Retail Trends 2023
Natalia Molchanova
Marketing Strategist | Head Of Corporate Communication | Design Thinking Coach
My personal key findings from the RETAIL TECH event in Moscow, Russia
Trend watching is one of my key activities in my job as a marketing strategist, so I would never miss such an opportunity as the 4th edition of the?Retail Tech?business forum in Moscow about advanced technologies in retail to gather insights and the vision for the future by the key players from the industry.
This article will focus on supermarkets, discounters and loyalty marketing as my core business in KLR | Key to Loyalty in Retail is. Of course, some trends are local to the Russian market, which has its clues and stand-alone scenarios, but matching our corporate experience around Eastern Europe and my personal knowledge of the global trends –?some local directions can definitely be taken as an international direction.
Cashier-less Checkout Is Retail's Next Normal
What hits the eye when you enter the event is how many stands are dedicated to automatic "cashier-less" cashiers. Until recently, retail couldn't function without cashiers, but according to a global Zebra Technologies survey of 4,200 international respondents, 82% of retail decision-makers plan?to invest more in technology?over the next three years. Almost half (45%) said they are converting more cash register space to self-checkout space, and 43% are clearing space for contactless checkout kiosks. If most people were reluctant to self-serve cashiers before the pandemic, 2022 signed a substantial shift towards customer satisfaction using them. A June RBR report estimated that shipments from?self-checkout technology providers will grow?to more than 300,000 by 2027. In our loyalty business, including mechanics both for human and automatic cashiers that may involve both preferences is becoming a game changer because nearly 35% of consumers already firmly prefer using self-checkout. Among millennials, that number can reach up to 70%, which means that this consumer habit will only grow. It involves considering pop-ups about the ongoing promotions on display, stickerless loyalty mechanics, printing additional information on the payment receipt or shifting the communication fully to mobile apps.?
Advanced differentiation of loyalty mechanics and targeted customer segments based on behaviour patterns.
The good news for those dealing with promotions and discounts as a marketing tool is that in today's climate of economic uncertainty, people are hunting for discounts and low prices.
The bad news, or at least something you might not consider, is that people do this differently.
Here are some strategies people adopt when they want to save money, according to NielsenIQ research "Russian consumer during the crisis, 2022."
There's more to this; the way you give discounts makes the difference too.
As the director of loyalty and partnership of the X5 group stated during his speech, the game changers in loyalty in these years would be advanced-personalization, gamification and "always-on" interaction with your customers. According to their research, today we have on the market 9 types of loyalty programs.
Obviously, the core is always something - reward some specific actions, give value and keep engaged, but as you can understand, for different target groups, the psychology is different, and this is why you should always consider all these directions if you want your loyalty strategy to stand out.
Digitalisation of loyalty mechanics
That might not be new, but I had just firm approvals that collecting loyalty points is moving to the "cloud" too. SPAR Kaliningrad showed how they effectively moved just in 3 years (2019 vs 2022) their sticker-based gamified mechanics 100% to the app cutting the promotional costs (3 425 000 rub vs 1 000 000 rub) and increasing the turnover. (2,4% in 2019 vs 2,9% in 2022), numbers that speak for themself as the economic situation and that the spending power of consumers in 2019 was definitely more vital than in 2022. So if you still think that older generations are still hard to move to digital loyalty mechanics, you should reconsider your beliefs.
Multi-subscriptions
Combining such loyalty trends as?subscriptions and coalitions?has generated a trend for multi-subscriptions. You may agree that having dozens of loyalty cards is annoying; having one that works pretty everywhere, from your favourite petrol station and supermarket to your movie streaming account, is definitely better. One of the latest breakthroughs in this field in Russia is the "Ogon'" customisable subscription system by Gazprombank. Register and just choose shops and services you want to include to have monthly discounts on everything. Pay to earn, we may say. Attractive business model, considering that the worldwide statistics say that 34% of subscriptions at the end are not even used or used far from the full potential.
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Top brands are losing appeal for the mass market.
Of course, in Russia, the trend for small local brands or private retail brands had a considerable boost in the last year as the market has been closed for many big international players, but trust me, we can see the same trend in the Eastern Europe market. The will to save money but not lose the quality of the products people consume and to be more responsible towards ethics and ecology make people shift their attention away from well-known brands. Price accessibility and perceived quality are the primary decision triggers, while the premium brand moved to the last position as a purchasing driver.
Discounters are a growing trend.
Sad news also for premium retail chains, for the same reasons stated above. The discounters in Russia had a stable growth of more than 20% in the last year, but it's not only a local situation. According to ADA Insights,?2022 is the year of the discounters.?research, discounters marked their growth around all of Europe, and this trend will hardly change in the following years.
SMM: Micro-influencers are the most underestimated tool for promotion.
Let's tell the truth. People?are tired of advertising: of newsletters, sms, social media ads, billboards, radio, tv… in the last decades, our brains exploded on a daily basis from all this information pouring on us, and we all clearly know - they want to sell us something. And we are bored of this.?
But we are social animals, and we like to discuss where and what we buy, what we want and why. Word of mouth within communities with mutual trust in each other was, is and will always be the most powerful tool for spreading information and decision-making. We will rather listen to a friend, a relative, a colleague… or someone we follow and admire, but at the same time, someone that we feel not so distant as top celebrities. Do you understand what I mean? Yes, microinfluencers.
They're more targeted than major ones — and often more effective. A micro-influencer has a social media presence larger than an average person's but smaller than a celebrity's, landing between 1,000 and 100,000 followers. Micro-influencers promote products that align with their interests or expertise to their followers — think a food blogger promoting a meal prep service or a travel writer sharing their favourite suitcase brands. They are close to their followers, and their communication style is tailor-made for relatable personas and based on genuine connections with their social media followers for help.?Being valuable and reliable for their followers, as a friend could be, is their essential value.?At the same time, they will never pretend such considerable costs and strict conditions as some top influencers may ask, and this combo makes them a huge marketing field to explore and invest in. Russia today is struggling with most social media channels being officially closed for traditional advertising, and this is where a really new, for big players as supermarkets at least, tool of connecting with new and existing customers.
Microtargeted communication for relatively small fanbases brings inspiring results for most speakers who participated in the dedicated round table. What inspired me most, and that I was not considering that much, is that one of the most sensitive targets for this kind of promotion is the 55+ age group. But consider this also if you are targeting 25-45. Instagram and Youtube bloggers, TikTokers or Telegram channels… my advice - consider them for your next big marketing campaign. They may seem like pawns on your marketing chessboard, but remember, each pawn can become a queen if you use it properly.
Artificial Intelligence use cases and Trends
The last but not least trend I want to mention is using artificial intelligence technologies. Top-performing retailers are bullish on artificial intelligence (AI) and machine learning (ML), with 71% of respondents to a Retail Systems Research report saying AI-enabled analytics will fundamentally change their merchandising forecasting by 2025.
There were highlighted 4 main areas where AI and ML make the difference for retail.
Personally, I am not afraid today that AI will replace us. I think we have some years to relax from this point of view. But people who know how to use AI tools like a magic wand to pull the rabbit from a hat in a glance will definitely replace those who don't.?
Do you have questions, doubts or considerations? I will be happy to discuss this in the comments!?
Sell well and prosper,
Natalia