Intro: The new retail trajectory
Retailers are standing on the cusp of another revolution. E-commerce’s once-unstoppable momentum appears to be flagging as more consumers flock back to malls, yet there's a strong appetite to connect with brands in innovative and exciting ways. Meanwhile the return of inflation is fueling a focus on cost and value among even the wealthiest customers. Winning market share in the emerging retail order will require adept management of multiple touchpoints throughout an increasingly non-linear customer journey, fusing each into an experience that’s seamless. The future of commerce is not just connected, but convergent.
Online retail losing allure (% of US consumers expressing enjoyment of each retail category)
Source: Morning Consult Research Intelligence
i. Breaking down convergent commerce and its implications
With channels like social media, live streaming and voice becoming part of the shopping process, consumers are able to embark on, and end, the buying journey anywhere, supported by a constant stream of real-time information. This has reduced tolerance for friction and also complicates customer loyalty, which can only be won by blending channels and building experiences to cater to the desire for differentiation.
Consumers dive into a host of shopping options
ii. Future commerce requires a data-driven foundation
The pressure to support, and seamlessly blend, a multitude of customer touchpoints means many retailers will have no choice but to reassess their technology architecture, to make sure it equips the enterprise with the necessary flexibility and resilience. By pursuing both systems and organizational integration, and increasing access to and the ability to act on data, businesses can create the foundation of information and insights needed to deliver on customer demands – and to change direction where necessary. Careful change management and forging the right partnerships will minimize any growing pains associated with this process.
“The most critical thing is having one source of truth. Not a single Excel sheet that you’re maintaining as a category manager – data has to be made available to all stakeholders, because everybody is now making decisions based on that information.”
Global Head of Industry / Domains, Thoughtworks
iii. Choosing channels and priorities
Data shows a significant number of consumers ‘channel hopping’ as they shop. But the resources required to set up and maintain channels like AR or VR mean very few retailers will be able to support them all. Rather than racing to adopt every technology embraced by competitors, Thoughtworks experts recommend a more tactical approach, where investments in new touchpoints and experiences are tailored to the organization’s customer base and aligned with its overall strategy.
Emerging channels driving purchasing decisions
Proportion of consumers using VR retail channels who:
iv. Positive, not intrusive, customer experience
Convergent commerce presents a dilemma for retailers in that it makes customer data more valuable than ever, but gathering or applying that data in the wrong way can shatter the experience organizations need it to create. Missteps can be avoided through transparency and ensuring customers are conscious of a connection between the data they provide and the value they receive in return. Rather than seeing data security and privacy as risks, retailers should view these as opportunities to build the kind of trust with customers that contributes to retention and repeat business.
“Providing real value to customers in exchange for their data will ensure they aren’t afraid to share it. At the end of the day, customers want to buy an experience, not just a product. Doubling down on creating unique experiences with the data they share can help organizations stave off price wars during a recession and increase customer retention.”
Head of Retail NA, Thoughtworks
v. Looking into the convergent commerce crystal ball
Through 2023 and very likely beyond, uncertainty will continue to surround consumer sentiment, the development of customer touchpoints, and what habits, and expectations shoppers might pick up next. Nonetheless, retailers can bet on some broad trends gaining prominence, including connected devices playing a larger role in the retail ecosystem, renewed appreciation for the importance of retail retaining a human touch, and above all, the capacity for change being a major driver of organizational success.
“Being a future-ready retailer means creating an environment where you can thrive amidst ambiguity. We are in a world where everything is evolving constantly, and will continue to do so. We need to be resilient, not just in terms of our platforms, but also as organizations.”
Retail & Commerce Industry Advisor, Thoughtworks
Perspectives delivered to your inbox
Timely business and industry insights for digital leaders.
The Perspectives subscription brings you our experts’ best podcasts, articles, videos and events to expand upon our popular Perspectives publication.