Why it matters:
- The country’s top retail leaders shared their strategies to drive business in 2022 at the annual National Retail Federation conference.
- Pandemic-fueled changes made consumers more willing to try new ways of shopping, putting retailers who don’t adapt to those changes at risk of losing customers.
- All businesses can benefit from the consumer insights gleaned from millions of retail transactions over the past year, such as shopper demand for tech that makes their lives easier, like buy online, pick up in store options.
Understanding the customer and knowing how they want to shop has never been more important, according to retail CEOs who attended the 2022 National Retail Federation conference in New York City recently, also attended by CO—.
“Customer-driven,” “customer-centered” and “customer-focused” were the top buzzwords as retail leaders described the trends that will shape their strategies this year.
“The customer has to be at the center of everything we do in this industry,” Walmart President and CEO John Furner said. But knowing what the customer wants has never been harder, he said.
“What’s happened in the last couple of years is a pretty precipitous shift in the way customers expect and need to be served,” Furner said.
“If you can react to the change, you gain an advantage,” said Vivek Sankaran, CEO of Albertsons Companies Inc., North America’s second-largest supermarket chain with over 2,250 stores. The pandemic, Sankaran said, has given his company “a maniacal focus on understanding what the consumer is looking for.”
Here are the top five changes in consumer sentiment that retail leaders like Furner, Sankaran and others are responding to this year:
Consumers have different definitions of what defines safe shopping
With the pandemic still disrupting lives, what feels like safe shopping to one consumer may be very different for another, retailers said. That’s why it is important to continue to offer a multitude of options, including buy online, pickup in store (BOPIS) and delivery, even as shoppers in growing numbers return to stores.
While retailers have taken extraordinary steps to create safe stores, “It matters more what the customer feels is safe,” said Best Buy CEO Corie Barry. “This is very personal for every consumer.”
Best Buy plans to continue to offer curbside pickup and delivery and virtual shopping options indefinitely to help customers “feel safe above and beyond what we know empirically is safe.”
[Read: The New Consumer: The Top Trends Shaping the Post-Pandemic Shopper]
Consumers like tech and want more
The pandemic has shown retailers that consumers will quickly adopt new technology if it makes their lives easier.
Consumers increasingly say that they rely on tech for purchases and daily activities. A report by global marketing communications agency Wunderman Thompson, presented at the retail conference, found that 93% of consumers say that technology is our future, 76% say their everyday lives depend on it, and 81% believe a brand’s digital presence is as important as its in-store presence.
Legacy brands like Ralph Lauren are embracing the latest in technology by marketing their fashions in the metaverse.
“There’s a great consistency between our philosophy and what the metaverse brings,” Ralph Lauren CEO Patrice Louvet said at the conference. Ralph Lauren, he said, is in the “dreams business,” and selling digital clothes in the metaverse lets customers fulfill virtual dreams. It also connects the brand with younger consumers. These digital clothes enable users to wardrobe their 3D avatars with exclusive product.
Ralph Lauren partnered with digital platform Zepeto to sell virtual fashions in August and it sold more than 100,000 items within the first weeks, Louvet said.
[Read: Pop-Up Store Experiences That Blend Physical, Digital Worlds Woo Pandemic-Changed Shoppers]
While retailers have taken extraordinary steps to create safe stores, “It matters more what the customer feels is safe,” said Best Buy CEO Corie Barry. “This is very personal for every consumer.”
Today’s consumer is a hybrid shopper who wants to move easily between online and in-store
Omnichannel used to only mean combining digital and physical shopping, Best Buy’s Barry said. Now, it has expanded to cover myriad consumer touchpoints, and retailers must provide a consistent experience with all of them.
For example, Barry said, a customer might call a store and want to chat with an employee, then place an order digitally, pick it up in store and later request that a consultant visit their home to troubleshoot an installation problem.
“All of those experiences need to stitch together,” she said. “Customers expect this frictionless consistent experience no matter how they touch your organization.”
Stores remain important, with 72% of consumers saying they rely on stores as their primary shopping resource, according to a study by IBM’s Institute for Business Value and the National Retail Federation. But the study concluded that “consumers no longer see online and offline as distinct experiences – they expect everything to be connected all the time.”
Albertsons has seen that its best customers – those who spend the most in its supermarkets – are those hybrid shoppers who engage with the stores both in-store and digitally, Sankaran said.
Consumers want retailers and brands to be purpose-driven
Purpose-driven consumers – shoppers who choose brands based on how well they align with their values – now make up the largest segment of global consumers at 44%, according to the IBM/NRF study, outpacing those who say value (37%), brand name (15%) or product functionality (4%) influence their decisions.
Best Buy and other companies are leaning into efforts like sustainability and diversity and inclusion, Barry said, not just because it is the right thing to do, but because “it is good for business over time.”
Employees, as well as consumers, want to believe they are connected to a retailer that is about more than just selling goods, she said.
Consumers have money to spend, but are worried about inflation
Retailers ended 2022 with robust sales growth of 14.1% during November and December, hitting a holiday spending record of $886.7 billion, according to the NRF.
Brian Cornell, Target CEO, said shopper enthusiasm during the holidays “gives me incredible optimism for the future.”
The NRF is expecting spending to remain strong in 2022. “We’re seeing job growth, wage growth, we still have a stockpile of savings that haven’t been used up,” NRF Chief Economist Jack Kleinhenz said.
But while Walmart’s John Furner also expects strong demand to continue, he says rising prices are a top concern of shoppers.
Walmart plans to address that concern by leaning into its message of everyday low prices, and by looking for ways to reduce supply chain costs to keep prices low for consumers.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
Follow us on Instagram for more expert tips & business owners’ stories.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
