A few years back, the retail industry had a head start over hospitality in its adoption of technology and its transition to a multi-channel service. Of course, hospitality has started to catch up, but as we think about where hospitality may go in the future, looking at current retail trends may offer a glimpse of what to expect.
Mass change in consumer behaviour
First things first, a bit of background into how we got here.
One thing that can’t be ignored is the impact of Covid-19, with the pandemic proliferating the rise of online shopping. Customers literally had no option given the shutdown of brick and mortar stores. But this shift in consumer behaviour was happening long before the pandemic arrived, Covid simply sped it up. We can see this in the US for example, where eCommerce penetration within retail has more than doubled since 2013 (when comparing Q3 retail spend figures).
Despite commentary around eCommerce being the death of the high street, the move to online has allowed a lot of retailers to flourish, particularly opening up the competitive landscape for businesses to reach a wider, often now international audience.
Hospitality has been following in retail’s footsteps, with periods of significant change, including Covid, forcing digital adoption and a change in thinking in order to keep up. Customers again have shifted their behaviour towards more online orders, the huge rise in third-party delivery apps only highlighting this further. This has been combined with the lowering of technology costs and generally the ability for hospitality brands to get online being as easy as ever.
So what can hospitality look to learn from retail now?
Of course, retail and hospitality have many differences. But by understanding the trends that are shaping the growth of the retail eCommerce industry we can get some insight into how trends within the hospitality industry may unfold too.
In-store experiences are moving from transactional to experiential
With the closure of many brick and mortar stores, many retailers are reinventing the role the store plays for their customers. Many are moving beyond the in-store experience being purely transactional and introducing a lot more experiential elements to it – a place where customers can come to really be immersed in the brand. It’s a way to engage with customers, especially those of a younger generation, outside of the typical sales process, and foster more brand advocacy.
Apple has been one of the pioneers in this space not only offering inviting, contemporary spaces that appeal to their target audience but also hosting the likes of in-store classes and exclusive events. And as you can see with Apple, it’s not always about going big, but delivering an experience in store that customers will relate to.
American cookie company Crumbl are one example of a food brand turning their in-store experience into something more than just a place where customers come to buy cookies. On the back of their widely successful weekly cookie flavour reveals on their social channels, Crumbl have been able to merge their offline and online channels, and deliver a more engaging in-store experience as a result. Customers get to bring to life what they experienced online, including being able to watch the cookies being made. The in-store “taste test” of the flavours is now so popular it has become a TikTok trend too.
Omnichannel is now table stakes
With customers now finding, interacting with, and purchasing from retail brands across any number of channels, it is no surprise that not only has eCommerce risen in popularity but also the likes of mobile commerce and social commerce. Hence, omnichannel offerings for retailers is becoming the minimum standard. Consumers want consistent and connected brand experiences across all touchpoints and devices. They want to move from online to social platforms to marketplaces, wherever, and get the same information with the same seamless experience. Any disparity in consistency and the overall brand experience, any barrier to purchase, and customers will simply go elsewhere.
Personalisation is proving crucial
Retail customers these days are demanding a meaningful relationship with retailers more and more. Purchasing is no longer just about the product, customers want to feel valued, and not like just another sale.
With this has come an onus on retailers to really get to know their customers on a one-to-one level. Personalisation is the key.
And when we say personalisation, we’re not just talking about implementing your basic “recommended products” modules, or utilising a customer’s first name on a website or email, but real personalisation. We’re talking about the likes of using real-time, behavioural and purchase data to know exactly what customers are in market for, when they want it and the right channel in which to interact with them. One easy example to mention is retailers layering in the likes of real-time weather data to know what type of product is better suited to display to the customer at that exact moment relative to their location.
Of course, crucial to all of this is how retailers are capturing and interpreting customer data, especially in real time, and using it in the right ways (aided by machine learning) that make sense for the customer. This is proving trickier for some where customer data and their systems are fragmented but those that are getting it right are differentiating themselves greatly.
Subscription models are rife
Subscription models have become more and more prevalent across a number of different industries as brands look to evolve, attract new customers and ultimately future-proof themselves. The likes of Netflix with TV watching and Spotify with music streaming have paved the way for a whole new way of purchasing. Retail is now no different with brands offering up clothes, beauty products and more, solely using subscription models.
Now, we’ve already seen a range of subscription-based meal boxes and pre-made meals come to market in the hospitality industry but how this starts to filter into other aspects of the industry will be more interesting. UK-based coffee and sandwich shop, Pret a Manger, for example, has recently launched a monthly subscription for their takeaway coffees.
Now of course there will be people seeing both sides of such a proposition, and it will be interesting to see how such a model goes within the food and beverage sector. But with potential upsides like the subscription enabling more upsell given many perhaps Pret coffee lovers will also get swayed into picking up food also, that they might not get enough coffees per month to warrant the monthly subscription fee, or that the subscription may sway the customer into more Pret coffee instead of ordering some from competitors, it may be something to be considered.
Digitally transforming hospitality
If you’d like to learn more about how MOBI can help transform and grow your hospitality business, especially through omnichannel ordering, personalised initiatives and enhancing in-store experiences, then get in touch with our team.