The digital revolution has upended the retail industry.
The rise of online and mobile shopping and the widespread use of digital devices—from smartphones to tablets—is reshaping how brick-and- mortar retailers sell products, as well as the consumption habits and expectations of shoppers. The same tremors that are shaking retail commerce are destabilizing business as usual in retail banking. Whether a consumer is shopping for a shirt, a saucepan, or a savings account, the digital shopping channels are becoming more important every day.
What is the research about?
Online and mobile shopping are changing the role of the physical store to accommodate consumers demanding a seamless experience whether they’re shopping in a store or on a screen, while fueling an expectation for more personalized merchandise and sale offers.
Technology is also birthing fresh retail concepts informed by a newly empowered consumer craving more unique, customized merchandise. At the same time, e-commerce is starting to dampen foot traffic in malls and brick-and- mortar stores, a phenomenon familiar to any credit union with a branch.
As a result, retail heavyweights from Walmart to Macy’s are now grappling with how to best compete with e-commerce and the ever- increasing influence of online giant Amazon.com, which has single-handedly rewritten the rules of retailing in the digital era.Big and small retailers alike are also faced with “showrooming”—when shoppers browse a brick-and- mortar store to check out a product, only to buy it later from an online merchant like Amazon at a lower price.
To compete, traditional retailers are coming up with experiential store environments that can’t be duplicated online, featuring digital technology informed by the convenience of online shopping. Many of these strategies offer a kernel of innovation for forward- thinking credit unions.
Merchants must also prepare for the biggest demographic shift to hit the retail industry in decades: the Millennial generation, which has come of age with digital technology and social networks, is expected to replace baby boomers as the largest consumer spending group by 2020.
What are the credit union implications?
Pay close attention to these leading indicators currently riling the retail world:
- Omnichannel shopping. Shoppers expect full in-store, online, and mobile capabilities—and, increasingly, the ability to jump between online and offline service.
- Mobile momentum. Mobile retail sales are expected to jump to $58 billion in the United States in 2014, a rise of more than a third over 2013.
- Big data derby. With the explosion of available information about shoppers, retailers are leading the way in searching for data-driven personalized selling opportunities.
- Storefront shift. Traditional retailers are competing with online challengers by making in-person experiences more immersive with food, entertainment, and art, and with digital enhancements.
- Online, crowdfunded. The Internet is the great leveler, allowing new entrants to raise capital and capture their niche without a brick-and- mortar presence.
- Social shopping. Sharing on social media is an effective driver for discovery and purchasing, especially among digital natives. But sharers are becoming more discerning even as the opportunities to share proliferate.
As you read this report, you will recognize patterns from your own shopping behavior. Take note of the innovative responses from retailers big and small as you strategize for your credit union’s own retail renaissance.