The last 40 years in the retail industry has seen incredible change. It is fair to say that the consumer experience compared to the 1980s is largely unrecognizable for shoppers.
For retailers, more so than most industries, it is vital that they stay ahead of the curve. In order to look ahead at upcoming trends, however, it can be useful to note the evolutionary changes that have taken place thus far. Let’s now look at the trends that have impacted the retail sector the most.
Total Quality Management
In the 1980s, retailers in Western countries faced stiff competition from Japan’s low-cost, high-quality manufacturing. Quality control became a big focus as a way of regaining competitive advantage. Companies began to define quality according to customers’ requirements. Additionally, management was being held responsible for improving product quality. These popular business approaches took hold in the 1980s and were implemented widely from retail to the US Defence Department.
All about the price
With the quality of products no longer being called into question, the 1990s saw a focus on price. Sam Walton’s vision of keeping prices low by focusing on volume, was the driving force behind the growth of Wal-Mart becoming the world’s largest company by revenue. Lean, and Just-in-Time Manufacturing saw big savings in the production of goods which also helped retailers keep prices low.
All Hail the Internet
The Internet revolution that began in the 1990s is something that we all take for granted, however, it has changed every aspect of our lives. The internet offered retailers an exciting and new channel to reach new customers. Not only did it democratize retail, lowering the barriers to sell anything to anyone, but it also opened up global barriers reaching customers across borders.
Social, Social, Social
Between 2003 and 2006, the launch of Friendster, Facebook, LinkedIn and Twitter changed our internet habits forever and with it the way we shopped and did business. Today, nearly 20% of total time spent online across both desktop and mobile devices is on social platforms (source). For retailers, the ability to use real-time communication channels to nurture customer relationships and drive revenue have proven very popular and some brands have even been successful in building a community of passionate brand advocates through the use of social media.
With quality, price and access now all taken care of, what are the ways that retailers can gain an advantage, win market share and drive sales?
At Aspectiva we believe that the next land grab for customers will be in User Generated Content (UGC). Already we see that the social media vanity metrics of recent years are proving ineffective. Likes or retweets are no longer a useful way of tracking the likelihood of gaining customers. Plus, with so much content being created and distributed by brands themselves, shoppers are disengaging with information disseminated by retailers.
Although not necessarily a new concept, according to Business Insider, shoppers who interact with UGC and online opinions are 97% more likely to convert with a retailer than customers who do not (source). Customers are not afraid to voice their opinions about the products they purchase – whether it be positive or negative – and do so frequently across all of the online channels they have access to. With so many opinions out there from consumers who actually use these products, brands are no longer the best advocates for their own companies. Social proof will be the most powerful tool for retailers to harness and those that can build trust, drive engagement and sell more.
The key challenge for retailers will be how they manage and present the large amounts of UGC that exists. With so many sources to gather opinions from – eCommerce sites, review forums, social media platforms, comments sections of articles etc. – retailers that can make the information accessible and easily digestible to shoppers will have an advantage in this increasingly competitive industry.
Aspectiva analyzes massive volumes of consumer opinions from across the web, turning them into comprehensive and valuable insights. Based on Artificial Intelligence and Natural Language Processing technologies, we leverage User Generated Content to help online shoppers search for the products they want and provide the recommendations to enable them to make informed purchasing decisions. Supporting eCommerce sites across any type of product or service, Aspectiva significantly increases shopper engagement and conversion rates.