital commerce promotions the most desirable brand content on social platforms.
Here are a few other reasons to invest in social commerce:
- Frictionless and seamless: For consumers shopping on social media platforms, the process of purchasing a product or service is as easy as seeing, clicking, and buying. The in-app checkout streamlines the buying process, making it easy to discover a product and purchase with a click.
- The millenial and Gen Z factor: If your target customer falls within the 18 to 34 age range (millennials and Gen Z), they’re more likely to buy your products via social commerce. Over 55% of social media users in the U.S. between 18 and 24 have made at least one purchase on social channels.
- Hyper-targets your target audience: Social media enables you to target your advertising based on customer data. That means that your product can be placed in front of a targeted customer base, increasing the likelihood of your customers purchasing your product.
Put it in action:
- Identify the right social media channel for your products. Some key considerations include: where are your customers spending most of their time? Would your product benefit more from visual platforms like Instagram or Pinterest?
- Research how to integrate social commerce with your ecommerce platform. Ask your ecommerce provider how you can integrate sales channels and manage your omnichannel strategy more effectively.
- Ensure seamless checkout on social media platforms. When shoppers are ready to buy your product, they want the process to be quick and easy. A hassle-free checkout experience makes them more likely to come back.
Equip your retail business with the right tools
Between omnichannel and social commerce, BOPIS and curbside, and alternate payment options, retailers are set to make huge improvements and investments in retail technology to drive their customer experience.
If you’re new to this and haven’t made inroads in these areas before, we understand how overwhelming that can be.
We’ve got some resources to kickstart your process and help you find the right tools:
We’ve got some resources to kickstart your process and help you find the right tools:
For omnichannel retail:
For BOPIS and curbside pickup:
For alternate payment methods:
For social commerce:
When you’re ready to move on to selecting software, our retail advisors can help by providing a curated list of tools that meet your specific needs. To start that process, schedule a call or start a chat with an advisor anytime.