- Companies that started out in other industries competing in retail operations for consumers’ time and spend
- Retailers are moving from single channel to multichannel to omnichannel very quickly
- Consumers expect more unique offers, enhanced recommendations, better service, easier checkouts and faster delivery
CHICAGO, US – Three shifts are driving a retail reinvention – new business models, channel expansion and shoppers’ expectation, according to a report by data analytics company Euromonitor International in collaboration with the National Retail Federation (NRF).
These three areas redefine industry rules and relationships - transforming the path to purchase in the process, according to Michelle Evans, Global Lead of Retail at Euromonitor International, in collaboration with NRF in the Retail Reinvention Report: A Framework for Future Growth.
Social media networks, streaming services and gaming platforms competing for retail spend
Rapid digitalisation has paved the way for new business models like marketplaces, direct to consumer and social commerce.
Evans said companies that didn’t start in retail are now competing for shoppers’ attention and their spend. Examples include social media networks, streaming services and gaming platforms. These platforms were not originally built for commerce but continue to expand such capabilities with shoppable content, marketplaces or their own merchandise sites.
“ByteDance - the owner of TikTok and Douyin - is capitalising on the audience reach and influence of its apps in the buying journey. In 2020, its Chinese platform Douyin added commerce functionalities and is reaping massive gains. Online sales of beauty and personal care products on Douyin’s marketplace surged 50% in Q1 2024 vs Q1 2023, and the company gained 10 percentage points in share, according to Euromonitor data. Douyin became the largest online retailer in China for this category as of Q1 2024.
“These behind-the-scenes shifts in how products reach consumers disrupt industry norms, creating new partners and competitors as a result. That leads to operational changes and forces retailers to find additional revenue streams to support growth targets in a fragmented landscape.”
Expansion of channels complicates shopping journey
Retailers continue to move from single channel to multichannel to omnichannel business models. These additional touchpoints serve as opportunities to engage shoppers, which could lead to incremental growth.
Evans said the challenge is harmonising these channels bringing together your brick-and-mortar stores, website, mobile app, and social media—to create a unified experience that puts the customer at the centre of the transaction.
“Food is a necessity in our lives, which means this category is a prime battleground for observing wider retail industry developments. There were once clear lines of demarcation between food purchases in grocery stores vs restaurants. But that distinction isn’t so clear cut anymore due to evolving consumer habits and tech advancements.
“Physical channels still capture most food spend. In 2023, 72% of global grocery sales came from local grocers, supermarkets and hypermarkets, and eat-in orders accounted for half of foodservice spend, according to Euromonitor data.
“But those four channels lost share over the last decade to discounters, warehouse clubs, food products e-commerce and on-the-go foodservice such as delivery, takeaway and drive-through. Euromonitor expects food products e-commerce and on-the-go foodservice to keep stealing share through 2028. The bottom line: channels that deliver greater value such as discounters and warehouse clubs or convenience like e-commerce, buy online, pick up in store and on-the-go foodservice are thriving here.”
Shoppers desire personalisation and for brands to really know them
Evans said consumers expect more of the shopping journey, now seeking unique offers, enhanced recommendations, better service, easier checkouts and faster delivery, for example. Their standards are high and will only continue to rise.
“Economic conditions, tech advancements, channel shifts and personal values all influence their preferences. Retailers and brands need to continuously transform to deliver on greater demands. To remain competitive, retailers and brands must know their target audience inside and out. One such shift is an increased desire for personalisation. Half of consumers want tailored products or services, and one in five want personalised shopping experiences, according to Euromonitor’s Voice of the Consumer: Lifestyles Survey 2024, a survey of internet-connected consumers in 40 countries.
“These sentiments are even higher among connected shoppers — a segmentation of the most digitally savvy population. But that shouldn’t come as a surprise. Why? This cohort shops more frequently across online channels where tech integrations like generative AI or AR can create intuitive, customised shopping experiences based on individual needs or preferences.”
Retailers and brands must adapt as the shopping evolution accelerates
Evans explained that the drivers behind these shifts can be at odds. While consumers expect tailored products and services based on their preferences, they also need to share their data for companies to develop such insights which may conflict with their desire for privacy.
“Privacy vs Personalisation is one of 12 challenges that Euromonitor identifies as most impacting the future of retail. Retailers, brands and others servicing the retail ecosystem need to balance these tensions and others to stay relevant in the eyes of their customers today – let alone in the future.”
For further insights see the Retail Reinvention Report: A Framework for Future Growth and Three Digital Shopping Trends to Watch in 2024.
For further information, please contact:
Euromonitor Press Office
Press@euromonitor.com
About Euromonitor International
Euromonitor International is the world’s leading provider of global business intelligence, market analysis and consumer insights. From local to global and tactical to strategic, our research solutions support decisions on how, where and when to grow your business. With offices around the world, analysts in over 100 countries, the latest data science techniques and market research on every key trend and driver, we help you make sense of global markets.