Triple Digit Growth In The Digital Retail Era: The Retail Trends Accelerating Growth

The biggest change has been around online shopping delivery trends — what used to be an option was now a necessity for survival. Almost a million Australian households shopped online for the first time during the pandemic and Cartology, the retail media business of Woolworths Group, reported exponential growth in online grocery purchases from older Australians.

But how did the most successful retailers keep everyone happy? They provided flexibility in delivery options. In 2019, only one person on our panel of retail leaders, Super Retail Group’s Brian Townshend, talked about click and collect as being a ‘vogue’ delivery option. But even then he offered it as an alternative for when the operational demand of fast delivery direct to consumers’ homes was too difficult.

Now, click and collect is a mainstay for online retailers. In the global 2020 holiday season we saw twice the online growth for stores with click and collect options compared to retailers that didn’t offer that flexibility.

The new trend around flexible delivery also extends to speed. Same-day delivery has always been hard to pull off when you consider that Australia is geographically the size of the US but has one tenth of the population. However, everyone had no choice but to adjust their expectations when the pandemic caused extensive delivery delays.

The result? A new trend in multi-speed delivery options. Different customers and product categories have different needs and sometimes quick delivery is not so critical. 

Retailers have embraced multi-speed delivery as an opportunity to save on costs and introduce more sustainable options. They’re really looking at their operational needs with two lenses – efficiency, which is about convenience for customers, and experiential, which is more values and purpose driven.

Our 2019 panel overwhelmingly voted this one as ‘vogue’. But we are seeing more voices and a greater focus on authenticity than ever before.

A dominant trend in the COVID-19 era has been the promotion of togetherness through the tough times. Brands that weren’t purpose-led before the pandemic are suddenly saying ‘we’re here for you’, which is making consumers stop and question the authenticity of those sentiments.

Gen X and Gen Y now have a larger share of the wallet and they're demanding change so retailers need to continue to adapt. The key is trust and authenticity and really living the values, rather than it being just a marketing exercise.

Understandably, this was not even on the radar for our panel in 2019. At the time, the retail landscape was dominated by larger retailers wielding purchasing power and marketing scale, but COVID-19 levelled the playing field in many ways.

If you were a big brick-and-mortar retailer with thousands of employees, you weren’t necessarily as agile as the small business with 10 employees who all had their fingers on the pulse and listened directly to their customers. 

As well as agility, successful retailers over the past year also had one thing in common — they all had existing technology assets that could be easily leveraged in the online world.

Despite its size, cosmetic brand MECCA was able to quickly transform its existing in-store capabilities into virtual services. Lounge rooms became the new personal styling showroom through mobile devices, and MECCA even live-streamed makeup demonstrations by their team members with the option to purchase the products in real-time. It was a bit experimental at the start, but it was exciting and engaging for their customers who were still able to transact and engage with the brand like they were in-store.

We were split on this in 2019 — how many payment options do consumers really need? But it seems buy now, pay later (BNPL) services such as Afterpay and Zip are here to stay.

Investors love BNPL and there are now dozens of versions available for Australian consumers. Gen X and Gen Y market growth has driven demand and we will continue to see more digital wallet offerings in this space.

Brand loyalty was overwhelmingly ‘vogue’ in 2019. The key, according to our panel, was the relevance and quality of rewards programs.

You can see the change in this trend if you apply the ‘experiential’ lens I was talking about earlier with MECCA. Rewarding your customers and maintaining loyalty in the crowded online market is now less about points and discounts and more emotional. Successful retail brands are identifying their customers’ changing needs in the COVID-19 world and providing meaningful recognition to keep their customers loyal.

The nature of retail roles has changed and will continue to change beyond COVID-19. Australian retail has seen more maturity and scale online, which has led to more specialisation in digital roles. Previously we saw commerce generalists but now there are people who specialise in search or online merchandising.

But that doesn’t mean that talent isn’t being cultivated in-house. The Woolworths Group announced a huge investment this year to retrain their employees skills for the new digital era. And that goes right down to the store level, with picking and packing and other job training to support online purchasing. This really underscores the importance of investing in capability and building pathways for team members to better meet customers’ changing needs.

This is something that has definitely accelerated since 2019, but has largely stayed on trend. 

We know 86% of shoppers buy from retailers, brands, and online marketplaces for a range of different reasons. Consumers’ need for product variety, availability and shipping flexibility have all contributed to a steady rise in sites like Catch, Kogan and Amazon in Australia and it seems like there is now a marketplace for everything, including niche interests and broader offerings.

There is an opportunity here for retailers to differentiate on service and loyalty. Provide convenience and be competitive in the other areas, but really own your differentiation.

In 2019, Showpo’s Mitul Lakhani acknowledged that you have to participate in sale events to some extent, but the panel warned retailers to manage investments carefully and consider customers’ desire for year-round consistency.

We will continue to see participation in sale events, but it will be more selective for retailers.