Disruption abounds across every major industry out there, and the retail & consumer products (RCP) space is no exception. There’s ongoing pressure to get ahead of the market, understand emerging trends, and do something to gain a competitive advantage. The modern customer of today has demands that are on par with everything tech-oriented. As a consequence, businesses are faced with a dilemma: either adapt to change and thrive or get left behind.
The RCP industry is in dire need of new operational and strategic transformations, as well as a complete makeover of the IT role. At its core, it remains centered on forging relationships, thinking about the future, and acknowledging trends. In light of the changes demanded by the tech-savvy consumer, business leaders are compelled to rethink how they operate in a data-driven, full-blown digital economy.
Brick & mortar reimagined
It’s no secret that even before COVID-19, physical retail stores began to change their business mantra, little by little relocating to the digital realm. When the pandemic hit, almost 60% of physical stores in the US closed. While some managed to reopen and survive, the majority witnessed record lows in profits. The demand for online and pick-up-in-store shopping increased at an unprecedented speed, completely changing perceptions and transforming brick & mortar into order fulfillment centers.
As retail & consumer products companies are reconfiguring business models, ditching traditional revenue models will make room for meeting the ever-changing needs of the modern consumer and boosting growth. Resale platforms, subscription services, and direct-to-consumer businesses were already in trend before COVID-19. The pandemic has served as a wake-up call for many, leading to greater adoption of unconventional models in sectors like food, pharmaceuticals, and more.
Health & sustainability are becoming a top priority
With over 40% of customers buying more sanitizers, medicine, and hygiene products than ever before, the pandemic has severely altered spending habits. Furthermore, there’s been a sales boom for organic and sustainable products, which is yet again a sign that priorities are changing across the RCP industry. As for future predictions for health and sustainability, it’s safe to assume that income disparity will play a huge role in keeping these markets on the floating line.
“Non-essential” brick & mortar locations will remain closed even after the pandemic as increasingly more consumers will either switch to online shopping or quit buying altogether. Essentials that come with same-day delivery, as well as real-time updates on inventory will dictate how the RCP market will move forward. COVID-19 will better fuel consolidation, paving the way for creating a truly agile environment for digital-friendly companies capable of restocking to exceed customer expectations.
Ad spend on the rise
In 2019, digital sales amassed only 15% of retail. 2020 has brought on tremendous growth as increasingly more brick & mortar businesses are shifting to the online environment where a major change is happening in favor of mobile shopping. Since 2014, mobile sales have increased from 19% to 45% in 2019. Companies are investing in digital advertising more than ever, resulting in a whopping $103 billion ad spend in the past 10 years. Social media plays a big part in the success of the digital, and for many retail companies, it’s not necessarily a sales channel but a traffic channel with astounding effects on the way referrals work.
A competition market led by the digital
The more technology advances the more challenges emerge for the retail & consumer products industry. And that’s because the choices available online are vast and the prices are competitive. On top of everything, the modern consumer is getting used to the Omni channel approach where products are available in-store, via digital apps, via e-commerce, and on various marketplace platforms.
For product-markers, the digital realm is an opportunity to become more visible. Building a brand online – whether it’s social media or e-commerce – paves the way to creating variety, boosting loyalty, and providing consumers with a memorable shopping experience.
Bottom line is, the RCP industry must pay closer attention to what the data shows. It’s not just about being the best in the digital, but about understanding, measuring, and monitoring trends that are impacting their business. A data-driven, pragmatic approach creates opportunities that go beyond hyped applications, and the more they focus on making informed decisions the better chances they have to make sensible investments and grow in a competitive market.
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