More than the metaverse: Four ways for retailers to future-proof their strategy

Author:
Nadia Michaud
_{Consulting Senior Manager, Consumer Markets, PwC Canada}

Remaining relevant is a looming—and often underestimated—challenge facing many Canadian retailers. They urgently need new ways of meeting the expectations of their current and future consumers. Staying viable means finding opportunities in several key disruptive forces:

Consumers have different channel preferences, which may vary depending on the type of purchase, retail sector and even product availability. But their experiences in those channels are often siloed, with limited opportunities to move fluidly between them.
A crowded digital environment is making it harder for brands to meaningfully connect with consumers at a time of growing social and environmental awareness.
The widespread availability of e-commerce is changing the purpose of physical stores—triggering a need to upskill retail associates so they can support consumers through their channel experiences.
Predictive insight capabilities are needed to provide a seamless path to purchase, including the frictionless fulfilment of orders, across multiple channels.

There’s no one-size-fits-all solution that will work for all retail sectors. Your strategy should reflect your unique brand, customers and channels. But several trends are converging to create opportunities for retailers to build trust and loyalty with consumers as they create their store of the future.

Engaging consumers across their physical, digital and virtual worlds (sometimes at once)

The omnichannel world is creating new avenues for retailers to integrate shopping into consumers’ digital lives by meeting them where they’re consuming content. This is especially true with a new generation of shoppers that values both their physical and virtual well-being and is comfortable being simultaneously present on multiple channels. Engaging these consumers requires retailers to let them move fluidly between physical, digital and virtual experiences aligned with your brand.

We’re already seeing examples of retailers taking innovative approaches to social media commerce and partnerships, such as MAC Cosmetics using augmented reality technology that lets Snapchat users try on and purchase makeup¹. Elsewhere, some brands are entering the metaverse—a nascent network of realistic virtual worlds where users can create, buy and sell goods—to varying degrees. McDonald’s, for example, has registered trademarks to operate a virtual restaurant² and luxury apparel retailers are already selling millions of dollars worth of virtual goods in the metaverse³.

The metaverse offers retailers opportunities to enrich the consumer experience, introduce virtual products, collect new data on consumers and market products and services—both physical and digital—in new ways. But that doesn’t mean all retailers should immediately jump in. What’s most important for retailers is to learn about these enabling technologies and build their capability to rapidly move from strategy to execution as they reflect on several key questions:

What does an emerging technology mean to your specific retail sector and individual business? Is there an opportunity to create a meaningful and engaging experience for your consumers? Whether you choose to play or not to play—or choose not to play quite yet—be conscious and deliberate about the factors informing your decision.

It’s often helpful to evaluate new technology trends through the lens of your specific retail sector. Is being a market leader worth the investment? Is it better to quickly follow the first movers? Or should you eventually follow once the technology has been proven in your sector? Market leaders have an opportunity to gain maturity ahead of competitors that haven’t carefully considered the full realm of possibilities.

How do new technologies work with your channel strategy? How can it enhance and complement your existing channels?

Where is your next generation of consumers? What channels and platforms are they engaging on? And how does your brand fit on those channels and platforms?

From traceable origins to end-of-life upcycling: Using sustainability to extend the consumer journey

We’re increasingly seeing consumers’ values and beliefs reflected in their purchases. In the run-up to the 2021 holiday season, 45% of Canadian consumers told us they’re likely or extremely likely to shop with socially and environmentally responsible organizations. That’s up from 35% in 2020. The message is clear: To avoid falling behind, retailers must keep up with these changing consumer expectations—particularly among younger shoppers.

Retailers with a strong knowledge of their consumers—and how their consumers’ priorities align with their brand—have an opportunity to build trust and loyalty through their approach to environmental, social and governance (ESG) matters. This can take many forms. One particularly compelling technique uses ESG to extend the consumer’s journey through meaningful engagements that deepen their relationship with a brand.

For example, QR codes can connect consumers with a product’s “digital passport” that contains information about where and how a product was made, as well as how it was transported. Our research shows this information is valued by many consumers. Slightly more than half (51%) of global consumers say they often consciously consider product transparency and traceability before making a purchase with a retailer. In Canada, the number is somewhat lower (38%), but still sizable.

Some retailers are also extending the consumer journey by creating a later end point, such as by providing solutions to extend the life of their products or offering reselling and upcycling services. The North Face is among the organizations using this model through its Renewed marketplace, where consumers can purchase previously worn or returned clothing that has been repaired or refurbished⁴.

While these examples show how some retailers are creating value through sustainability, it’s important to remember that ESG isn’t about checking a box. It’s about reframing how you conceptualize value and position your business to build trust with a broad range of stakeholders. Different retailers will have various starting points on their journey. But an important first step is to gain a solid understanding of what’s important to your consumers and other stakeholders. This will help you develop an ESG strategy and roadmap that integrates with your business strategy and operations and delivers the right return on investment.

Putting human-centred design at the heart of the new physical store

The physical store is no longer the final step of the sales transaction. It’s an integral part of the discovery and education process and should be a destination where consumers want to go—not just need to go. Retailers have an opportunity to reimagine their physical stores as experience centres that complement other channels. But to be successful, retailers need a clear understanding of what their consumers value in order to create meaningful, inspiring and engaging experiences.

