Tomorrow’s Retail Trends: Lessons From the Global Marketplace
What can UK businesses learn from their counterparts around the world about anticipating and exploiting new developments in the retail sector?
The UK’s retail sector has undergone dramatic transformation in the past few years – and the rate of change shows no sign of slowing. The biggest challenge facing retailers today, therefore, is how to put in place a strategy and organisational model that can both anticipate and take advantage of the trends of tomorrow.
At Santander, we’ve gained deep and valuable insight into these trends, as well as the best practices employed by the most resilient and successful businesses. Some of these insights come from the trade missions we organise to markets all over the world.
After all, Britain isn’t alone in its experience of upheaval: all global markets have seen significant changes in consumer behaviours, with expectations of retailers now far higher than ever before. These changes have been driven primarily by technological advances and increasing connectivity.
From the four Cs to the four Es
To put these developments in context, it’s useful to look at the three key cycles of market disruption that have occurred up until this point, each of which has prompted retailers all over the globe to adapt their business models.
- In the more distant past, we saw the ‘age of efficiency’, during which businesses focussed on supply chain improvements such as just-in-time distribution systems as well as retail models like standardised flowing stores.
- This was followed by the ‘age of experience’, where consumer demand for instant gratification was fuelled by the rise of social media and related ideas ranging from FOMO (fear of missing out) to ‘Instagrammable moments’.
- Today, we’re seeing the emergence of a trend that can best be described as the ‘age of belonging’, where the most important drivers for consumers’ purchase decisions have become concepts such as community, sharing and a sense of purpose. Retailers are already starting to rethink how they can make the shopping experience more personal and create a greater sense of place and social interaction.
No longer are retail business models driven solely by the four Cs – consumer desires, cost, convenience and communication. Today, operators need to place just as much focus on the four Es: emotional connection with consumers, a more personalised experience, all-important ecological considerations and the evangelism that can drive greater levels of engagement and brand loyalty among sub-groups of shoppers.
Learning from the world
So how has Santander seen these factors being addressed in overseas markets? China provides a great example of a retail sector that’s at the forefront of technology adoption thanks to the significant infrastructure improvements it’s made over the last two decades.
“More retailers continue to entice customers into physical stores, using emerging technologies to deliver genuinely engaging and enjoyable experiences, even when the online experience is the first step in purchasing behaviour”.
The Chinese market has evolved from ecommerce to ‘social commerce’. It has seen, for example, the popularisation of shopping through social media channels such as WeChat. This ‘instashopping’ - making purchases via Instagram - is another way for retailers to leverage the social media juggernaut. Another dominant trend in China is the influencers model, which drives up brand engagement.
On visits to China, Santander customers have also witnessed first-hand how the popularity of online sales moving to offline is bouncing back due to their greater potential engagement levels and tendency to drive repeat purchases.
In the United Arab Emirates, meanwhile, many businesses are exploring experiential retailing: as a December 2019 report from our partner organisation the British Centres for Business in the UAE points out, the concept of ‘storetainment’, where retailers use a mixture of shopping and entertainment to attract customers and build loyalty, has taken off recently in the region.
In ASEAN markets like Singapore, the limited size of the city-state allows retailers to meet the need for convenience with physical stores – although here, having a unique brand that allows individuals to express their identity is a must.
As we live in ‘high convenience lifestyles’, where workstyle meets lifestyle, we’re seeing more curation of retail spaces, to engage consumers and create connection of people
Particularly relevant to UK businesses are the changes currently sweeping the United States: here, the brand story and its ability to resonate with consumers is also of paramount importance. This is why the Santander international pop-up showcase trade programme in the US this year not only helps UK-based businesses identify the most suitable market entry channels and trading partners, but also aims to demonstrate to retailers how they can leverage their brand power to access new markets across the Atlantic.
In both Britain and the US, we’re seeing the continued rise of subscription retail models that can deliver higher levels of customer loyalty, while technological advances such as artificial intelligence and blockchain – the latter especially in Europe – are helping to improve supply chain efficiency and increase traceability.
All over the world, meanwhile, retailers are leveraging data analytics to forecast fluctuations in supply and demand in order to protect their margins and working capital while also avoiding excess stock, which supports cashflow.
New markets, new insights
Getting to know overseas markets better can be a win-win for UK retailers. On the one hand, it gives them the opportunity to reach new customers, many of whom place a significant premium on British products and brands. This can play a significant role in reducing the concentration risk inherent in operating in a single economy or a single sector. On the other, it can provide excellent insights into different ways of thinking about and approaching the retail opportunities of today and tomorrow.
The retail environment has never been more dynamic – at Santander we believe that incorporating a global perspective into your business strategy will give you the best chance of sustainable success.
SUKHJEEVEN NAT
sukhjeeven.nat@santander.co.uk
linkedin.com/in/sukhnat
santandercb.co.uk/financing/international/trade-barometer
+44 (0) 7568 112 445
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This article was originally published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.