Challenges Facing Retailers 2018 Post

What are the Top Challenges Facing Retailers in 2018?

In General Marketing, The Digital Marketing Blog by Dave0 Comments

Last year we explored some of the major challenges that we thought the retail industry would face in the upcoming months and years. It quickly became our most popular blog post. Despite the short time that has elapsed since the original post was published, there have been some significant developments in the retail sector.

For that reason, we thought it was a pretty good time to review the new problems facing online retailers in 2018.

“Alexa, how will companies manage voice search in 2018?”

Siri, Alexa, Google Assistant, Cortana, they all do broadly the same things, and so for the purpose of this post, we’re treating them as one entity. Voice search is here to stay, and all the stats show that its usage is increasing:

So, how can retailers capitalise on this growing trend?

Currently, voice search on phones, tablets and laptops is more capable than on devices like Google Home and Amazon Echo. The former can take searches such as where can I buy a Manchester United shirt” and take the user to a page where they can make a purchase. The latter has a slightly different problem in that they can only convey a finite amount of information and in one audible response.

The challenge to perform well for these searches varies on the intent. For example, if somebody uses voice search to find out what time Game of Thrones is on, that’s easy, the search engine just needs to find the result and deliver it, either via screen or the speaker.

What about when we use our Manchester United shirt example though? How do these services handle multiple potential options?

siri and google voice search results

As you can see, the results are relevant. But what about when we ask for more specific information?

“Where can I buy a Man United shirt?”

Siri & google assistant voice search results 2

As you can see, Google has done well. Siri… not so much. I know for a fact that United Colors of Benetton doesn’t stock football shirts.

What about if we change it to “Where can I buy a Manchester United shirt?”

Siri & google assistant voice search results 3

Slightly different results, but Google has given me something useful. In this case, Siri has shown me a relevant shop but, and it’s a big but, this shop is in Manchester, and the search was conducted in Brighton.

Not good.

So, one service is better than the other, what’s the big deal?

It’s likely that in the future, customers will want to order and pay for items using voice search and retailers need to be ready for this. For example, how is it implemented on site? How do we find out what people are searching for? Just how much will the search queries themselves differ from traditional searches?

The fact that on Android there are different results for very similar queries tells me that Google is interpreting the query differently for each search and that neither retailer is focusing on voice search.

If they were, you might assume that the same retailer would be returned for both queries.

This article from Search Engine Land goes some way to expand on how we as marketers approach voice search and is worth a read. (Spoiler alert: we all still have a lot more questions than answers). My thinking is that the work people have already done to rank for featured snippets will be transferable to voice search at least to some extent.

When it comes to voice search, the early bird will almost certainly catch the worms. My prediction is that Amazon will nail this before any other retailer but they do have one potential curveball…

Amazon’s Patents for their Dash buttons have expired. What does this mean for other retailers?

For those who don’t know, Amazon Dash buttons are for Amazon Prime users. These buttons can be placed around the home, and one push can order items such as toilet roll, coffee, pet food, cleaning products etc. and they will arrive the next day.

We already know that Walmart has filed patents and are trying to develop something similar and so one challenge for retailers in 2018 and beyond is whether they try to emulate Amazon’s success with Dash button technology now that the patents are open, or whether they wait it out and hope it’s a fad. The jury’s out as to which it will be.

The fact that Walmart (and by extension, probably ASDA) is developing a version shows they are taking it seriously. Forbes suggests that Walmart is still the world’s largest retailer, bigger than Amazon.

It’s telling though that Amazon is now the first port of call from some of the things that otherwise would have been part of the weekly shop at Tesco. How will the supermarkets react? In the UK, the big 4 have already had their margins ripped apart by LIDL and ALDI and so they could probably do without Amazon getting in on the act too.

Here’s why I said earlier that I think Amazon will be the first to nail voice search: Amazon Prime is already very popular, and they can be safe in the knowledge that 1-click delivery is a service people want. In addition to this, users are already able to order directly from Alexa devices simply by saying “Alexa, order me an X”

Implementing voice search, and getting it right, will be a major problem facing the retail trade. However, the retailer that starts experimenting with voice search early will very likely reap the rewards from a new purchasing medium that looks very likely to stay.

Looking through the Google Lens

Even though it’s still in its embryonic stages, Google Lens could be as important as voice search. Instead of a voice input, it uses a smartphone’s camera to detect objects which it can then search for.