We’re seeing some retailers create spaces that prioritize consumers spending their time, rather than their money. Successful in-store programs, activities, events and services relate to the products being sold and entice people to return. One example is Nordstrom Local—a coffee shop-sized “neighbourhood hub” with no dedicated inventory. Instead, it featured personalized stylists, alterations, online order pickups and returns⁵.

Creating a truly human-centric designed store requires reimagining the core capabilities of your workforce. Front-line associates must play multiple new roles, such as assisting consumers with shopping virtually, shopping by appointment, local delivery, fulfilling online orders and more. While this means retail employees must be as digitally savvy as their consumers, it’s not just about technology.

A workforce equipped with creative problem-solving skills and an ability to think, act and thrive in a digital environment will give retailers an edge. And consumers will reward those retailers with their loyalty when store associates innovatively meet their needs and surprise them with, for example, unexpected in-store personalization based on past orders and visits.

Retailers can start developing their workforce of the future by mapping out the capabilities needed to achieve their ambitions. It’s important to remember that upskilling your people goes beyond providing training. It’s a cultural shift that gives employees the knowledge, skills and practical experience for new and transformed roles. And it’s about fostering an environment that encourages and rewards new ways of thinking and working.

Providing a personalized—and frictionless—path to fulfillment

Consumers are already connecting with your brand on multiple channels. But omnipresence on its own is insufficient to meet consumers’ rising expectations. They’re looking to move fluidly between your channels in a way that connects their online and in-store experiences and leads to the seamless fulfillment of their orders.

This requires building out machine learning and predictive analytics capabilities to accelerate back-of-house functions such as demand forecasting, assortment planning and inventory management. This can help, for example, consolidate a consumer’s purchases into a single order that’s quickly moved to a destination of the consumer’s choosing or allow a shopper to use a mobile app to filter clothing sizes and find in-store inventory.

But frictionless retail is about much more than seamless fulfillment. We’re seeing that consumers are looking for an engaging and personalized journey. In our 25th annual CEO Survey, nearly half (45%) of Canadian retail and consumer goods respondents said their customers updated their personal preferences with the company to receive a more tailored experience at least some of the time.

Retailers can use this consumer data to generate predictive insights and create a unique customer journey based on their needs, preferences and motivations in a way that personalizes the path to purchase through to fulfilment. This data can also be used to anticipate customer needs before they even arise and then create an individual experience. Meal kits, subscription boxes and prescription refills are all examples of offerings that address common pain points while creating an ongoing relationship with consumers.

As they innovate, retailers will inevitably encounter technology solutions that are searching for a problem. Not every new tool will address a current business challenge. But it doesn’t mean the problem won’t emerge in a few weeks or months. It’s valuable to do your homework, know what technology solutions exist and continuously look for innovative new ways to engage consumers. This approach will help you spot opportunities and partnerships that enable channel fluidity.

Are you ready for the store of the future?

How will I remain relevant? Retailers should constantly ask themselves this question. It can’t be put off. Without a strategy to deliver meaningful outcomes that create value for your consumers beyond today, the question simply becomes, Will I remain relevant?

Omnipresent commerce, ESG, human-centric experiences and frictionless fulfillment present opportunities for retailers. But to successfully use these shifts to increase consumer engagement, retailers must act with agility, speed and an openness to change. Are you ready? Ask yourself:

Are my corporate, customer and channel strategies aligned?
Are we thinking of our brand to evaluate risks and ways to grow our revenue, retention and reputation?
Have we upskilled our people and updated our processes and technology to execute our strategy?
How will I measure success?

A long-term strategy and execution plan, combined with a solid understanding of your brand, strong knowledge of your consumers and channel fluidity, can transform the consumer experience and drive revenue growth. But to be a sustained source of value, retailers need to embed these principles into their business in a way that builds trust with consumers. As we’ve seen reflected in our own journey, trust is calculated against how well organizations act with consistency, integrity and competence—factors that can differentiate businesses through the quality of their actions and behaviours that match their commitments to consumers.

_{1 SPS 2021: New AR Tools and Camera Experiences for Snapchatters, Creators, and Businesses, Snap Inc., publié le 20 mai 2021, https://newsroom.snap.com/new-ar-tools-and-camera-experiences-for-snapchatters-creators-and-businesses.}

_{2 Anugraha Sundaravelu, McDonald’s is planning to open restaurants in the metaverse, Metro.co.uk, 10 février 2022, https://metro.co.uk/2022/02/10/mcdonalds-is-planning-to-open-restaurants-in-the-metaverse-16081498.}

_{3 Mark Ellwood, Luxury Brands Are Already Making Millions in the Metaverse, Bloomberg, 9 décembre 2021, https://www.bloomberg.com/news/articles/2021-12-09/luxury-fashion-brands-are-already-making-millions-in-the-metaverse.}

_{4 The North Face Launches "Renewed" to Keep Apparel in Use Longer, The North Face, publié le 6 juin 2018, https://www.prnewswire.com/news-releases/the-north-face-launches-renewed-to-keep-apparel-in-use-longer-300660594.html.}

_{5 Nordstrom Announces Latest Retail Concept: Nordstrom Local, Nordstrom Inc., publié le 11 septembre 2017, https://press.nordstrom.com/news-releases/news-release-details/nordstrom-announces-latest-retail-concept-nordstrom-local.}