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Shoppers Are Flocking to a New Digital ’Hood. What Does This Mean for Retail?

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During the pandemic, much like our working lives and our socializing, retail had to migrate solely online — and with this seismic shift, shopper expectations have skyrocketed.

A smooth transaction and quick delivery is no longer a perk for customers — it is the baseline expectation. Consumers everywhere now seek a rewarding and enjoyable online shopping experience — one to rival, if not replace, the real thing — and this doesn’t look set to change, even as COVID-19 restrictions lift.

So what does this mean for retail brands?

Welcome to the ‘Digital Neighborhood’

The concept of “place” has become meta, and the pandemic has only accelerated the convergence of the digital and physical worlds. We have work meetings from our own homes, young teens meet on “Fortnight” to socialize after school, and we hang out in digital spaces to watch virtual streamed concerts.

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In essence, there are digital neighborhoods forming, and they’re here to stay.

So what’s a digital neighborhood? It’s just like any other neighborhood — but it’s online. It happens when people are brought together via multiple platforms and virtual spaces to explore and form a community.

It might sound futuristic, but it’s a trend that every retail business needs to get on board with — and fast — because in the digital neighborhoods of the future, people will “show up” to online stores as an event; not only to browse and buy goods, but also to socialize and be entertained, just as they do in physical stores.

If retail brands aren’t plugged into these emerging digital neighborhoods from the start, and if they lack the ability to rapidly and continually evolve as new apps and technology do, they risk being locked out.

Making Online Shopping More Immersive

As ecommerce becomes more social and experiential, the range of channels available to both consumers and retailers will expand and diversify. In social media, Youtube, TikTok and Instagram are practically digital cities already. They’re made up of endless influencers and brand ambassadors, integrated shopping options and numerous selling opportunities for brands and business owners.

Instagram’s shopping feature now allows users to pay for items in-app, so followers can buy  products without stepping away from the conversation.

Despite this cultural evolution for retail, the experience of shopping online is still, in the main, boring. It’s been constructed this way. The intention is to scroll and select with ease, and tools such as Amazon’s auto-replenishment feature mean shoppers don’t even have to remember what they like.

But is this what they really want? According to the Future Commerce Vision 2021 report, 51% of shoppers admit that during the pandemic, they’ve missed the socializing element of going to the shops, and one in four still watch classic shopping channels like QVC. For now at least, that sense of interaction and community is lacking in online retail.

The next step is for retailers to diversify their technology to keep up with this consumer appetite for a more immersive shopping experience. Because experience trumps loyalty. If a retailer can’t (or won’t) provide the shopping experience consumers in these new digital neighborhoods crave, consumers will simply find another retailer who can.

Are Retailers Up to the Challenge?

In recent years, retail brands have proven they can successfully evolve in line with consumer expectations as they have added the role of conversational facilitators to what they offer.

Today, customers expect their chosen brands to recognize their potential as impactful cultural entities and use their influence to speak out on important causes. For instance, the Black Lives Matter movement of 2020 put the spotlight on brands to champion diversity and inclusivity; not just within the workplace but also in their marketing and product ranges. We saw wide adoption of efforts such as the 15 Percent Pledge, which had retailers such as Sephora, Macy’s and Rent the Runway commit 15% of their shelf space to black-owned businesses.

This example proves that brands can successfully evolve to meet consumer expectations. The only difference with embracing digital neighborhoods is that retailers must have the right tech at their fingertips.

How Will You Stand Out on the Street?

For brands that want to stand out on the virtual streets of the digital neighborhood, having the functionality to make sales through numerous channels will be key. That will lead to greater system complexity and an operational minefield. In this environment, no “one vendor” can provide the best functionality for all the applications needed for running a modern ecommerce experience.

Furthermore, reliance on legacy ERPs is preventing retailers from quickly upgrading and evolving their tech stacks, and, in future, this is going to cause major issues. For example, if your ecommerce business can’t immediately connect to the latest hot sales channel, using TikTok as an example, then consumers will simply go elsewhere.

As a result of this shift, companies will require, even demand, the flexibility to rapidly select, integrate and assemble best-in-class functionality for specific business requirements, and switch out technologies when they no longer are fit for purpose.

The solution? Adopting flexible solutions and open API that allow brands to curate dynamic and interconnected tech stacks with systems that enable them to quickly integrate a changing roster of tools and applications. 

This is essential to simply keep pace, let alone differentiate, in an already saturated B2C market and we’ll see more brands building out agile tech stacks through API to keep up with consumers’ demands.

Exciting, Not Intimidating

A “one vendor” approach may have worked for retail businesses up until now. But if companies overlook the multi-leveled, immersive retail environment of the future, they risk consumers looking elsewhere, and never coming back.

API adoption will be the way forward for ecommerce brands to develop and nurture their customer experience investment and remain plugged into the evolving digital neighborhood. Yes, the desire for consumers to buy wherever they are will unearth operational complexities; but with the right operating system, it needn’t be intimidating. For those who are willing to grasp the opportunities that will blossom from digital neighborhoods, there has never been a more exciting time to be in business.

A flexible tech stack will ensure you are two steps ahead of the most innovative online merchants, using various best-of-breed systems to support consumer expectations, rather than relying on one vendor to produce standard functionality fit for everyone, which will not be enough.

It’s no secret that the retail industry is still reeling from the effects of the pandemic. But while many have struggled or failed, others have thrived. To ensure you land in the latter camp, prepare your business logistically to be an ever evolving leader within the digital neighborhood — or risk being locked out altogether.

Since joining Brightpearl four years ago as CEO, Derek O’Carroll has led the retail operations platform from stagnant growth to more than $22 million in revenue, nearly 1,000 customers worldwide, and managing more than $5 billion in orders. Shortlisted for CEO of the Year at the Digital Masters Awards in 2019, the father-of-two is now recognized globally as a retail expert.

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