Retail has become a hotbed of technological innovation. From AI bots that make personalised purchase recommendations to AR apps that let you try out or try on items remotely; from video game-like immersive digital stores to physical stores where you don’t need to checkout, the retail landscape is changing rapidly in what feels like a continuous state of digital revolution.

But what is driving this headlong dash into the future? Is it the inevitable result of the rise to dominance of a new breed of digital-first retailer, the likes of Amazon, JD.com, Alibaba, Suning etc? Now giants in the industry, names like these have built their success on digital disruption and innovation. Is driving continual change simply part of their business model?

Or is the fact that these businesses have risen to prominence the effect rather than the cause? Have they in fact simply cashed in on a deeper truth - that 21st century consumers, immersed as they are in a digitised culture, demand innovation and are making their choices as consumers accordingly?

This will always be something of a chicken and egg argument. The likes of Amazon have made no secret of the fact that digital disruption is a central part of their strategy. Whether this influences or is influenced by consumer sentiment is hard to establish with any certainty. But what we can be clear about is that modern-day shoppers are very keen to embrace new innovations when it comes to how they shop and where they shop.

As consumers become more digitally confident, brands are in a race to keep up

Over the years, this is something we have seen consistently in our annual Future Shopper reports. And it was very much evident again in the results of our latest survey, on this occasion conducted with more than 30,000 digital shoppers across 18 countries.

Some of the headline findings are compelling. 64% of global consumers told us that they wished that brands and retailers would be more innovative in how they use digital technology to improve their experiences. 59% said that they were more likely to purchase from digitally innovative brands.

What is more, there is a feeling among consumers that brands and retailers are lagging behind their expectations. 74% told us they want to see retailers step up their game, and 58% say they will stop buying from brands that don’t meet their expectations in the future. 53% say they feel more digitally advanced than the companies they shop with.

It also appears that the experiences of the COVID-19 pandemic, when people had little choice but to lean on digital technology, has served to accelerate consumers’ digital confidence. 72% told us they were more comfortable with digital tech now compared to before the pandemic.

This is all something of a wake-up call for brands and retailers. But what exactly are consumers talking about when they say they want brands and retailers to be more ‘digitally innovative’? What sort of technologies are they most keen to embrace, and to serve what purposes?

For consumers, innovation pays

One obvious reason why shoppers want to see more technological innovation in retail is to enjoy more seamless, convenient shopping experiences. Convenience matters to consumers. A massive 80% worldwide told us they want the shopping ‘journey’, the transition from looking for initial inspiration through to purchase, to be as short as possible. (We look at this phenomenon ‘Compressed Commerce’ here). 64% said they liked the idea of being able to do all their shopping through just a single retailer.

One clear trend that emerged from our survey findings was that shoppers worldwide are very keen to embrace more convenient - and more innovative - payment options. After all, whether it’s long queues in store or clunky checkout platforms online, payment is often cited as a key friction point in the shopping journey.

Ultimately, no one likes parting with their money, and they don’t appreciate it being made difficult for them to do so.

58% of people we surveyed said they were excited about a future where all payments were cashless. Perhaps a little surprisingly, an even higher proportion - 64% - said that they were excited about stores where you don’t have to queue to pay, including completely ‘checkout-less’ store concepts like Amazon Go.

This interest in payment innovation also pushes further into even more unorthodox territory. 50% of people we spoke to said they liked the idea of biometric payments - or being able to use parts of their body like their face, fingerprints or eyes to identify themselves to authorise payments, without having to carry a card or even a phone. Most intriguingly of all, 47% said they would be interested in being able to continue to make automated payments in their name even after they had died, for example to continue to look after family members.

Of all the areas brands and retailers could look to innovate across their operations, based on insights like these, we’d say payments would be a strong place to start.

Here we are now, entertain us

Continuing with the theme of convenience, nearly half (49%) of all consumers we spoke to told us that they would prefer their online purchases to be digital and therefore instantly downloadable. We know that speed and convenience of delivery are a big deal to the modern digital shopper - in fact, they are two of the top five things consumers told us they would like to see improved about online shopping. A quarter (24%) of people now say they expect their orders to be delivered within two hours!

Ultra-fast fulfilment of course depends on considerable levels of innovation, both in logistics (e.g. hyperlocal distribution) and technology (e.g. use of drones). The digitisation of products solves the problem from another angle, namely by doing away with the need for distribution altogether!

Half of shoppers being in favour of this for the sake of convenience alone seems a very high figure, however, especially when you think of all the things that simply can’t be digitised (food, for example). So, is this mere wishful thinking on the part of shoppers?

It’s probably more a reflection of a different motivation altogether - that people are simply starting to place more of a value on digital products and services. We’ve always thought of retail in terms of the trade in physical goods. But maybe we need to start shifting our thinking on that.

Over the last few years, we’ve seen the amount of money consumers spend on digital products and services, from entertainment streaming and downloads to digital subscriptions and products like insurance, climb steadily. This year, shoppers worldwide estimate they have spent 38% of their total online spend on digital products, up from 33% in 2021.

The link between entertainment and digitisation here is worth expanding on. Streaming services like Netflix, Prime Video, Disney+, Spotify and Apple Music remain the biggest players in the digital products category. Throw in Amazon’s giant ebook and audiobook operations and we can see a clear trend behind the growing demand for digital products - people want to be entertained.

Gaming is another fascinating area in this regard. 96% of online shoppers we spoke to worldwide say they play digital games of one sort or another. Moreover, 62% of those people say they spend money through those gaming platforms.

And it isn’t just that people are spending on those games (i.e. on subscriptions to play). They are spending through gaming platforms to buy digitised products. For example, an astonishing 60% of gamers said they were interested in buying digitised versions of products they buy for themselves for their in-game avatar, such as dressing them the way that they dress in real life.

And that carries into the surprisingly high figure of 29% of digital consumers who say they have already made purchases in the metaverse - the alternate, fully immersive digital reality or ‘spatial web’ born of connecting VR spaces together via the internet, where your avatar mingles, plays and apparently shops with fellow digital citizens.

Perhaps the bluntest expression of this connection between consumerism and entertainment is the fact that 62% of people want online shopping to be more entertaining full stop. From streaming and download services to gaming and then into the metaverse, it’s driving a new kind of consumerism.

Could this be shifting the perceived value we place in purely digital products? Of the 47% of consumers who said they know what a non-fungible token (an NFT - a ‘unique’ digital creation sold as a one-off original), 70% said they’d be willing to buy one. It’s not just bits and bytes anymore - digital products are starting to carry a value of their own.

Staying ahead of the curve - your customers demand it

For some brands, the very word ‘innovation’ carries with it a sense of dread. Because innovation means change, it means investment, it means taking risks.

But what is it they say about the customer being always right? As we’ve seen in our latest Future Shopper findings, your customers want - no, demand - you be digitally innovative. They’ll decide whether to stick with you or not on that basis alone.

There are ways and means of embracing digital innovation, of threading it into your company’s culture and operational framework so it becomes a part of your strategy. At VML Commerce, we have the experience and expertise to help you find the right path for your business.

But the starting point is always understanding what motivates your customers. Drawing on the findings of our latest global consumer survey, we have highlighted some common themes that draw back the curtain on why digital shoppers are so eager to embrace retail innovation - convenience, the growing value placed in digitised products and services, even the desire to combine consumer behaviour with entertainment.

To get under the skin of what your customers feel about digital innovation and why, get in touch with our team and let us help you stay ahead of the curve.

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