The retail industry, not just in the Asia Pacific but globally, faces headwinds. However, 2020 marks a new decade and potentially new hope for retailers.
While we don’t have a crystal ball, we’re in the privileged position of working alongside many thousands of the most innovative independent retailers. They’re on their shop floors, face-to-face with their customers every day, so they are well placed to understand consumer needs and how to cater to them.
It’s this inherent understanding of their customers that will help independent retailers navigate any uncertain waters ahead. Here’s how their 2020 vision is going to help them do it.
Capitalising on technology to drive profitability
Technology is changing the way we live, work and shop; and its impact will be felt throughout the retail industry in 2020. While state-of-the-art customer-facing technology like virtual reality and touch screens are becoming more common in modern-day retail, 2020 will also show that retailers are prioritising their backend tools to help crucial business functions such as inventory management and customer data.
Retail tech that enables ‘behind the scenes’ operations, like ensuring stores have the right products at the right time, is critical to every merchant’s success. It is intuitive technology like this that will act as the behind-the-scenes support network, so retailers can do what they do best in the year ahead.
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Payment flexibility
Flexibility will continue to be the name of the game when it comes to payments in 2020. While cash and credit cards aren’t going away anytime soon, consumers – particularly millennials and Gen Z will continue to look for more convenient, flexible ways to pay for what they purchase.
These payments, which originated as online-only, will quickly expand to in-store in 2020. Mobile payments will increasingly appeal, as will “buy now pay later” solutions such as Afterpay, which allows merchants to receive payments for purchased items upfront, while letting customers pay in regular installments.
There is increased awareness from even the largest banks that alternative payments have a genuine chance to be disruptive. This was further realised by CBA’s US$200 million investment in Klarna, the Buy Now Pay Later market leader in Europe, and Zip Pay’s recent US$1 billion valuation.
Buy now pay later is already a big hit among consumers, with 2.9 million customers in Australian and New Zealand taking advantage of Afterpay alone. Millennials are the highest proponents, accounting for 40.6% of buy now pay later users while Gen Z accounted for 35.1 per cent. As a system, it gives customers the option to pay for their purchase over time, which means they can buy more of what they want while being able to budget.
While there are always concerns about increased regulation in the space, Buy Now Pay later is clearly a winner among Australian consumers. Indeed, we hear from our retailers that upwards of 50 per cent of their online stores are processed through new payment types. As a prediction, we’ll see more buy now pay later usage in Australia – not only online, but in-store as well.
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Community building
Boutique independent retailers are dynamic, diverse and forward-thinking. They’re essential to not only the economy on a global scale but locally, to the vitality of the communities and high streets they call home. In 2020, they recognise that the communities they form will be more important than ever before.
In Australia, for example, many bigger box retailers have struggled to start the year, with numerous store closures. However, smaller retailers understand that creating a sense of community can set themselves apart and build stronger customer relationships.
A by-product of this is often increased sales and loyalty. Consider the case of Pace Athletic, a speciality store for footwear and running gear based in Sydney. Pace Athletic’s co-founders, Will Hatton and Stuart Sleeman, realised that they needed to do something different to set themselves apart from big chains and e-commerce sites selling the same products.
So, they decided to focus on community-building and started the Pace Run Club, a casual and inclusive community that brought its customers together through their shared love of running.
Since the club started, Pace Athletic has grown from one to five stores. That is the power of community, and it is what many retailers will endeavour to build in 2020.
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The circular economy and sustainability
In 2020, we will see more retailers join the circular economy: a system predicated on eliminating waste by reusing and recycling resources. It is a concept that has a particular appeal for today’s increasingly conscious consumers, and it is going to be a big focus for many retailers not just this year, but many years beyond.
By thinking ‘circularly’, businesses can reduce their environmental impact by creating less waste and using up fewer materials. The benefits are not just social and environmental, however, but economic too.
According to Accenture, the circular economy could generate US$4.5 trillion in economic output by 2030, while the International Labour Organisation predicts it could generate 18 million jobs in the same period.
That is the longer-term impact globally, but what about those retailers already involved in it on a more local scale today?
Dresden, an eyewear retailer that sells sustainably-made glasses in Australia takes plastic waste and discarded fishing nets from beaches and upcycles them into affordable eyewear frames. It is part of their mission to create high-quality glasses in a way that actually has a positive net impact on the environment.
And if what we are hearing is true, Dresden is far from the only retailer set to embrace the circular economy.
In-store experience
In addition to selling great products, Dresden also offers a unique in-store experience – another trend that will resonate with retailers and shoppers alike in 2020. Unlike other eyewear retailers that sell ready-made products on their shelves, Dresden lets shoppers create their own pair of eyeglasses or sunglasses.
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That is because, to stand out today, retailers have identified that a more involved, memorable and personal experience is becoming increasingly sought after by consumers. For them, the shopping experience is becoming just as important as the products they purchase.
It is about the journey as well as the destination, and Dresden is not alone in identifying ways to offer something a little bit more memorable.
While the retail sector does indeed face a period of uncertainty, it’s an industry of innovative businesses, using the latest innovative trends to change the way we shop in 2020. While the retail headwinds might remain for at least a little time yet, Australia’s dynamic independent retailers are generating plenty of wind in their sails for the year ahead.
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Image credit: Ashim D’Silva
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