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Clark Street Mercantile

Experts reveal retail trends that aren’t going away anytime soon

There’s no doubting that the pandemic had a significant impact on the retail sector. Despite this, the retail industry’s persistence has been on display for the past two years and shows no signs of dying down. 

Retailers developed technologies that pushed contactless shopping and payment to the mainstream. Traditional retail is still going strong, despite widespread fears that it would collapse into the eCommerce boom. 

As retailers and entrepreneurs look ahead to a future filled with opportunities and uncertainties, we asked industry experts about the key retail trends they expect to see in 2022.

Customer is God

Nati Harpaz, Managing Director and Co-Founder of TradeSquare

“Last year was the year when the customer took the upper hand in the retailer-consumer relationship. Social-distancing requirements and trading restrictions imposed by governments forced many consumers to change the way they shop. 

“They had both good and bad customer experiences, and those experiences shaped expectations as they became more confident shopping online. Consumers generally became more demanding in terms of product quality, brand authenticity, service expectations, delivery options and payment choices, increasing the pressure on suppliers and wholesalers to help retailers step up to the new playing field. 

“This change drove trends that will undoubtedly endure through 2022, and both wholesalers and retailers need to recognise the game has changed – most likely forever. 

Buying and sourcing local is more important in a post-Covid world: A broader sense of community has evolved since Covid-19 hit Australia, especially in the regions. Communities have hunkered down and found ways to support local businesses. 

“We’ve noticed a significant uptake in the number of businesses sourcing stock, supplies and products from local businesses rather than looking abroad. Cross-border supply chain challenges have compelled people to look local to avoid delays with imports – and businesses both small and large are reaping the benefits of establishing solid and reliable relationships with fellow Australian businesses. 

“This is already leading to stronger relationships with suppliers – and a migration away from sourcing products and stock from offshore, online platforms towards local marketplaces where vendors are easily accessible, and recourse is easy should something go wrong – a stark contrast to the relative anonymity of overseas marketplace platforms.  

New means of payment freedom: The rapid emergence of Buy Now, Pay Later shows consumers are looking for more convenient, simpler means of paying for goods without incurring relatively high-interest rates from credit cards. 

“The trend has extended into the B2B sector with businesses now able to use the short-term, interest-free solution to even out cash flow with minimal paperwork and red tape. On TradeSquare, for example, some retailers are purchasing stock using BNPL and onselling them before they need to pay for it. This is freeing cash flow to invest in growth and broadening their inventories. 

Smart wholesaling is reshaping the customer offer: Just as consumers have adapted to buying products digitally, wholesalers are now following suit in a trend that is changing the range of goods end consumers can choose from. 

“Consumers are being exposed to products and trends through social media, streaming video services and online promotions every day, which has forced businesses on every step along the supply chain to become more responsive to their customers. There are no borders for finding new ideas or products in a digital world.

“Trends and fashions are evolving and spreading more quickly, forcing wholesalers to react faster in keeping up with consumer demand. In the old days, retailers would meet with travelling salespeople, select from catalogues or strike up relationships at trade shows and exhibitions. In a post-Covid world, browsing and trading have moved online. 

Supply-chain instability will challenge retailers & suppliers: Stories of empty shelves, container shortages, airfreight disruptions and other supply chain crises have dominated retail news throughout last year and into 2022. Expect more of the same ahead. 

“Factories worldwide have been short-staffed due to Covid-related shutdowns and worker absenteeism, the suspension of cross-border travel has reduced air freight capacity, and there has been extensive congestion at ports and transhipping facilities. 

“The result is that retailers of all sizes have struggled to maintain stocks on-shelf and inventory shortages at factories and wholesale level, leaving customers frustrated by less choice – or at times unable to buy goods at all. 

“This has bred contrasting fortunes for wholesalers: on the one hand, they’ve struggled to satisfy customer orders, but on the other, opportunities have arisen to expand ranges and develop new sourcing channels. 

Consumers are looking for brands to be authentic and accountable: The advent of Covid has raised consumer awareness of health and wellbeing, and consumers are thinking more about products, their ingredients, and their environmental footprint. 

“Along with a greater understanding of the impact and implications of climate change, consumers are looking for companies to demonstrate that they are sourcing products from suppliers that do not exploit workers or harm the environment. Authenticity and a clean conscience in doing business is an expectation now – and brands that fail to be transparent in their supply chain risk paying the price through social media exposure or bad press. 

“This is impacting the way multi-brand retailers are sourcing products. Ordering from international sources online, for example, has become fraught with risk: How can a retailer know the true origin of the products they are buying? 

“Furthermore, buying products that are shipped from the other side of the world is unlikely to be as sustainable as sourcing them locally, especially when ordering in small volumes that tend to require air freight. 

“Smart businesses are making sure there is transparency in the origin of their products and materials – that workers are being paid fairly by suppliers, and that sustainable practices are being adhered to in the manufacture of products they create and sell. Sourcing from local suppliers can help ensure transparency through closer business relationships.” 

Incentivise customers to keep them coming back

Cary Lockwood, chief executive officer, Loyalty Now 

“The unstable highs and lows over the past two years have impacted on the ability of retailers to return to pre-pandemic normality. And the recent, rapid rise of COVID-19 cases across Australia as domestic borders reopen continues to highlight the need for merchants to remain flexible and expect the unexpected.

