Future of Retail: 3 trends that will define retail strategies over the next 5 years
This post was written by Rashedun Nabi who is a business innovation expert, specialising in business expansion. He works with Startup companies in Asia to build operations from the ground up. Rashedun is originally from Bangladesh and is currently based in Bangkok.
Recently I read the Google Smart Shoppers Research Paper, where they have clearly stated the trends that will define retail strategy over the next 5 years. Here I have summarised the findings of the study and also put some data and thoughts in relation to Bangladesh market.
Businesses may never go through a more tough time like this as a retailer. For many the focus has been on survival, though some retailers have seen huge growth as they responded to unprecedented demand in new and unexpected areas. In Bangladesh, it is known that online sales have increased by 70 to 80 percent compared to the regular time. And while the reality is that we may not have moved completely out of crisis mode yet, the time has come to think beyond the current context to get your business ready for recovery and growth.
E-commerce has revolutionised during the COVID-19 Pandemic. However, buyers are not buying all kinds of products yet. They are buying more essential products. According to e-cab, the e-commerce or online shopping market across the country has crossed TK 6,000 crore during this pandemic. Consumers are now shopping for all kinds of products including medicines, clothes, food are done from different online platforms. Although economically marginalised and lower-middle income families are still market oriented, middle class or upper-middle people are shopping more online.
According to the e-Cab, shoppers are mainly city-centric. 80 percent of e-commerce buyers are from Dhaka, Gazipur and Chattogram. Of these, 35 percent are from Dhaka, 39 percent from Chittagong and 15 percent from Gazipur. The other two cities are Narayanganj and Sylhet. Eighty-five percent of e-commerce users are between the ages of 18-34.
Retailers with a strong digital offering will gain additional sales in the next five years
According to Google Trends Analysis, although the current crisis accelerated digital adoption and online sales are growing, it’s expected that most purchases will still be made offline by 2024 (78% versus 22% share online).
However, it may be more helpful to think not just about which channels consumers will transact in, but which types of retailers they are choosing. The research shows that retailers with a strong digital offering will gain additional sales in the next five years, even if customers choose to buy in-store. This emphasises the importance of seamless and integrated retail experiences across online and offline.
Online food delivery service foodpanda, in collaboration with retail brand Shwapno, have officially launched an on-demand grocery delivery service through its app across the country. Customers will be able to get frozen food, dry food, fresh fruit, vegetables and daily household necessities like soap and shampoo from Shwapno, which will be delivered at their doorsteps through foodpanda.
Meena Bazar, one of the country’s largest supermarket chains, along with their offline and online services, has also launched mobile shops in the capital. It will serve customers near their homes at reasonable prices, without having to pay value added tax (VAT) on their purchases. The mobile shop, selling basic grocery items as well as fresh vegetables and fruits, was launched on Wednesday, initially covering parts of Dhanmondi, Gulshan and Banani at specific times.
Multichannel and marketplaces formats will drive 86% of sales growth in the next 5 yearsGoogle Trends Analysis
3 Consumers Behaviour Trends will shape retail strategy
Looking at how retailers can prepare for this shift in market share across retail formats, Google Trends Analysis Report has identified three key trends. These consumer behaviour insights can help retail companies to develop their marketing strategy to drive long-term success.
As consumers shop both online and in-store, multichannel (which includes physical-heavy and mixed retailers) and marketplace formats will drive 86% of the sales growth in the next five years. During the festive season in this year, we have also seen strong online presence by the fashion houses in Bangladesh.
The pandemic has made consumers more fluid about whether they buy online or offline, with 73% describing themselves as channel agnostic (up from 65% before the crisis). Consumers will expect a more blended and seamless experience as they continue spending across both channels.
As purchase decision-making becomes more messy, consumers also expect to have helpful information to make their own decisions, including competitive pricing, recommendations delivered in moderation, and helpful personalisation. I believe still Facebook merchants has a good contribution in the online sales due to the trust they have gained and also they provide more information like regular live stream and positive customers review, which actually help consumers to make informed decision.
How to prepare for the future of retail
In the next five years, retailers will need to bring together their digital and in-store experiences to make the biggest gains as consumers will continue spending offline but as online spend continues to grow. Consumers will favour retailers with a digital offering, even if they go on to transact in-store. As during this pandemic, we have learned that the only constant is change and retailers must be ready for what will come next. Here are a few of my thoughts –
1. Consumers have now a lot of choices. Retailers should help consumers make empowered decisions by providing helpful information to make their own decisions. This will increasingly become a key differentiator.
2. The future of retail is not about an either/or when it comes to physical or online presence. Retailers will need to move on from focusing on where the transaction is happening and refocus on integrating online and offline experiences.
3. Retailers need to meet rising consumer expectations and deliver seamless experiences. This means there is no going back from investing in digital transformation.
This current pandemic has increased the uses of online technology and lots of companies has introduce new online services to adapt with the crisis. While businesses that are not yet well adapted to the digital world may find it more difficult, it can offer the opportunity to make these necessary and fundamental changes to the way their businesses operate. There is still time to pivot, introduce new services based on technology and think big, but it is the time to transform and grow.
Thanks for reading.