Key takeaways
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The purpose of retail is evolving
Instead of being the ultimate destination, storefronts are now just one of several stops on a customer's journey
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In-store experiences are trending
Competition is ramping up, so brands are captivating customers with one-of-a-kind, immersive interactions
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Happy employees mean happy customers
Today’s workers need more out of their role if brands want to keep the customer service bar high
The post-pandemic shopper is changing the face of retail
Of the businesses we surveyed, 82% are confident physical stores will continue to play an important role in future commerce growth.* In fact, as restrictions around the world loosened in 2021, physical retail grew faster than ecommerce. Even half of Generation Z shoppers, who famously spend more time online than any other age group, favor in-store shopping. And their spending power will only grow—even more than the $360 billion US in their pockets today.
Although foot traffic is up, it's still at least a few percentage points below pre-pandemic levels.
All values are in U.S. dollars
U.S. mall foot traffic in 2022 is down further than in 2021
Sourced from Our World in Data
But the positive effect physical retail has on online channels—dubbed the "halo effect" of brick and mortar—is persuading more digitally native brands to expand offline.
Physical and digital retail are no longer separate lanes of business. A physical presence can supercharge an online one by doubling as an interactive billboard that builds customer trust. Brands get on average 37% more web traffic the quarter after opening a new physical store.
"Online and offline are effectively one continuous experience,” says Shopify director of product retail and messaging, Arpan Podduturi. “Very few people walk into a retail store without having done their homework. They usually started on their phone. They're following some brand and they go into stores with purpose.”
About three-quarters of U.S. shoppers research products online before making a purchase either online or in person.
Sourced from Retail Insider
Harley Finkelstein President, ShopifyBefore, customers went to brands. Today, brands must go where their customers are. Brands would be wise to start adopting this behavior now.
With the trend of blended channels upon us, many brands aren't clear what role brick-and-mortar stores will play in the years ahead. How can they make the most of a physical location in an increasingly digital commerce world?
Now that shopping can happen anytime, anywhere, the primary function of retail stores is no longer transactional. Enjoying the experience is the primary reason 35% of consumers shop in store, and another 24% want to interact with products before buying.
But shoppers step into physical stores at various stages of their customer journeys, often already knowing what they're looking for. For example, showrooming is a trend where consumers visit stores to touch and feel the products but opt to purchase them online.
The retail store in 2023 fills a wide range of needs—and gives brands unique opportunities to meet them.
Sourced from Chain Store Age
Diversifying and clarifying the role of the retail store
A store has multiple purposes that go beyond the transaction: giving visitors hands-on guidance on how to use products and services, hosting networking events and panels, or creating a collaborative space to build community, to name a few. These examples have one thing in common: a tailored experience. The growing demand for enhanced experiential value will be one of the most crucial needs to meet in 2023, according to 82% of the global brands we surveyed.*
But such in-store experiences are only possible through employees, for better or for worse. Recruiting and retaining talent is an ongoing challenge around the world: 69% of surveyed brands say it’s difficult to find and retain talent in this market, and 67% say they’re short-staffed as a result.
Sourced from Shopify/Ipsos Commerce Trends Study. A survey covering n=900 SMBs and Enterprises in 14 countries, Aug–Sep 2022
Of businesses say they’re short-staffed due to the current talent crunch in the job market
Of businesses say it’s difficult to find and retain talent in this market
Sourced from Shopify/Ipsos Commerce Trends Study. A survey covering n=900 SMBs and Enterprises in 14 countries, Aug–Sep 2022
The pandemic has shifted workers’ mindsets and priorities, and younger cohorts are demanding more from their jobs than previous generations. Gen Z and millennials want more flexibility, more benefits, more opportunities, and more money, in part because salaries aren't stretching as far as they did even a year ago.
The Great Resignation of 2021 is continuing into 2022, with the "quiet quitting" movement adding to the pressures of inflation and rising energy costs. More people are seeking raises or changing jobs in search of higher wages. To combat staffing challenges, retailers will need to rethink how they view, pay, train, and offer growth opportunities to employees.
Kevin MacGillivray Senior Product Marketing Lead, Shopify RetailWe’ve seen ups and downs over the last year, in particular around staffing volatility. A lot of businesses are struggling to find enough workers to staff their stores. As things start to reopen, all industries are facing the same problems. I expect that to continue.
How to create a standout retail store in 2023
1. Design magnetic in-store experiences
The growing trend is to make retail even more experiential by appealing to the senses, and adding the magic that just can’t be replicated online. Engage with customers beyond traditional in-person interactions, empower store staff to act as “experience hosts,” and facilitate options like virtual shopping, live chat, and appointment shopping.
Look at these highly honed store experiences for inspiration:
- Use your store as a “third space”—a space outside of home and work where people go regularly—to boost foot traffic by hosting collaborations with coffee chains, art galleries, or other brands. Ralph Lauren and Uniqlo have set up a coffee shop and playground, respectively, as part of their stores.
- Offer a showroom experience, like the 46% of brands that planned to in 2022. Showrooming takes up less space than a traditional retail store, fosters relationship building, and helps brands better understand their customers.** But there's a risk: Store visitors might learn about a product in store then go home to purchase a similar product online from a competitor. If you open a showroom, use technology like a portable point of sale so that high-intent customers can buy on the spot.
