Anastasia Lloyd-Wallis, Chief Operating Officer and Head of Insights at Retail Doctor Group (RDG) was the keynote speaker at IBA’s 2023 Trade Workshop and delivered a presentation on the future of retail.
Lloyd-Wallis’ presentation centred around predictions on where retail in Australia is going and what it will look like by 2030, in terms of what consumers will be looking for and what they will be expecting from retailers. This played in nicely to the theme of the week, which was all about how IBA building the ‘Network of the Future’ and ensuring they are at the forefront of championing successful independents in Australia.
First and foremost, by 2030, RDG is expecting physical retail to hit $480bn in Australia, and e-commerce to be around 20 per cent of this at $113m – at the moment e-commerce is at around 12 to 15 per cent, depending on the category.
Gen Z’s and Millennials currently account for around 36 per cent of all retail spend, whereas when we hit 2030, RDG is expecting them to hit 48 per cent, so those Gen Z’s and Millennials really are going to be the spending power in Australia. Lloyd-Wallis highlighted that retailers need to be thinking about how they’re interacting with these groups of shoppers to future proof their businesses.
IBA’s Network of the Future strategy is adopting a two-speed approach to ensure its retailers are future ready, with a key focus on loyalty and data collection. A new loyalty program for Porter’s retailers is set to launch in the new year, replicating the already successful programs that are currently active in Cellarbrations and the Bottle-O, which have received 1.5 million and 1.1 million online visits this year alone respectively.
The idea is that by leveraging data and insights through shopper, basket scan, loyalty, and e-commerce, IBA will be able to develop a more tailored approach for its network of more than 1,500 retail stores across the country, generating consistent and stable growth for its members.
Lloyd-Wallis spoke about how the physical store is changing and the rise of social commerce.
“We know that adults spend around four hours per day on their mobile phones, and by 2030 we expect that social commerce will be around one per cent of all retail sales. So, we need to understand what that journey is and how our customers will want to engage with us,” she said.
“We expect drone delivery to grow retail sales by $2.2bn, but more importantly it’s going to save retailers about $800m by 2030. Drone delivery is a bit of a novelty so far, but we really do predict that it’s going to help retailers to save money.
“The physical store is changing and will be available 24/7. Customers will be able to walk past your store and interact with you through your window, order the products that they can see through your window, and have them delivered to their door.”
Finally, she spoke about augmented reality and artificial intelligence (AI), including ChatGPT.
“ChatGPT has been a real topic of conversation lately, but what we can see is that even by 2025, Australians will spend $3.6bn on AI. So, it really is a focus for retail, a focus for the industry, and it’s got a compound annual growth rate of around 24 per cent. So, we can really see AI taking off, but the question is, how does that influence us and what does it mean for us?”
She highlighted that by 2030, physical retail will be around 80 per cent of all retail, so it will still be the dominant channel, but we do need to consider the one-in-five customers who will be playing in the digital space.
She then went on to speak about some key trends that RDG has noticed in the current retail landscape, and these were:
- Time is a currency – consumers treat their time very differently post-Covid, it is much more valuable to them.
- Humanisation – it’s all about personalisation and understanding who our customers are.
- Experiential shopping – give customers a reason to leave their house, to take off their pyjamas and go outside.
- The importance of the brand and customer loyalty.
She continued: “We actually see consumers looking to retail as an activity and a reason to leave the house. We see 66 per cent of Millennials saying that they want to look to social media and digital experiences in retail. So, it’s all about these experiences and how we join the dots between all of the aspects that I’ve spoken about,” she said.
So, looking at how this will play into IBA’s Network of the Future strategy, the business is encouraging its members to step up their game and raise the quality of their in-store execution to accelerate growth.
IBA’s focus on loyalty and capturing customer data will enable more customer personalisation and the business plans to incentivise and reward its most disciplined retailers to raise the level of execution in-store, while maintaining current programs for those retailers who are not ready to take the next step.
In closing, RDA’s Lloyd-Wallis reminded retailers that to stay ahead of the pack, “we’ve got to be brilliant; we’ve got to be an experience; it’s got to be time well spent. It’s got to be a reason to leave the house.”
This ties in nicely with a comment from Rod Pritchard, General Manager, Strategy & Transformation at the Trade Workshop, who said: “We will continue to support those retailers within the status quo. If they’re happy with the status quo, that’s great. But we really want to challenge and reward our best retailers for stepping up their game. And we also want to challenge the pack to become fitter.”