Retail today is all about the personal relationship. It’s a question of offering the right product and the right experience at the right price in the right places on the right channels—in a way that works for each individual consumer.
But when so many economic, social and cultural forces are in flux, understanding what the consumer wants is so much more difficult. It’s why Accenture
Three trends in particular are now prevalent. The first, which we call “the anxiety pivot,” reflects the fact that economic worries are now eclipsing health concerns in the minds of consumers.
Unsurprisingly, given the pandemic, health and wellbeing have been a big driver of purchasing behavior recently. And they still are. But research shows that more people 51% versus 46% now worry more about their personal finances than health. And eight in ten say inflation and the cost of living are top of their economic concerns.
For retailers, it means this is a critical time for nurturing and reinforcing those customer relationships. As discretionary spending tightens, people need help stretching their budgets further. And they want reassurance about stable pricing.
We’ve seen grocery take a lead here. One UK supermarket, for example, is “dropping and locking” the price of more than 100 items through the end of the calendar year in response to consumer worries about inflation. Another grocer is offering discounts to potentially vulnerable groups or launching budget-friendly options. All retail categories will need to be thinking along similar lines this year. People will remember positively the retailers that were helpful and supportive. Longer term, this is an opportunity to increase brand loyalty.
The second trend—the “spending shuffle”—reveals how, as consumers (and lower-income groups in particular) feel increasingly squeezed by the economy, they’re having to make more trade-offs in their spending.
Research suggests that luxury goods, big-ticket purchases, eating out, and leisure travel will be impacted the most by these trade-offs. Whereas essential spending on groceries, bills, and household items will remain strong.
However, there are some interesting nuances in the research. For example, over a quarter (27%) of consumers—and even 21% of low-income consumers — expect to spend more, not less, on health and fitness this year. That suggests a significant pivot has occurred in what consumers consider essential spending.
What’s more, over half (55%) say they’re still trying to hold on to their sustainability values despite economic challenges. So, there are opportunities for retailers to work with their customers to help them live not only more economically but also more sustainably.
We’ve seen, for example, retailers offering repair services or extending warrantees to increase the useable lifetime of products. Some are also providing “like new” resale platforms to help their customers profit from their past purchases.
This can be a powerful way to develop deeper customer relationships while simultaneously enhancing sustainability and opening up new revenue opportunities.
The third trend, the virtual reality check, reflects the ways digital and physical shopping continue to merge — especially as we add immersive platforms and the metaverse into the mix.
As day-to-day existence becomes more and more digital () consumers’ interest in VR as a shopping channel has grown. An amazing result is that greater than 50% of consumers revealed that more of their lives are moving into digital spaces.
And this extends across all ages and income groups. A significant majority of Millennials (61%) are interested in using virtual spaces to shop for real-world products. But over a third (34%) of Baby Boomers are too.
With global metaverse revenue is expected to be around $800 billion by 2024 and up to $1 trillion by 2025, the key for retailers here is not to get left behind as the technology matures. It reminiscent of what occurred with the evolution of ecommerce over the past 20 years. Those that didn’t jump in early were at a disadvantage. While this is very much still an emerging space, the priority should be to experiment. That means testing out metaverse concepts and business models both within the business and with customers, understanding how to blend virtual and real-world experiences in a seamless way.
There’s already a lot of momentum behind the metaverse in retail. We’ve seen luxury and fashion brands in particular move into these spaces in a notable way. And some brands have even created entire divisions devoted to metaverse strategy.
But it’s important to understand that fully immersive VR is only part of the story. There’s a whole range of different immersive experiences and digital engagement channels for retailers to explore. These include 2D virtual platforms, augmented reality experiences, digital livestreaming, social commerce, and more.
Retailers should consider honing their abilities in these environments today, since many of the underlying capabilities—strong data and analytics, information security, deep understanding of customers, digital know-how, experience design—will play a central role in future metaverse experiences.
Above all, retailers need to be prepared for a period of turbulence in consumer preferences and behaviors. Economic uncertainty is changing shopping mindsets and priorities. This is a time to strengthen consumer relationships, help customers through tougher times, and have the organizational agility to flex, and keep flexing, as these preferences inevitably evolve in the future.