There’s no current release date, but let me give you an example of how it might work.

Let’s say that my friend buys a jacket that I also happen to like and want to buy. All I’d need to do is take a photo using Google Lens and I could be just one quick snap away from purchasing that very same jacket. (side note: don’t buy the same clothes as your friends, nobody likes that guy)

The Conscious Consumer

Loosely speaking, being a conscious consumer means shopping and consuming with greater thought given to aspects of the product and business you’re buying from. Though not a concrete list, this may include thoughts like:

  • Do they pay a living wage?
  • Are they fairtrade?
  • Are their products responsibly sourced?
  • Do they have a good CSR reputation?
  • Are they environmentally friendly?

Many of these things have gained in importance to a certain group of consumers… the mythical ‘millennial’.

While of course there have always been consumers that have looked out for these things, the younger generation that has been raised on a diet of global warming, global poverty and yes, even global terrorism.

Information that is available at the touch of a button seems to have ensured a much more ingrained sense of responsibility when it comes to consumption.

Here’s a list of things Millennials have killed according to various news sites:

Thing Millenials Have Killed

https://twitter.com/theindiealto/status/897274286951497729 

Clearly some of these are tongue in cheek, but some point to a wider responsibility with purchasing, coupled with the fact that in the western world they’ve been left with rising cost-of-living prices, low pay and crippling debt.

Many millennials don’t have the money to pay for all these things that previous generations could afford. The money they do have is spent wisely and consciously. They want quality, and they’re responsible.

Let’s look at some examples:

  • Millennials are killing the golf industry – can’t afford it
  • Have Millennials killed hotel loyalty programs – can’t afford hotels
  • Millennials are killing chains like Buffalo Wild Wings and Applebee’s – poor quality food and questionable health/environmental records
  • Millennials are killing the oil industry – destroys the planet
  • Millennials are killing department stores – they just use Amazon as its cheaper

The overriding theme in these examples are of an industry that failed to meet the changing needs of their new users, be it on cost, flexibility or sustainability and they’ll eventually get left behind.

For example, the oil industry may be failing, but Tesla isn’t. The hotel and travel industry might be struggling, but Airbnb isn’t. The golf industry may be struggling, but evidence suggests people are devoting more time to free exercise & leisure like running than ever before – look at the success of Parkrun.

We also know that the number of vegetarians in the UK has risen by 360% in the last decade. Next time you walk through your local area, have a look at how many shops and cafes are advertising vegetarian food, or food that’s locally and ethically sourced (spoiler: it’s a lot).

Whether it’s the exploitation of cheap labour or the effect of our food miles on the environment, we’re now a world of conscious consumers more than we have ever been before.

But just how conscious?

So, what does this mean for retailers? Put simply, you will have to offer your customers what they want, when they want it and with a conscience too. This could mean ensuring that your products are Fairtrade and/or sustainable, that staff and suppliers are paid a living wage, that you put something back into communities or charitable causes or even that your business runs as carbon neutral.

Interestingly, Forbes compiles a list of what it considers the most ethical companies in the world and some may surprise you. Interestingly, very few of them are retailers. Levi’s, L’OREAL and Petco are the notable exceptions.

A major difficulty for retailers now and into the future will be how they do this. Those that succeed will thrive, those that won’t or don’t will go to the great retail park in the sky to join Blockbusters, Woolworths, BHS, JJB and all the others that couldn’t move with the times.

I’ll add one caveat to this final point. Many retailers are embroiled in controversy and still perform very successfully: Starbucks, Amazon and eBay famously don’t pay much tax. SportsDirect and Amazon have been in the news a lot for worker’s rights issues. More clothes stores than I can count have been implicated in cheap labour scandals abroad, and finally, we could write a whole post itself on criticisms of the gig economy like Uber and Deliveroo…

We know the conscious consumer is becoming more common, we may even be able to feel it in ourselves, but to just what extent is unknown. And that’s a challenge for retailers. In many cases, maximising profit, ensuring sales and being ethical (used as a catch-all term in this case) are not familiar bedfellows. Does a retailer commit to ethical practices? Or do they potentially risk getting left behind? In truth, does it even matter?

Only time will tell.

If you’re a retailer and would like to discuss some of the challenges you’re facing, get in touch using the form below:

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