The Retailer Spring Edition 2022

THE RE TA I L ER

20

CONSUMERS NOW HOLD ALL THE POWER. ARE RETAILERS READY?

Joel Bines Global Co-head of Retail AlixPartners

Matt Clark Head of EMEA Retail AlixPartners

T he tables have turned. Empowered by tech nology and each other, today’s consumers have declared, “It’s not you, it’s me.” Tumult has become a constant in our lives. Retail is dealing with the impact of everything from supply chain issues, to labour shortages and geopolitical uncertainty. Shoppers in the UK are beginning to react to rising inflation . For every business – large and small – taking control back in this environment means expecting, preparing for, and embracing disruption. For a consumer-facing industry such as retail, the most powerful way to preempt oncoming disruption is by listening to the all-powerful consumer and using that knowledge to put the right investment, resources, and energies into the right areas. Retailers have talked about making changing consumer behaviour and insights a core capability that impacts decisions up and down the organi sation for years. However, this has mostly been lip service and the urgent need to truly do so has never been higher. This is because consumers are no longer the reliable and static demographic clusters marketers have been used to. Instead, they are constantly regrouping and changing according to social trends, identity politics, personal whims, and even time of day, and because they have unlimited access to information and the ability to communicate with each other, they have both the power and agency to make choices. Social platforms have given consumers megaphones, enabling them to discover new products, read and write peer reviews, identify with communities of shared interests, and buy only what aligns with their personal brand. They make choices about what theywant to buy based on information from sources that transcend, and upend, traditional com panymarketing efforts. Consumers nowoperate outside of the carefully controlled customer experience zones where consumer companies have felt most comfortable for essentially all of time. The simplest way to think about this is the absolute democratisation of consumerism. More than 80% of U.K. and U.S. customers trust recommendations from family and friends over those from companies, and two-thirds do not trust advertisements or sponsored social media advertisements. This shift in power is monumental and irreversible. Never again will companies control the narrative or tell consumers what, when, and how to buy something. Some companies have come to this realisation – the quick rise of direct to-consumer businesses was one example where consumers controlled the relationship. But the solution isn’t hidden in one specific platform or technology, and this power shift cannot be attributed to e-commerce alone either. Too many retailers are operating under the false assump tion that the difference is the ability to buy goods and services online. However, the key change has arisen through the power of information, with consumers using technology as research and connection tools before making their purchasing decisions.

Even when consumers are shopping in a physical store, they are likely to simultaneously use their phone for related actions – comparing prices, finding other colorways or sizes, and exploring similar products at competitors. Sephora has long been a leader in seamlessly connecting online experiences to in-store shopping, bringing a robust loyalty-driven personalised experience across all touchpoints – from in-app Live Beauty Chat, to skin tone matching AI technology and in-store AR experiences.

percentage of consumers who use a mobile device to aid shopping while in store

49

39

2020

2021

Souce: AlixPartners Holiday Survey, 2020 and 2021

Retail CEOs realise the urgency of needing to make a change – but their understanding of what must change continues to come fromwhat rivals are doing or what new technology is available. The 2022 AlixPartners Disruption Index finds that 96% of retail executives say their business models must change within the next three years. But their top concerns are focused on operations.