While early reports on the pandemic showed doom and gloom for global retail, some surprising trends are emerging.
The US retail market, which until this year had been the world’s largest, was surpassed by China’s market. This in itself is not surprising—in fact, analysts had been predicting the Chinese market would soon outpace the American in this century. However, what is surprising is that it happened so soon.
According to eMarketer.com, “The US economy and its rates of consumption are expected to be impacted more negatively than China’s … China will produce $5.072 trillion in retail sales in 2020, compared with $4.894 trillion in the US.”
China’s ability to bounce back from the pandemic, due in part to strict measures to control the virus early in its spread, has allowed its markets (and its shoppers) to get back to something like normal.
This is good news for a number of global retailers, including those based in the US. For example, Tiffany & Co surpassed projections for quarterly profit this past week, on the back of an over 70 percent increase in sales in China, bolstered slightly by an uptick in sales in their home country. Tiffany has just emerged from a legal battle with prospective parent company Moët Hennessy Louis Vuitton (LVMH), which will see the conglomerate purchase Tiffany for $425 million less than their original negotiated price.
What does this mean for digital? The recovery of the retail market points to some interesting opportunities for growth and customer experience innovation. Our recent panel Digitizing Retail Experiences: A Global Perspective offered an in-depth look at retail with experts from North America, Asia and Europe. One of the strongest messages to come out of the discussion was the importance of retail convergence: Bringing digital and physical experiences together to enhance the customer shopping experience.
According to Koos Berkhout, Co-Founder of the Tecsa Group, “It's all based around an intimate knowledge of higher customer behavior across different segments. The retail experience breaks down into three different components: One, how you shape your proposition. In other words, what range do you carry and how do you set your price points across that range? How do you promote it? Two, how do you then deliver on that proposition? Three, how do you convey that message to customers?”
The combination of physical and digital in this area creates a powerful, sticky customer experience that entices shoppers and builds brand loyalty. The emergence of multi-channel shopping during the pandemic has led to an increased demand for convenience that was already evident in the market—the pandemic only hit the gas to switch it from a nice-to-have to a must-have.
Similarly, brands that have been lagging behind in their digital transformation are now seeing that their timelines have to speed up in order to compete in the new economic landscape. A successful digital transformation keeps customer-centricity at its heart, and enables retailers to win the loyalty of consumers who have more options for their purchase than ever before.
Check out the full panel recording below to learn more about the coming future of digital and physical retail.
Full recording of Panel Talk on Modern Retail