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First, it’s important to understand how changes in demographics, technology, and community are driving these seismic shifts in the retail market.
These shifts are being felt across all retail categories, though certain industries, such as the beauty and cosmetics, books, and entertainment industries, are being impacted more than others, largely due to their nature as “discretionary spending” categories.
The impact of millennial buyers is one of the greatest drivers of change in retail. Millennials now account for 21% of discretionary consumer purchase in the US. Yes, they expect speed and convenience, but 37% also claim to be willing to pay more for a product to support a cause they believe in.
And their digital-first attitude is influencing the buying habits of other demographics, too.
The parents and grandparents of millennials are following their digital-first lead. In fact, a KPMG report found that Gen Xers made an average of 18.6 online purchases (per year, per person), compared to the 15.6 online purchases made by millennials. Millennials are also taking over in the B2B space. According to research conducted by Merit, ,millennials now make up to 73% of B2B buyers.
What’s more, millennials are more likely to engage with the latest technology tools during their buying journey. Many are using augmented reality apps to virtually try on clothing, makeup and even eyeglasses before deciding on a final purchase.
More and more people are researching new brands and products online—and making their purchases online. Even luxury brands, which have traditionally been insulated from changing buying habits, expect to see 40% of their sales move online by 2020.
Traditional marketing channels, such as magazine spreads and television ads, are being supplemented, or even replaced, by social media marketing and social influencers. In fact, the Instagram influencer market is already a billion-dollar industry, and Media Kix expects it to grow to $2.38 billion in 2019. That growth is especially exciting, considering a 2018 McKinsey study found that millennials are three times more likely than Baby Boomers to say they learn about new products or brands from social media.
Today’s millennials—your current and future buyers—aren’t as trusting of traditional media outlets as previous generations. A 2015 survey by Harvard University’s Institute of Politics found that 88% of millennials say they only “sometimes” or “never” trust the media. When it comes to their purchasing decisions, this generation is turning to social influencers to inform their buying decisions.
Millennials are seeking out people they can relate to online, and are holding the opinions of their online communities in high regard. A 2018 Fullscreen report found 37% of millennials said they’re more likely to trust a brand after seeing an influencer post about it.
Trusted online communities are also empowering brands and businesses to create new and exciting products and services. Members of these online communities are rarely shy about expressing their needs for future products, and brands that actively participate in their online communities can take advantage of the crowd-led innovation that comes with a robust and supportive community.
The percentage of millennials who prefer to use a smartphone to shop online.
The percentage of Gen Xers who have used their smartphone to look up a product while in a physical store
The average amount Baby Boomers spend per online transaction.
*According to KPMG data
Learn how Paula’s Choice Singapore used socialmedia to grow its B2Cbusiness—and break intothe wholesale market.
How to fearlessly transform your businessRetailers who have embraced multi-channel sales and conduct business in both the B2B and B2C markets can drive growth by better leveraging their existing customer base.
Bundling certain products, and upselling and cross-selling to your existing customers can open the door to increased revenue, while also helping your customers see your brand in a new light. As more brands emerge in an already busy marketplace, it’s important to maintain a diverse series of revenue streams.
Brands that resist eCommerce might soon find their slice of the market shrinking.
When it comes to embracing digital technologies, the B2B market is especially ripe for innovation—a Forrester report estimates that, by 2021, B2B eCommerce will reach $1.2 trillion and will account for more than 13% of all B2B sales in the US. Much of this growth is a result of wholesale buyers bringing their personal, digital-focused buying habits into their work.
Your B2B buyers will appreciate a buying experience that they’re already familiar with in the B2C market—such as a price-and-assortment personalized eCommerce shopping experience and hassle-free purchasing options.
But the digital transformation hardly stops there. Brands, especially consumer-facing ones, have been turning their attention to artificial intelligence (AI) and augmented reality (AR). These relatively new technologies have already proven invaluable for many organizations—from their use as digital customer service representatives to their proliferation in manufacturing operations—and even as in-store greeters.
