5 things 2022 consumers will expect from retailers
Retail has experienced a major shift. The foundations of the retail industry have been shaken. The world’s consumers are adapting their lives, buying differently and working differently. As the post-pandemic dust begins to settle, it’s time to examine what all these changes mean for businesses in 2022 and beyond. What global and local trends will continue to influence industry operations, determine strategies and shape future goals, thanks to evolving consumer behavior?
Retail transformation is influenced by consumer behavior
Our latest Retail Report research with KPMG shows that globally, 67% of businesses across the retail, food and beverage, and hospitality sectors grew in revenue by 20% or more in 2021. This is due in large part to the rapid growth of digital transformation investments, which were made in response to changing shopper needs and local regulations. Our research shows that 49% of merchants believe their business is better off because of investments made to improve operations during the pandemic. 94% of businesses intend to continue investing in 2022.
The change has been noticed by consumers too. 61% of respondents believe that retailers made their products readily available to the public during the pandemic. But there’s still a long way to go. Having experienced retail’s recent rush of resourcefulness, innovation, and flexibility, consumers around the world now expect more from their shopping experiences.
Here are five key consumer expectations that are worth strategic consideration in retail right now:
1. Shopping across channels more seamless
Flexible, tech-driven experiences that were made available during the pandemic blur the lines between sales channels. This is allowing for nonlinear customer journeys and a blurring of the distinction between them. Our data shows that 61% believe retailers should offer the same flexibility across channels as they did during the pandemic. Online retailers are more popular with 55% of consumers.
This shopping preference presents significant opportunities for loyalty building, revenue growth and brand building. However, many businesses may not be able to take advantage of these opportunities. While 61% of consumers would be more loyal to a retailer that lets them buy things online and return in store — up from 54% in 2020 — only 28% of businesses say they enable customers to shop and complete transactions easily across online and offline channels. In order to close this expectation gap, businesses should consider exploring unified commerce solutions, connecting sales channels, consolidating payments, and breaking down silos for a more modern customer experience.
2. Tech-driven loyalty programs are more efficient
It’s never been easier for people to find, compare, and shop with new brands — and this is affecting traditional customer loyalty around the world. A global 70% of consumers won’t shop with companies that offer poor shopping experiences, whether online or in-store. To secure long-term loyalty, retailers must offer customers more compelling reasons to connect with them on a regular basis.
Loyalty programs are an area of the customer experience ripe for innovation: 70% of consumers globally say retailers should use technology to make their loyalty or rewards programs easier and more effective.
The Retail Report highlights a particularly strong opportunity in payments-linked loyalty programs and apps: 61% of consumers would download a retailer’s app to receive better loyalty rewards, and 57% would be more likely to shop with a retailer if their loyalty program worked automatically through their payment card.
When it comes to growing loyalty, data must play a central role. Payment-linked loyalty, especially when sales channels are connected through a unified commerce solution, can help businesses capture richer data insights, understand shopping preferences, assign loyalty points, and better anticipate customers’ needs.
3. Greater environmental and social consciousness
Brands are being viewed as making positive contributions to society by consumers. Our research shows that loyalty is built by showing support for good causes and empowering consumers to make positive contributions. Sixty-six percent of customers believe that brands are responsible for ensuring ethically sourced stock, while 53% prefer brands that support causes they believe in.
Retailers still have much to do in order to meet these needs. Only 24% of businesses allow offset carbon emissions, so 38% consumers will pay more to buy an item.
Linda Ellett, Head of Consumer Markets, Leisure & Retail of KPMG in the UK, says Environmental, Social, and Governance (ESG) is an ever-growing consideration for consumers choosing which brands to shop with, and should be a top priority for the retail industry.
4. In-store tech-enhanced experiences
Despite the significant rise in online shopping during the pandemic, there’s still a strong appetite for the in-store experience — and consumers have high expectations that technology can be used to improve it. 64% of consumers agree that physical stores are important, even though they shop online with the same retailer. Half of consumers will shop online, but go in store for customer service, or help with a product that they couldn’t find online.
Physical shopping should be enjoyable, easy, and not stressful. Nearly half of businesses intend to open more physical stores over the next year. Brands must find innovative ways to attract customers, minimize waiting lines and create memorable experiences for their customers.
Research shows that 55% more consumers will shop with retailers who use technology to enhance the shopping experience. This includes adding new payment methods, offering kiosks for stock checking, and using in-store technology like digital mirrors.
Many retailers realize the importance of in person shopping. 51% of businesses expect to see a rise in revenue from physical stores over the next year. To get the most from brick and mortar investments, it is important to embrace the physical store’s role as a place of brand experience and loyalty-building.
5. Flexibility and increased payment options
The right payment options are a crucial loyalty driver that retailers should focus on in 2022. Businesses have the potential to capitalize on the rising popularity and demand for digital and contactless payment options, as well the growing demand of alternative shopping options, such as social commerce, buy now-pay late (BNPL), and buy online, pick up in-store.
Although payment method preferences will vary from region to region, globally 78% of customers expect to have the ability to pay with major debit cards while 68% expect to use cash. 54% of consumers expect to be able pay with digital wallets.
BNPL shopping has been on the rise all around the globe. 24% of global consumers have used a BNPL solution in the last year. Adoption is highest in Sweden and Norway, France, Mexico, France. However, retailers are still not fully embracing the flexibility offered by BNPL, particularly when it comes to high-value transactions. Only 18% of customers are allowed to use BNPL services. This is a trend that has been led by Asian and Scandinavian merchants, where 26% of businesses offer BNPL services in Norway, Sweden and Singapore.
Digital transformation closes the expectation gap
For many retailers, the move to embrace digital technologies that enable greater operational agility and richer shopping experiences hasn’t just helped mitigate loss during the COVID-19 pandemic — it’s opened up a wealth of new opportunities for growth.
The changing consumer behavior will continue to drive the demand for innovation and flexibility in a global market. Businesses who can connect their sales channels and use data to better understand and anticipate customers’ needs and exceed their expectations will ensure long-term loyalty.