Personal shopping is the number one choice for Irish consumers, IBM retail chief says
The pandemic, the return of skyrocketing inflation and the impact of technology have radically transformed the retail sector in just 28 months.
s some of the world’s biggest names in industry met in Dublin this week, with Luq Niazi, IBM’s Global Managing Director of Consumer Industries, sitting down with the Irish Independent and shared his insights into the ongoing changes in retail – both in-store and online.
At IBM, Luq Niazi advises retail and consumer goods companies on industry opportunities and challenges, offering him a front-row seat to the major trends reshaping retail post-Covid. He was in Dublin this week for the Consumer Goods Forum Global Summit, one of his first post-pandemic retail conferences, having started the job in 2019.
“We’ve seen very rapid shifts to digital retail. It went from 30 percent at best to a peak penetration of 70 percent in the US,” he says, looking back on the pandemic. “What would have happened in two years would have happened in ten years.”
In Ireland, however, shoppers were not easily lured away from stores, reflected in the queues that formed outside stores like Ikea and Penney’s as non-essential retail outlets reopened. According to an IBM poll conducted by Mr Niazi’s team, the Irish have yet to swap shopping sprees for scrolling.
“If you look at the in-store averages, Ireland was 10 percentage points above the world average,” he said.
The survey of 19,000 consumers worldwide found that 45 percent of respondents prefer in-store browsing, while 72 percent described their approach as “hybrid” and mixing both channels.
However, in Ireland, 56 per cent of Irish shoppers primarily visit stores, while 78 per cent opt for a mix of in-store and online.
Mr Niazi says the results reflect the Irish community spirit, with many staying true to the ‘shop local’ mentality adopted during the pandemic.
“They’re more connected to the store environment because they’re closer to the community,” he says.
It also revealed that the Irish are “hungry for knowledge” before making a purchase, with shoppers likely to do research or take recommendations from friends and family.
“They were also higher in terms of engagement on social media and with product promotions,” he says.
This technology, powered by artificial intelligence, is becoming more advanced as consumers become accustomed to – and expect – targeted advertising and offers from frequently visited outlets.
“They target me at chino guys, t-shirt guys and sneaker guys because they know I’m buying that,” laughs Mr. Niazi.
Other technological advances in the shopping experience include the rise of the seamless shopping experience.
However, Mr Niazi does not believe that the much-discussed Just Walk Out technology powered by Amazon will become the norm in Irish stores just yet.
This technology allows shoppers to scan an app or payment card to enter the store. Shoppers then fill their bags and leave without having to visit a checkout. The cost of the items removed from the shelves and tracked by a series of cameras is then automatically deducted from the buyer’s account.
Amazon has opened 18 tech-powered grocery stores in London, the first of which opened last March. The company recently opened its first store outside of London in Kent, while Compass Ireland opened the Market x Flutter store in Dublin in February, offering the service.
Tesco, Aldi and Sainsbury’s have also opened their own checkout-less technology stores in the UK.
“If you look at the cost of rolling out Amazon Go technology in a traditional store, it’s pretty expensive and it’s a question of whether the return will ever work,” he says.
“It will accelerate, but I don’t think the model will scale for 5 to 10 years.”
Rising inflation and the accompanying price hikes are also a factor that is beginning to affect the global consumer. “You have less discretionary spending and you have to make compromises,” he said.
This threatens to derail what Mr. Niazi calls the rise of the purpose-driven consumer, a shopper who considers sustainability in their purchasing decisions.
Shoppers could reduce their purchases of “green” premium products in favor of private label items to reduce costs. However, Mr Niazi has found that Irish shoppers are already smarter than their global counterparts by choosing to try a product in store before committing to a purchase and to save on costs such as shipping.
Recently, Zara joined retailers like Next in now charging return fees for online purchases as returns skyrocket. It’s also a problem for fast-fashion retailers Asos and Boohoo, both of which warned of rising returns rates last week.
According to Mr Niazi, the rise in cheap clothing is a victim of its own success.
“It created an ‘buy, try and go back’ perspective. It doubles your distribution costs and is highly inefficient. Then you have double the final packaging cost. It needs to be put back, cleaned and repackaged,” he explains. “It increases transportation and labor costs at the fulfillment centers.”
Mr Niazi is confident that the retail industry is making a real commitment to a more sustainable future.
“[Millenial and gen-Z] consumers will expect the change,” he says, pointing to companies transforming their value chains as examples of those that will survive.
“I don’t know if that will make them more profitable,” he concludes. “I think it will increase their brand and value so they can keep their business going.”
Key retail trends in Ireland
Buy and try
Returning online orders has become the biggest challenge for fast fashion retailers, with Asos, Boohoo and Zara all affected. As concerns about a pandemic ease, people are now buying more clothes for socializing or work than in the previous two years. With the cost of living rising, buyers don’t want to miss out on a refund. Without the ability to try on, some buyers may order multiple sizes and return the ones that don’t fit. Now retailers are faced with increasing shipping costs and the increased time and effort required to process all returns. The item must not be offered for sale again as the company is sending it to the landfill.
Back to town
Irish consumers love to shop in person, with 56 percent of those surveyed by IBM saying they shop primarily in store, 10 percent more than the global average. Irish consumers enjoy the social element of shopping and the ability to browse and try products in store. It’s also said to save money – 36 per cent of Irish consumers don’t want to pay for postage.
Private label products are becoming increasingly popular as they are cheaper than branded items. According to Kantar, brands’ share of grocery spending has fallen to 49 percent in the three months to mid-May, equivalent to €29 million. 62pc also plans to reduce grocery shopping across the board, with grocers hoping to use discount coupons to prevent losing customers.
https://www.independent.ie/business/irish/shopping-in-person-is-the-top-choice-for-irish-consumers-says-ibm-retail-boss-41780492.html Personal shopping is the number one choice for Irish consumers, IBM retail chief says