- Refresh your store theme or layout on an ongoing basis to attract and engage customers. While many brands change up their stores with each season, STORY, a retail gallery based in Manhattan, reinvents their store every month or two. Like a new gallery exhibition, the concept, design, and merchandise get a complete overhaul, keeping customers curious and engaged.
2. Harness the power of tech
Over 40% of brands planned to invest in tech to enhance the customer’s in-store shopping experience in 2022.** Here are some of the hottest tech advances in retail:
- Autonomous, cashierless shopping in commodity-based stores like Lifvs, which provides rural Sweden with better access to fresh food.
- High-tech, low-touch stores like Glossier appeal to shoppers who want flexibility. Customers do 90% of their research online through channels like TikTok, then pick up their products in store.
- Buy online, pick up or return in store. According to a commissioned study conducted by Forrester Consulting on behalf of Shopify in 2021, 59% of consumers say they’re likely to browse online and buy in store, and 54% are likely to look at a product in store and buy online.**
- Immersive experiences using augmented reality. More than 130,000 stores will be using this technology by 2023.
3. Attract and retain a team to deliver exceptional customer experiences
At least 60% of consumers purchase from specific brands because of excellent customer service in the past, so retailers that invest more in their staff will see more customer wins.** An exceptional customer experience starts with the employee experience. Brands that attract and keep exemplary teams are the brands that provide flexibility, good pay, and competitive benefits.
Learning incentives are another perk that benefits everyone—employer, employee, and customer. When employees learn new skills or reach milestones, employers can and should recognize and reward the growth they see. Lack of recognition and respect is partly why 25% of employees say they quit their jobs.*
Teams also feel more engaged when they find meaning in their work, which employers can reinforce by communicating how they contribute to the company's goals or to the community. Similarly, providing a clear plan for career advancement, including timelines and a consistent way to monitor progress, all contribute to retaining talent. When employees know the company is investing in them, they’re more motivated to invest their time and do their best work.
Shaza Mahmoud Head of Retail, Daily PaperWe're seeing a big challenge in recruiting talent. Younger generations don’t want to fall into patterns of always being available. They're demanding a lot more and rightfully so, but if you don't have the right people, you lose sales.
We’re working on our benefit schemes—different allowances and commissions, things to keep them engaged and happy. That’s a side effect of the pandemic: People are no longer willing to coast along, and you have to anticipate it.
4. Customer service beyond the cash register
The human touch of clienteling across channels—including messaging apps, virtual shopping appointments, and home deliveries—will become a more popular trend in the future of retail.* Training staff to use emerging technologies can make workers more efficient and “pandemic-proof” the store employee role. Employees carry these skills wherever they go, adding to the role’s attractiveness for young talent. Cross-channel training keeps staff engaged at a time when employees are demanding higher wages.
More business owners are getting immediate benefits from that training by putting idle store staff to work with online orders. Unifying the sales division into one “commerce” department, instead of separate online and retail departments, further encourages employee training.
Kevin MacGillivray Senior Product Marketing Lead, Shopify RetailUsing staff more effectively, and having technology that helps staff do their jobs more efficiently and deal with more customers in different environments—that's something I expect we will continue to see.
One trend we're watching closely is the ability for retailers to use store staff to assist with online transactions or orders if things are slower, so you can use the folks you do have more efficiently to close sales and keep customers happy.
Merchant spotlight
How Lively found success with physical retail using Shopify POS
Lively began selling bras direct to consumer in 2016—and their business took off. What started as a booming online store evolved into an organic community, fueled by retail pop-ups in partnership with Nordstrom and Target.
Lively was in a position that many digitally native brands find themselves in today: satisfied with steady sales and a loyal customer base, yet frustrated by high online customer acquisition costs.
Opening permanent locations helped Lively lower acquisition costs—about half of all Lively customers now discover the brand just by walking past one of their four storefronts. “Our stores operate like billboards,” says founder Michelle Cordeiro Grant. But operating both online and offline showed them the advantage of blending channels: Customers who booked fitting sessions online went on to spend 60–80% more than walk-ins.
Customers who discover the brand online and book a fitting appointment on Lively's website are also much more likely to convert, become return customers, and refer friends and family to the brand. Unlike the clinical nature of traditional bra fittings, LIVELY's staff tailors the recommendations and the experience to the customers’ unique needs—made possible by Shopify POS, which syncs their online and in-store system to track customer information.
Michelle Cordeiro Grant Founder, LivelyToday, most of our in-store customers become repeat customers online. It’s much easier to repeat a purchase online once you’ve come in, done a fitting, and know your bra size.
How Shopify can help
Deliver a world-class customer experience through Shopify POS
POS Go helps your team drive sales on the go by giving them instant access to the information they need. From customer profile information to inventory tracking to accepting payments anywhere in your store, it’s all in the palm of their hands. And you can extend the power of POS Go to as many as 1,000 locations, available to all Shopify merchants in the United States.
Enhance the discoverability of your retail store
For today’s buyer, shopping locally is a priority, with searches for items “near me” tripling in volume in the past two years. Get discovered more easily by shoppers nearby with a local listing and display ads through the Google Local Inventory integration, which syncs your store’s inventory with Google.
In-person selling made possible anywhere
Apple Tap to Pay is included in the Shopify POS app and can accept contactless credit or debit cards and all digital wallets without payment hardware. Available to all Shopify merchants in the United States.
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Commerce Trends 2023p. 13, Overview