By Anastasia Lloyd-Wallis
COO & Head of Insights, Retail Doctor Group
In the 2 years since COVID-19 landed on our shores, retailers (and customers) are still left dealing with unexpected trends and crises. These trends and crises are not limited to regions but manifest globally:
- Supply chain issues
- Volatile consumer confidence
- Ever-changing consumer behaviours
- Ongoing legacy network issues to build out omnichannel
- And fast emerging technologies such as AI and the Metaverse
How Has Customer and Retailer Sentiment Shifted?
The pandemic brought on radical lifestyle shifts, which prompted consumers worldwide to make more meaningful, thoughtful, and long-term purchasing decisions. Now that the world is heading towards recovery, consumers are more ready to take risks and seize opportunities presented to them.
The pandemic forced Retailers to go back to basics to succeed in 2021, testing resilience and adaptability to the max. 2022 presented new challenges for retailers, including uncertain interest rates and ongoing supply chain issues.
Over the past 3 years Retail Doctor Group insights division has connected with Australian retailers and consumers through ongoing research to track changes in retail behaviour and sentiment. This research analysed the gaps between consumer behaviour and retailer strategy, identifying possible deployment steps for retailers that would help close these gaps. We will look at some of this research and what is means for retailers.
Retailer Focus For 2022/2023
Many new and exciting opportunities exist for those retailers who are ready to make the shift and embrace the new 24/7 consumer. 2022/23 is going to be a growth year for many brands and retailers who are focused on the role of the physical store and staff engagement.
Retailers’ Strategic Priorities
Retailers had a significantly higher focus on Physical Retail sales (48%) and Staff Training (38%) in 2022 when compared to figures from 2021. This was to be expected as more of the workforce returned to the office and everyday shopping experiences started up once more.
DID YOU KNOW?
1 in 2 Retailers are prioritising on the Instore Experience and building their brands
While online sales remain important, it is apparent that the shift is more towards a retail ecosystem rather than a singular channel.
Retailers’ Pressure Points
72% of those Retailers polled cite inflation as their number 1 pressure point. This is hardly surprising as the cost of living has dramatically increased, while spend limits have drastically decreased to compensate for this.
Obligatory price increases have further led to decreased consumer sentiment and trust, resulting in more cautious discretionary spending.
Ongoing supply chain issues have brought pressure. Falling demand during the early Covid-19 lockdowns forced logistics carriers to reduce capacity to match. Rising demands post-pandemic have created unprecedented congestion, resulting in service disruption, on-time product delivery, and rate increases.
Retail supply chains will need to address these disruptive issues and take action to manage and meet consumer demand. This may mean rethinking traditional approaches.
As the workforce reprioritises their wants and needs, 56% of Retailers find themselves dealing with recruitment issues. This is further compounded by unprecedented staff retention problems experienced by 44% of Retailers.
These and other ongoing Covid-19 effects faced by Retailers have developed as a direct result of the pandemic. As customers streamline what they consider to be essential goods and foods, the pressure is on for Retailers to anticipate customers’ needs before the customer does.
Retailers’ Consumer Priorities
Solving the customers’ immediate problem or need is now the #1 consumer priority for Retailers. More than half of those polled stated that the Instore Experience has increased in priority as consumers return to stores en masse. With consumers wanting to experience engagement with staff in store and also the rise of “Retailtainment” – shopping as entertainment! With consumers now looking to retail as a way to spend time and are looking to retailers that can deliver a differentiated instore experience.
On the lower end of consumer priorities, it’s interesting to note that the online shopping experience and all its components have shifted to a back seat – for now.
These declines are a sure indication that retailers’ consumer priorities have changed.
Area of Interest in Retail
Two thirds of Retailers state they are interested in Retail Consumer Behaviour, which can loosely be defined as the behaviour displayed by consumers in the process of buying, using, and disposing of products. In this regard, consumer behaviour revolves around the attitudes, emotions, and preferences that affect the buying decision. We know that up to 95% of consumer decision making happens in the sub-conscious – on an emotional level. So, by understanding consumer behaviour and emotions we can understand how to influence decision making.
Brand Building remains an area of interest for almost half of all Retailers. Creating an emotional brand that aligns with consumers has become an area of increasing interest as we are seeing a trend towards consumer loyalty to a brand increase.
Current customer and retailer sentiment reflect strongly in the areas of interest in Retail. Driven by changing perceptions of what constitutes a purchase, consumers are no longer focused on whether an experience happens online or offline (in-store).
It is clear that – despite the obvious and overwhelming need for omnichannel – changes to consumer sentiment will be strongly influenced by the retail ecosystem that customers now shop in.
Shifting Customer and Retailer Sentiment
Talk to our Insights team to find out more about how you can understand what is on your customer’s minds or download a copy of RDG’s 2022 Consumer and Retailer Sentiment research here. To find out more, contact us on bu[email protected] or call us on +61 2 9460 2882.