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Despite Falling Online Sales, the Future is Still Digital for Retail

For the first time in its 9-year history, the Salesforce Global Online Shopping Index recorded a drop in the amount consumers were spending. During Q1 of 2022 US consumers spent 3% less online than they did during Q1 of 2021. Traffic was down by 2% and the number of orders placed had fallen by 12% in North America. In Europe, the value of online sales had dropped by 13% and the order volume had fallen by 17%.

Some put this down to the CoVid effect. They reason that in 2021 shops in many parts of the world were not fully open. Even where they were, some consumers still did not feel confident enough to leave their homes and go to a crowded shop. Whilst this is a factor, other retail behavior studies show that this is not the whole story.

Inflation is having far more of an impact. Consumers simply cannot afford to spend as much. Even those who can are hanging on to their cash. Economic insecurity is affecting everyone´s confidence.

Some retailers have decided to refocus on making in-store sales. But that does not mean that they are giving up on digital. Far from it, many realize that no matter what happens, the future for retail is still digital. It is just that they need to use this technology a little differently to weather this particular storm.

They are wisely maintaining and improving their online stores while looking at ways to streamline things and reduce the costs of running them. Headless commerce is the perfect example of this. Uncoupling the front-end, customer-facing interface, from the back-end software which manages the processing of the order results in a much lighter website which requires fewer resources to run. These sites are also far less time-consuming to maintain.

In-store the adoption of digital solutions is also being stepped up. There are considerable upfront costs involved with doing this, but most of these innovations end up paying for themselves just a few years after deployment. The use of digital shelf edge labels is a good example of this. Using it enables live-time price changes, which enable retailers to maintain the profit margin they need to stay in business. This is particularly important when it comes to fresh products. There is no longer any need for a retailer to bear the loss when they pay more for a pallet of potatoes but have to wait several days to be able to print and deploy new labels to stores that reflect the price increase.

Deploying digital solutions is also helping retailers to deal with staff shortages. In the USA, the retail sector has seen a staff turnover rate of 69.7% during the first half of 2022. A rate that is leaving many stores without enough workers to serve customers. Unsurprisingly, many retailers see deploying digital tools as being essential for their survival.

They are also increasingly using digital screens to make it easier to help their customers. According to Mandoe Media, demand for their digital screen software has soared. They have clients located throughout the world and demand is growing in most of them. Retailers are waking up to the benefits of being 100% in control of their in-store marketing.

They benefit from having the flexibility to create adverts that are tailored to fit in with what their customers want. If a store owner is watching a popular cooking show on a Sunday evening the next day, they can put together a promotion inspired by one of the recipes used. Quickly assemble the ingredients, photograph them, create an ad, and deploy it across all of the screens in the store. With a bit of experience, a highly localized promotional campaign like this can be put together in 30 minutes or so.

Provided they buy screens that have the right type of software it is possible to combine deployment times with sales data for the products being promoted. Enabling the store team to see, almost immediately, whether the offer has worked.

For retailers, having access to data like this is essential to their survival. The more digitized a store is, the more information can be gleaned about its customers. Enabling retailers to further tweak what they have to offer to better fit in with what consumers want.

Even at a time when online sales are falling the future is still digital for retailers. Those that do not tap into technology are not likely to survive this economic downturn.