“The key for this year is fostering an engaged, loyal customer base. The more consistently you can provide customers with timely offers, ready information, and instant gratification, your customers will become more loyal.

“With consumer behaviour changing rapidly, its critical retailers look for ways to more deeply engage with customers to enhance an ongoing shopping relationship, both online and in-store. Evolving loyalty and rewards programs will help retailers build stronger relationships with customers, encourage repeat business, and use customer behaviour data to provide discounts and other offers that yield more sales. 

“Furthermore, expected to lead the way in the sector due to the advances in digital innovation is loyalty programs utilising card linking. Card linking provides a frictionless, seamless way for customers to gain rewards versus more traditional legacy programs that require customers to carry and display membership cards or scan codes at the point of sale. 

“Card linking can track customer spend at specific merchants and alert you, so you can immediately notify customers about points or cashback earned. Frankly, no other service supports card transactions like card linking, which is key to success in 2022.

“Reward programs with card linking service enabling their members to use any of their Visa, Mastercard or EFTPOS cards to earn points (or cashback) automatically will be a major development this year. 

“This digital, frictionless, data-driven approach to loyalty and rewards programs not only facilitates a more seamless customer experience, but it also lets retailers better understand their consumers’ wants and needs, and tailor programs and offers to their tastes, that will help to redefine brand loyalty in a post-pandemic retail market.”

The Power Of Advertising

Eugene Du Plessis, Regional Director Aus/NZ at Pathmatics

“Over the last two years, the pandemic has created the biggest retail shift the world has ever seen, turbocharging e-commerce. Having a functional website and online presence is only half the battle, though – it’s getting customers to those product pages that requires clever digital marketing.  

“As a result, marketers in the retail sector have had to be as nimble as consumers and Pathmatics data reveals that each year, retail brands digital advertising spend has grown exponentially, with huge spikes in 2020 and 2021. 

“I expect this trend to continue with 2022 trumping this spend again, and my advice would be for brands to invest in a mobile-friendly e-commerce store and a local app. This helps create a better and more user-friendly virtual shopping experience, as consumers continue to spend more time on their smartphones than ever before.

“Looking at the latest Pathmatics data, it comes as no surprise to see tech giant Amazon as the biggest spender thus far in January and the likes of Officeworks spending big as it gears up its marketing efforts to prepare Aussie kids going back to school. 

“Overall, the retail industry is in a very challenging position given staff shortages and supply chains under severe amounts of strain. I expect to see fewer digital ads encouraging home delivery so companies can alleviate some of this pressure – at least in the short term anyway. 

“I also foresee digital ads continuing to focus on educating the public about  COVID-19 restrictions and encouraging consumers to remain patient, as opposed to driving sales of stock, given how low this currently is. At Pathmatics, we’ll continue closely tracking activity in the retail sector as the year unfolds, lifting the lid on trends and which brands are spending where.”

Here are the top 5 AU advertisers (based on spend) in retail in January 2022:

(Between 1 January 2022 – 15 January 2022)

Brand: Spend (AUD): 
Amazon.com$828,600
Luxottica Retail $291,400
Officeworks Ltd. $291,400
Woolworths$147,700
Super Retail Group (SRG) Limited$119,200
Source: Pathmatics

Peter Thomas, Chief People and Customer Officer at SmartPay

“During the COVID lockdowns, cafes were quite stable, and we saw a decrease in restaurant volumes as many adapted to a takeaway model. With restaurants, we see spending improving dramatically in 2022, as restrictions ease, post the initial impacts of Omicron.

“We expect a continued shift to contactless payment forms, click and collect, and home delivery this year, and even though Omicron is currently impacting the community, we still expect a similar bounce back / increase once people are back to work and life returns to ‘normality’.

“Since the initial lockdowns in 2020 reports, merchants card transactions have jumped 20% compared to pre-lockdown transaction figures in 2019. This overall increase in these transactions indicates sustained growth driven by lower cash usage and the shift to a cashless society. Cash usage has been decreasing for years, but Covid-19 has helped speed up this shift.

“Card payments rose again in 2021, up 13.1 per cent in 2020, while digital wallets jumped 90 per cent in the same period, with 68 million monthly transactions. This transaction data indicates SME merchants started to rebound in late 2021 after many struggled through the COVID-19 lockdowns. But the increase in card usage equates to an increase in merchant’s fees, adding to costs at a time when saving costs is crucial to small to medium-sized businesses.

“It would be reasonable to expect a bounce back to trading levels experienced pre-Omicron once the dust settles; however, overall, the pandemic has increased the move from cash to the card, which we can see across our fleet.

“Retailers seeking to minimise Omicron’s impact on their business should review all business costs and reduce or remove them where possible. The easiest cost to reduce is the most overlooked – card transaction fees can cost some businesses thousands of dollars each year.

“Many of our small business merchants are reinvesting savings back into their business, initiating marketing and promotional activities, and developing loyalty programs to reward and retain customers – so it should be time to put their business first and review their cost efficiencies to ensure long term success.”

Also Read: Shipping delays and supply chain issues are here to stay: Tips for retailers struggling during the crucial holiday season

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Yajush Gupta

Yajush Gupta

Yajush is a journalist at Dynamic Business. He previously worked with Reuters as a business correspondent and holds a postgrad degree in print journalism.

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