Friday Five, August 28: A Quick Summary Of The Top 5 Articles From This Week
It’s often said that new social conditions give birth to new human behaviors, and COVID-19 is no exception. As stay-at-home orders swept the nation, U.S. consumers embraced online shopping alternatives with open arms, a trend that’s likely to outlast the ongoing pandemic. But what does that mean for the future of traditional retail? Well… a few things. First of all, shipping costs may increase, product return rates may escalate, and direct to consumer business models may explode in popularity. Ya know, all the normal stuff! J
In this week’s Friday Five blog, we explore all of that, plus so much more. Here, we’ll cover topics including how the US Postal Service budget cuts will impact 2020’s holiday season, the accelerated disruption that COVID-19 has inspired, digital transformation in the retail industry, and why consumer behavior has jumped almost a decade ahead of expectations. Read on for a quick summary of the top five news articles from Forbes, Burberry.com, Chain Store Age, and Total Retail. Don’t forget to let us know your thoughts in the comments!
1) Politics At The Post Office Is Hiding A Problem For Retailers: Holiday Shipping Costs Are Going Way Up
Forbes – August 26, 2020
Due to recent budget cuts to the US Postal Service, both FedEx and UPS have told their customers that surcharges are coming for the holiday season and shipping rates will increase, too. In light of the ongoing pandemic, 2020 will likely see the highest e-commerce sales ever, which will inevitably strain the established systems and drive up shipping costs. According to Forbes, “the retailers most at risk will be those who have a high percentage of e-commerce penetration and a low average order value.” Luckily, software exists that allows retailers to increase average order value through machine learning that makes intelligent product recommendations, in addition to prioritizing items that come from the same distribution center. Another option to offset shipping costs is to focus on promoting curbside pickup, which eliminates the issue altogether.
2) Burberry Debuts Luxury’s First Social Retail Store In Shenzhen, China, Powered By Tencent Technology
Burberry.com – July 31, 2020
According to Burberry, the luxury brand recently announced its “first social retail store in China’s technology hub Shenzhen, blending the physical and social worlds in a digitally immersive retail experience.” The brand’s social retail store will be powered by Tencent technology, and it will be a space of exploration “designed to inspire and entertain luxury customers, where they can interact with our brand and product in new and exciting ways, in person and on social media.” By merging social media with the traditional shopping experience, Burberry hopes to bring the store to life through exclusive content and personalized experiences, both physically and virtually. Davis Lin, Senior Vice President at Tencent, said the innovative technology company will create state-of-the-art digital services and delightful experiences, and also help Burberry build deep emotional connections with its consumers.
3) Retailers Are Innovating In Ways That Will Outlast The Pandemic
Chain Store Age – August 24, 2020
In light of COVID-19 stay-at-home orders and business closures, retailers have noticed significant shifts in consumer shopping habits. Notably, online spending in the U.S. reached $66.3 billion in July, up 55% year-over-year, and only about 30% of U.S. consumers said that they felt comfortable going to a shopping mall. As these new trends transition to become long-lasting transformations, retailers will need to continue to innovate. A few trends that are likely to outlast the pandemic are buy online/pickup in-store services, self-checkout kiosks, contactless payments, video shopping, augmented and virtual reality experiences, and a bigger emphasis on social media engagement. Although “digital transformation” has been a buzzword for some time, its mission has never been so relevant. No matter how big or small a retailer may be, they need to adopt omnichannel strategies that allow for flexibility, adaptability, and mixed-reality experiences.
4) 5 Ways Technology Can Minimize Product Return Rates
Total Retail – August 25, 2020
Between November 2019 and January 2020, U.S. consumers spent a record $1.1 trillion on goods. However, the total value of returned goods also increased more than 6%, or approximately $100 billion. Due to COVID-19 precautions such as stay-at-home orders and dressing room closures, online shopping exploded in popularity, which further exacerbated the existing “returned goods” issue. That said, many retailers are investing in innovative technology solutions that make the new shopping experience more seamless. For example, augmented reality and virtual reality can help shoppers pre-determine whether merchandise will fit. Additionally, machine learning can help retailers identify products that shoppers are known to return, and then suppress future recommendations in that category. Although product returns may seem like a “good problem” to have right now, everything counts when it comes to getting retailers back on their feet.
5) Why Consumer Behavior Has Reached 2030 Levels
Forbes – August 23, 2020
According to Forbes, new social conditions often give birth to new human behaviors, and COVID-19 has possibly changed the course of modern society forever. Traditionally, new ideas, behaviors and technology would usually take many years to reach critical mass. But during the pandemic – out of sheer necessity – mass adoption happened in just a few short months. To keep up with the radical changes in consumer behavior, retailers should focus on three key areas of change: 1) the rising popularity of direct to consumer business models and how they help to create a community of brand fans, 2) the traditional Monday-Friday work model has been thrown out, thus opening the opportunity to make work more modular, creative, entrepreneurial, and meaningful, and 3) the ever-growing importance of cultivating consumer trust and building brand loyalty through transparent messaging and engagement.
We hope you enjoyed the last “Friday Five” of August! Did we miss any exciting developments in the retail industry? Let us know in the comments below, or on any of the BDS social media channels. We love to hear feedback from our community of industry professionals. Until next week!