What Today’s Digital-Native Shopping Habits Reveal About Tomorrow's Retail
Key Takeaways:
- Digital natives demand fast, easy, personalized retail through their smartphones
- Retailers will need to adjust their operations and technology to retain market share
- Personalization, omnichannel buying journeys and social integration are critical
- Innovations like AR, VR and AI can all help retailers connect with younger consumers
The first generation of people that have grown up with the Internet are reaching adulthood - and that means they’ve got money to spend.
This segment of the world’s population has very different ways of interacting with retailers, and therefore very different expectations of the businesses they deal with. This can be a real challenge for organizations who are used to traditional ways of serving customers, but also an opportunity for those who can implement technology in the right ways.
In this blog, we’ll explore the new world of retail for digital natives, including how AI agents in retail can help.
Who Are Digital Natives and How Do They Interact With Technology?
First of all, it’s important to understand who digital natives are. They are people who have grown up with digital technology such as computers and smartphones all around them, and have no experience of a time when internet use wasn’t widespread.
Generally speaking, digital natives fall into either the Millennial and Generation Z age groups. And as these two generations collectively make up more than 42% of the population (in the United States, at least), their buying power and economic importance is large and growing all the time.
They tend to be much more comfortable and confident with technology, and more willing to try and adopt new tech as and when it emerges. But this can be a double-edged sword for retailers: because digital natives are accustomed to getting what they’re looking for immediately, they can be very impatient and want their expectations fulfilled as quickly and easily as possible.
What Are Digital Natives’ Consumer Expectations and Trends?
Compared to the generations before them, digital natives can have a markedly different outlook and attitude to purchasing. In particular, they have come to expect:
Mobile-First Shopping Experiences
Digital natives will turn to smartphones to buy goods and services before anything else - as a result, they expect to get seamless, intuitive experiences that aren’t held back by slow loading or complex checkout processes.
Social Commerce Integration
Social media platforms are increasingly important in buying processes: PwC has found that 46% of consumers now make purchases directly from social media, up from 21% as recently as 2019. As well as enjoying the convenience of shopping in their chosen social environments, it allows them to make easy purchases when viewing recommendations from influencers and content creators.
Value-Driven Purchasing Decisions
Consumers in general are willing to spend an average of 9.7% more on goods that are produced or sourced sustainably. But younger generations place particular emphasis on the social, ethical and sustainability values of the businesses they shop with. Even through the current cost-of-living pressures, they want to spend with businesses that align with their values and avoid those that don’t.
Omnichannel Buying Journeys
Blending digital and physical touchpoints along the customer journey, and delivering a consistent experience throughout, is essential. Emarketer has found that nearly 80% of global consumers will visit a retailer’s website on their phone when in that retailer’s store, while 74% will use that retailer’s app.
In-Depth Personalization
Digital natives tend to be receptive to personalized communications, such as tailored offers and curated recommendations. This means they favor brands that can use consumer behavior analytics and data effectively to simplify decision-making and connect consumers with timely, relevant content and products.
What Does This Mean For Traditional Retailers?
These new consumer expectations mean that many retailers have work to do to retain market share and drive new growth. The most successful retailers in the long-term will be those who:
Invest in Mobile-First Infrastructure
Retailers need digital platforms with mobile-first design, quality customer data platforms, and AI-powered recommendation engines. All of these are essential for delivering the personalized, seamless, data-driven experiences that digital natives demand.
Transform Physical Stores
Brick-and–mortar stores will become centers for experiences, instead of simply a place for transactions. They need to be places where customers can engage with products and the brand, get personalized service and advice, and interact digitally through in-store technology and mobile interaction opportunities.
Make Meaningful Commitments to Sustainability
Sustainability-focused consumers want actions rather than words, and for retailers, that means making changes throughout the supply chain. This can include ethical product sourcing, reduced packaging, and committing to the circular economy.
Move Towards Real-Time Product Development
Instead of planning product releases and marketing seasonally, retailers will need to become more dynamic and develop products in real time. This can be achieved by the use of AI in product development, along with machine learning and social data, that support a continuous feedback loop that works constantly across every stage of the product lifecycle.
Adopt the Latest Technology and Innovations
Digital natives will respond positively to new innovations in retail spaces. These can include the use of augmented and virtual reality to deliver immersive shopping experiences; smart stores powered by IoT devices; real-time dynamic pricing to stay competitive; automation and robotics streamlining processes behind the scenes; and AI-powered chatbots for fast and effective customer service.
In Summary: Adapting to Tomorrow’s Retail Expectations
The future of retail is fast, convenient and hyper-personalized shopping experiences, driven by AI agents for retail; autonomous retail environments built on seamless omnichannel integration; and transparent sustainability that is deeply embedded into every area of retail operations.
To make the most of these new trends, and meet digital natives’ expectations, retailers will have to explore innovative strategies such as:
Immersive Technology Integration
Using AR, VR and interactive displays to remove the barriers between physical and digital shopping, to create memorable interactions throughout AI-driven customer journeys.
Flexible Fulfillment Models
Adaptable, dynamic supply chains that can meet rapidly evolving consumer demands, including using stores as mini-distribution centers, deploying seamless inventory management, and widening the range of delivery options.
Experience-Based Retail Environments
Make retail spaces destinations for brand engagement, community interaction and education, helping to build lasting emotional connections with consumers that last for years.
If you feel you need help on this vital journey, then your best partner is one that can not only deliver expertise and experience on retail technology, but also one that can help you innovate with the latest solutions like AI. Ciklum can help you make your retail technology digital native-ready, with a winning combination of skills, technology and retail-specific know-how.
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