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From novel technologies to changing consumer attitudes, Applause has selected 10 top retail trends to watch.
The COVID-19 pandemic led to an increase in services like BOPIS (buy online, pick up in store), curbside pickup and BORIS (buy online, return in store). While retailers in many markets have long since resumed brick-and-mortar trading, demand for omnichannel is still high. According to an Applause survey conducted last November, 66% of respondents said they would shop at merchants that offered an omnichannel experience. Moreover, 35.6% said they would actively leave a brand with a poor or unsafe omnichannel shopping experience.
Social commerce — the act of selling products directly over social media channels — will be a clear retail trend. After a three-year plateau, the average daily social media usage of internet users worldwide rose again in 2022, increasing from 145 to 147 minutes per day, data from Statista shows.
The more time consumers spend on social media, the more crucial it becomes that retailers adopt a social commerce strategy. In fact, brands that don’t have one are likely to fall behind their competitors — fast. According to an Accenture study, shopping on social networks such as Facebook, TikTok and WeChat is going to grow three times faster than sales from traditional channels over the next three years.
The advantages of social commerce are clear. First, it shortens customer journeys, as consumers can complete purchases directly on the platform without being directed to an online store. Second, the rise of micro-influencers means that consumers can easily find products relevant to their style and interests. According to a Sprout study, 79% of Gen Zers say they would purchase after seeing an influencer recommendation.
To have the most success with social commerce, brands should avoid “salesy” ads. Instead, they should include user-generated content in their campaigns and create ads that closely resemble organic content. This way, promotions actively enhance the social media experience rather than posing an annoying distraction.
It has been cited as a trend for years now, readers are likely bored of seeing AI/ML listed as a top retail trend. Hear us out.
Building truly successful AI applications takes time and companies are still only realizing small pockets of potential value. According to research from Accenture, nearly three quarters of companies struggle to scale AI because they underestimate the work that goes into training and testing AI properly.
The business advantages are clear to see. Just switching from a traditional contact center solution to one powered by conversational AI can have an average 3-year ROI of 241%, an NPV of $10.2M and reduce call center cost by 31%, a Forrester study shows.
If retailers are to maximize potential revenue from machine learning-driven personalization campaigns, they need to implement an enterprise AI program.
Since the start of the global pandemic, retailers have looked for new ways to substitute in-store shopping with immersive online experiences. Cue the rise of AR: with 3D visualizations, product demos and virtual try-ons, consumers can trial items without leaving home.
However, AR is more than a quick fix solution to make up for lost foot traffic. A study by Shopify found that products advertised with AR content saw a 94% higher conversion rate than products without it. Consumers are also less likely to return items, as AR gives shoppers a much better idea of the product and how it fits/suits them. Given its obvious advantages, AR is becoming more than a nice-to-have; 43% consumers in the beauty sector, for example, expect brands to offer AR, according to research from Google.
The more commonplace AR becomes, the more digital quality will play a decisive role in the brands customers choose. As the director of product management at Google said during an interview: “As technology continues to improve and usage increases, AR will soon become a universal language on the web. The best part will be seeing how brands push the boundaries to deliver amazing and helpful experiences for consumers.”
With a DTC channel, companies can sell their products or services directly to consumers, eliminating the need for intermediaries like third-party distributors.
In its early days, DTC came about as a democratic form of commerce. Rather than convincing a wholesaler to include their products in its assortment, small brands and startups could sell to consumers via their own ecommerce website. The obvious benefits were higher speed to market, more favorable prices and higher margins.
Nowadays, thanks to the growing consumer shift toward digital, DTC channels are just as valuable for major global brands as smaller players. This is because DTC has become less about direct sales and more about marketing. The larger a company gets, the harder it is to keep brand messaging consistent, as brands have no control over the customer experience, product descriptions, delivery times, etc. of third-party distributors. A DTC channel is a brand’s single point of truth.
Read more about why global brands are investing in a DTC strategy.
In 2021, Gartner named visual search as one of five technologies set to have a significant impact on digital advertising in the next two to three years.
Instead of typing searches into a search engine, users can take photos instead. In the past, image search functionality was very basic and its use cases minimal. If a consumer had seen an item online or elsewhere, but couldn’t find or remember what it was called, visual search gave them a way to find it.
Today, the technology is more sophisticated. Thanks to advancements in AI, retailers can analyze images taken for visual search queries and suggest similar or complementary items. Users can also use images to search for results that are hard to capture in words, such as outfits that mirror a certain style or pattern.
Through livestream shopping, customer representatives can respond to and execute customer requests in real time.
This trend is particularly popular in China. Livestream commerce was pioneered by the Chinese retailer Alibaba in 2016 with Taobao Live, which linked an online livestream broadcast with an e-commerce store. Chinese media reported that Alibaba’s 2020 Singles’ Day event on Taobao Live generated $7.5 billion in total transaction value in the first 30 minutes alone.
However, this trend is set to turn global. McKinsey predicts that live-commerce-initiated sales could account for as much as 10 to 20 percent of all e-commerce by 2026.
The advantages are clear. Livestream e-commerce accelerates customer journeys from awareness to purchase, especially if one-off coupons are used to create a sense of urgency. By offering new sales formats, brands also differentiate themselves and attract younger consumers.
As of 2021, nearly one third of US consumers owned a smartspeaker, according to Statista. This number is likely to grow exponentially. As the Harvard Business Review explains: “voice represents the third key UI and technology platform of the past three decades, following the web in the 1990s and smartphones about 10 years ago.”
Buying via voice commerce is the fastest way to shop. If a voice assistant already has a consumer’s details, the consumer need only make the command, confirm it and the voice assistant deals with the rest. However, as a report by PwC found, the majority of items bought via are small items that consumers can buy without having to see them physically. More use cases will likely emerge as voice heads towards mass adoption.
72% of sellers believe that buying pre-owned items has become more common in the past year, according to eBay’s 2021 Recommerce Report. Consumers (particularly Gen Zs) are becoming increasingly conscious of what they buy, where they buy it and who they buy it from. In the past year, 80% of Gen Z, 78% of millennials and 75% of Gen X purchased pre-owned goods, the report shows.
Following on from #9, a key retail trend is sustainability. According to McKinsey research, two-thirds of UK and German consumers say that it has become more important to them to limit the impact of climate change. To do so, a further 65% say that they will now buy more high-quality products that last longer. Especially for younger consumers, “luxury” is less about premium materials and more about materials that have been created responsibly. Already, more than one third of global consumers are prepared to spend more money on sustainable items, a study by Simon Kucher & Partners shows.
The retail trends explored above all find themselves at various stages of development. Which trends will permanently shape the future remains an open question.
Applause works with retailers worldwide to ensure their digital experiences are exceptional. Find out more here.
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