AR technology is especially popular in the beauty and cosmetics, clothing, and eyewear industries, enabling both B2C and B2B buyers to virtually try on everything from a new dress to a new pair of glasses before committing to a purchase. In fact, a Retail Perceptions study discovered that 40% of people would be willing to pay more for a product if they could first experience it through augmented reality, while 61% of shoppers said they prefer to shop at stores that offer an AR experience.
What’s more, businesses can use the data they collect from these AI and AR tools to inform their future strategies. Together with crowd-led innovations, brands can more easily understand what their customers want and work to bring these products and services to the market in the most effective way possible.
Diving into new revenue streams and opening yourself to different business opportunities makes it even more important to be as organized and effective in your operational processes as possible.
Process automation is truly the unsung hero of digital transformation. Automating your operational processes can not only help save time and money, but it frees up your staff’s time to focus on more meaningful tasks. When your team doesn’t need to manually process orders or track shipments, they can focus on more important tasks, such as improved marketing campaigns or the development of new products, effectively winning more business for your company.
Your team can also work on strengthening the existing personal relationships that are crucial to a successful B2B business. And, together, your employees can engage in co-innovation, leading to even more nimble processes and better insights by pooling their knowledge into a more complete picture of your business operations.
What is co-innovation?
In their 2014 paper, Explicating Open Innovation: Clarifying an Emerging Paradigm for Understanding Innovation, Henry Chesbrough and Marcel Bogers describe co-innovation, or coupled open innovation, as a process that involves at least two partners. These partners may manage their mutual knowledge flows across organizational boundaries using joint invention and commercialization activities.
These boundary-crossing flows ensure that organizations have the biggest picture possible—from operations and marketing to sales, inventory, order management, and more—making innovation easier than ever.
Similarly, when your team isn’t manually tracking orders and placing shipments, they can work on building the online communities on which thriving brands now rely. After all, great service and strong relationships are crucial for brands to differentiate themselves from the digital giants, such as Amazon, that are able to offer consumers lower prices on often the same products.
Maybe you’re looking for a new accounting system that can help your operations team manage both a wholesale and a traditional B2C business. Or maybe they need an inventory and order management system that can holistically keep track of inventory across multiple sales channels, warehouse locations, and currencies.
Or, perhaps it’s your sales team clamoring for a customizable B2B eCommerce portal that makes orders easier for their wholesale customers. Whatever it is, it’s important to leverage well-integrated technology so the efforts of your entire team can have a greater impact.
The online world has made it easier than ever to join a community of like-minded peers. These online communities of loyal fans, influencers, and suppliers also make for the perfect focus groups for your B2C and B2B businesses alike.
Wholesalers can look to these communities to gauge the market and help their buyers better understand the needs consumers have and the ways they want to shop. Retailers can also use these communities to determine interest in new products and grow excitement around their brands. Instead of relying on so-called gut feelings alone, businesses can analyze the data they collect from these communities to support their decisions and drive innovation. Taking advantage of this crowd-led innovation can help organizations hone in on what, exactly, their customers want.
Crowd-sourced insights can also help businesses effectively forecast and scale in ways that were never before possible. And digital technologies, like customizable online buying portals, digital automation, and social media platforms, make fostering these relationships and communities even easier.
Today’s technological advancements have made it easier than ever to collect data and glean valuable insights. So it’s vital for thriving businesses to take advantage of the data they’re already collecting.
In fact, a 2017 Hackett Group study revealed that many supply chain organizations are planning to more effectively use data to drive performance in cost reduction, inventory optimization, improving quality, and improving working capital and service.
Of course, getting to a place where data can help inform and even lead decision-making takes time. It starts with collecting descriptive data that simply answers the question, “what happened?” And over time, businesses can use the varied information they collect to diagnose operational issues and even predict trends in real time.
These data points—and the crucial insights you can gather from them—can not only lead to better informed decisions, but can also help you pursue the most optimal future for your business.