Innovation isn't an option, it's essential for retail
Thoughts by Hugh Fletcher, Global Head of Innovation
Consumer spending continues to endure its longest period of decline in four years as shoppers refuse to show an appetite for increased spending. Visa's latest analysis clearly demonstrates that shopping habits are changing, particularly as card spend fell by 0.8%; having a strong online strategy alone is clearly no longer enough in the highly competitive retail sector.
Evidence continues to grow that prices will rise as a reaction to inflation, and retailers must react accordingly to their share of the customers' wallet - which is increasingly shrinking. They should do this by implementing a strategy that places all types of innovation at the forefront of their offering. Doing so will not only help drive footfall and online spend, but our figures proved that six in 10 would be more likely to spend with a retailer which is digitally innovative.
In a retail world that is increasingly dominated by Amazon, retailers shouldn't and cannot afford to shy away from innovative ideas. Amazon's Dash, Fresh and Echo devices are designed to help the digitally native firm secure a wider customer base, and a greater share of the wallet, while its acquisition of Whole Foods will see it enter the physical space and combat the traditional supermarket chains like Sainsbury's.
Think beyond online
What Amazon has begun to do is develop its overall offering beyond online to own the entire customer experience - this feeds into the term Interface Imperialism where brands diversify and expand their offering into entirely new services. It's imperative to understand that innovation isn't an option but a universal characteristic that all retailers must embrace. Those that don't will quickly become outdated and see the customer turn to a savvier competitor.
July's ONS figures offer mixed reading for retailers as consumer's spending on the high street remained relatively stagnant. Food expenditure helped to bolster the overall figures but the real winner in all of this was online which accounted for approximately 16% of all retail spending. It's unsurprising to see online experiencing continued growth as shoppers crave greater convenience in their daily shipping interactions.
Ease of use will always be king for the customer as they look for the quickest possible route from product to point of sale, with our research finding that 23% are digitally obsessed and make almost all their purchases online - prioritising convenience and innovation over brands.
As consumers become more comfortable with new innovative ways of shopping, retailers will have to transform as well. The concept of Programmatic Commerce, for example, will begin to make its way to the forefront as the majority of shoppers (57%) begin to see the personal benefits of technology automatically purchasing goods for them based on pre-agreed preferences.
There is no hiding the fact that Amazon currently dominates retail because it understands exactly what the customer wants and provides it consistently through its Echo & Dash products. We all have a love/hate relationship with Amazon because of this, but retailers should take a note and evolve their own offering to meet customers' high expectations. A failure to take on board innovation will only lead to a loss in customer satisfaction and ultimately spend.
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