Both Black Friday and Cyber Monday are expected to generate billions of pounds in sales, in the league of last year’sspend of £8 billion. With the High Street seeing lacklustre sales, many retailers will be hoping that shoppers will be coming out in force to kickstart the festive shopping season. Having big retail events like Black Friday and Alibaba’s Singles’ Day are changing the way consumers purchase and brands need to understand these shifts to offer more seamless and personalised shopping experiences.
A lot can be learnt from China’s recent Singles’ Day retail extravaganza, or, as its officially called, the Global Shopping Festival 11:11. Singles’ Day started in the 1990s when young single people used it as an excuse to get together. Then in 1999 Alibaba co-opted it and turned it into a shopping event. Now it’s not just a single day – it’s a 20-day shopping festival – the biggest global event in retail and e-commerce with China now being the world’s largest e-commerce market. 2018’s event smashed the 2017 record by racking up sales of 213.5 billion yuan (an eye-watering £24 billion) within 24 hours, (27% up on 2017). For comparison the US Black Friday sales in 2017 achieved $5 billion (£3.9bn). Alibaba also set a world record for most payment transactions with Alipay, its online payment platform, processing a staggering 256,000 payment transactions per second. The number of delivery orders surpassed 1 billion. In just one day.
These big seasonal retail events are seeing significant consolidated consumer spend and they will account for almost half of all holiday shopping transactions (40%) – that’s 21% growth from 2017. Brands need to have the most compelling and relevant content and products as well as optimised and personalised shopping experiences now if they are to benefit. Here we look at what is driving these changes in the retail landscape and how brands need to evolve:
Mobile will be the preferred device for festive purchasing
Salesforce is predicting that mobile devices will dominate both traffic and transactions for the entire festive season. They observed that on certain peak holiday shopping days last year, mobile devices processed more orders than computers for the very first time. This marked a big milestone on the path to ‘mobile-only’ shopping behaviours and this is expected to grow exponentially. This year is seen as the tipping point for mobile commerce where mobile devices will surpass PCs for order and traffic share from here onwards. Black Friday is set to be the biggest digital shopping day of the season and mobile is expected to achieve 46% of purchases. Interestingly Alipay saw 60% of total payments for Singles’ Day completed by users scanning their fingerprints and faces on their mobile devices. With the increased ease of payment through mobile, ‘in-the-moment’ purchases are ever on the increase.
It is critical for retail brands to have a solid mobile-friendly offering, and to ensure that their apps provide that seamless shopping experience that users seek and come to expect.
Creating a new retail experience
Here is where Alibaba exceeds in shifting from transactional selling to experiential shopping for Singles’ Day. Audiences are invited to engage with brands and products through interactive treasure hunts and augmented reality games. The blend of retail, entertainment and innovation allows consumers to be active participants and this proved popular with Alibaba’s audiences – almost half (46%) of Singles’ Day consumers were born in the 1990s, not surprising given that 28% per cent of China’s 800 million online population are aged between 20 and 29. In 2020, Generation Z are set to account for 40% of all consumers and will influence nearly $4 billion in discretionary spend. Brands need to understand how to reach this influential audience and build brand advocacy now to benefit from this upward trend.
Blurring of online and offline
Jack Ma, the founder of Alibaba, coined the phrase “new retail” to depict the increasingly blurring boundaries between the online and offline shopping world. Technological innovations are allowing us to see a synthesis of the digital and the physical with the adoption of Augmented Reality (AR) and AI. Certain brands are embracing interactive technology to provide consumers with more memorable, customised shopping experiences.
Blending in-store and online shopping experiences will be key to the survival of brick-and-mortar retail. In a recent study by Criteo, 80% of Gen Zers said they looked forward to shopping in storeswhen they had time, but 75% do most of their shopping online out of convenience. Most Gen Zers prefer having the option to touch and feel products before purchasing and to use their smartphones while in-store. They also enjoy unique product displays and ways to test out products in stores.
Beauty brandsare leading adopters in terms of AR-apps that enhance the shopping experience. Customers are able to try on makeup virtually at home and in-store as well as share through their social media channels. Interactive experiential pop-ups and ‘smart stores’ with virtual greeters and facial recognition payment options will provide shoppers with the personalisation and customisation that they seek.
Personalisation from Big Data and AI-based recommendations
From recent research, 64% of consumers report that they feel like retailers don’t really know them. This is why many retailers have increasingly started to leverage AI to personalise the shopping experience — and those that do are reaping the rewards of those efforts. This season, it is expected that 35% of all revenue driven by shoppers will be from an AI-based product recommendation — a 25% increase over last season. But AI doesn’t end with product recommendations. AI is being implemented across the entire shopping journey, particularly with chatbots to support shoppers. The likes of Alibaba and Amazon will have incredible data and buyer insights that will help brands create new products, as well as trends that will feed into their strategies. Timely and personalised product recommendations during these “FOMO” shopping events will be a key way that brands can demonstrate that they understand their customers’ needs and preferences.
Social Media as a significant driver for retail
As more shoppers turn to their phones to shop this season, we expect to see more of that happening through social media feeds. Overall, social traffic share will surpass five percent during the holiday season —up 17% from last year. Multiple social platforms are raising their game to maximise advertising revenue from retail brands, but some channels are gaining the traction over others. It’s expected that Instagram will grow 3x faster than the growth of overall social traffic, which translates to a 51% year-over-year increase in traffic to retail sites. Meanwhile, Facebook will see traffic referrals to retail sites shrink by seven percent as Instagram begins to own more traffic share.
Alongside referral traffic to retail sites, Instagram is working on a standalone e-commerce app called ‘IG Shopping’ which allow users to browse collections and make in-app purchases. Instagram will be leveraging its 25+ million business accounts to take on e-commerce competitor Shopify.
Ahead of the Black Friday shopping rush, Snapchat is this week launching a new Discover channel called ‘Shop and Cop‘, which will highlight app-exclusive e-commerce deals from chosen brands and enable on-platform purchasing of those items, so you can snap up the deals without leaving the app.
The phenomenon of big retail events is not going away with consumers choosing to spend more if a deal is to be had. Retail brands need to be ensure their messaging is in the right places and reaching audiences at the right times.
This is the era of ‘New Retail’ where brands must focus on fulfilling the personalised needs of each consumer.
Mobile will be the preferred device for festive purchasing E-commerce purchases via mobile devices are at a turning point as well as in-app transactions with seamless fingerprint and facial recognition.
Creating a new retail experience Consumers want brands to engage with them and they want to be active participants in their shopping experiences.
Blurring of online and offline Younger audiences are seeking hybrid experiences that blur the boundaries of online and off-line – they still want to test products, engage with brands directly and for their experiences to be personalised.
Personalisation from Big Data and AI-based recommendations Technology like AI and AR can create more personalised customer journeys through targeted product recommendations as well as digital interactive product sampling either in-store or online.
Social Media as a significant driver for retail Choosing the best referral channels like Instagram will bring significant growth for retail brands. Social media is evolving into e-commerce platforms and increasing ‘mobile-only’ shopping behaviours.
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