Things are changing—fast. The retail sector continues to reflect these changes as it keeps up with consumer demand. Since the pandemic’s onset, retailers’ reactions to government regulations limiting capacity and consumer demands for equity and authenticity have been finessed into smarter, more flexible responses, says Barbara E. Kahn, Patty and Jay H. Baker Professor and professor of marketing at the Wharton School.
More and more, consumers are involved in a customer experience that integrates social media and in-person interactions, product and experience, brick-and-mortar shops along with a quality digital experience. Penn Today spoke with Kahn to find out about these trends and how they’re shaping creativity in the marketing field.
What are the retail trends that we’ve been seeing this year?
It’s hard to separate 2020 and 2021 completely because it’s all one, big, merged COVID-land for me, but what you’re seeing in 2021 is definitely a move to omnichannel retailing, which is this recognition of the digital acceleration that happened during 2020 and during early parts of COVID. And now in 2021 we’re starting to see more stores opening up. What does that mean? Is everybody shopping online? Are they going back into the stores? I think what sophisticated retailers are doing—and what consumers are expecting—is some kind of merged experience.
One of the trends that started in 2020 and has gotten a lot more momentum in 2021 is buy online, pick up curbside. That requires an integration of what’s going on online and what’s happening in the store. As we go into more consumers visiting physical retail establishments, you’re seeing that merged behavior, not just in pickup. For example, before people go to the mall, they may spend a lot of time online looking at different things they want to go visit and then when they go to the physical retail; it won’t be starting from scratch. It will be starting from the online experience, and that will change what they do in the store. The consumer expects a seamless integration between what’s happening online and what they see in the store. Some of this integration between online and offline is facilitated by the mobile phone, which of course goes with you when you go into the store. So, there is higher priority on mobile marketing as well.
Another big trend is the use of live streaming and influencers. Especially for the younger generation, but more older people as well, are starting to understand the role of social influencers and social in learning about what’s going on with brands. A lot of the marketing is now being done using live streaming, in which the shopper can interact with the influencer in real time. It’s a very engaging experience.
What’s the advantage of livestreaming for consumers?
Well, this allows the shopper to become a bigger part of the process. It feels more customized and personalized, there can be actual conversations (through chat) with the influencer. It feels more directed, more immediate, and more personalized.
We’ve seen as a general trend, and what has been very much accelerated in 2021, is this move to experiential marketing. It’s the customer experience that’s wrapped around your purchase. And for some consumers that experience is as important as acquiring the good. The customer experience, how you get the product, is part of the marketing exchange now. There are other trends that we are observing, such as the transparency of a brand’s social impact and values. These have to be authentic, but consumers are looking to see what brands stand for.
The pandemic has shuttered many big chain stores, does that forecast the death of mom and pop stores as well?
Unfortunately, a significant number of retailers closed or went bankrupt during 2020, and that was building on several prior years of store closings. The good news is though that in 2021 we are starting to see new stores opening. So that’s a nicer trend. To some degree, it’s the big getting bigger. Amazon is opening stores, Macy’s seems to be coming back some, and, Walmart’s doing really well, Target’s doing really well. The big retailers are doing really well. Dollar General’s even opening up new stores. But we are seeing some of the small retailers, the mom-and-pops, surviving, and even some new ones popping up. There is definitely some growth, but people could walk around their own towns and see a lot of closed retail stores, too. COVID did close down a lot of retailers, they couldn’t stand up, but the good news is that new businesses are coming in.
We are also seeing some of the direct-to-consumer brands that started online, opening up new stores, like Warby Parker is opening up more new stores. Allbirds is opening up new stores. There are also new ideas for the retail space. For example, l was in New York City the other day and I saw some of the storefronts offering indoor tennis and another offering indoor archery. And so, that was really interesting. Retailing and physical store space is moving to experiences in a way that you never thought possible in a storefront. I personally never thought of going to the tennis court store.
How has COVID impacted the ‘experience’ versus the ‘product’ consumer argument?
I don’t buy that dichotomy of product or experience. I think it is all one customer transaction. If you’re buying a product, there’s an experience built around that. And if you are going to an experience, there are things to buy at that experience. The customer expects all of it.
Between more ‘woke branding’ and sustainability issues, how is Gen Z influencing consumption?
That’s another big trend that’s happened, and a lot of people attribute that just to Gen Z. If you look at the data, it is more important to a higher percentage of Gen Z, but it’s not like it’s all being driven by Gen Z. I think of it as a new mandate for brands. I’ve been teaching marketing for a long time, and branding used to be very product-driven. So, if you think about it, the old classic brands were defined by product—Coca-Cola originally was about brown, bubbly liquid, Gillette was about a razor—then the newer thing in branding was to make it more about customer experience. Coke became ‘open happiness’; Nike became about performance.
And now brands are purpose-driven. When you’re thinking about a brand, you want to know where they stand on issues; you want to know what they’re doing about sustainability. You want to know what they’re doing about the DEI issues; you want to know about their ESG issues. All of those kinds of things are new mandates for brands and for marketers in a way they never had to stand up to before. And it can’t be just something they add on. It has to be authentic and integral to who they are and what they mean, or people won’t buy it. So that’s radically changing marketing and branding.
How do you expect things to shift as new variants and restrictions emerge?
I’m not a policymaker; I’m just a marketer, but I don’t think we’re going back to the shutdown world that we had before. I think what you’re seeing is an acceleration of safety precautions. So, making sure people get boosted, wearing masks when they’re appropriate, social distancing, but not closing it down. From a marketing point of view, from an economy point of view, from a retail point of view that’s pretty important. Because when we didn’t know what hit us in March, April, May, we went into shutdown. That was a radical change in behavior.
After two years of this, I think we’re smarter. This notion of omnichannel, integrating what can you do online that’s safe and what can you do in person, recognizing the human needs of social interaction, but being much more careful about it. I think that’s the way we’re going forward, not just in marketing but in employment and health care; there’s a real recognition of what I call omnichannel, which means recognizing what should be in person, carefully done, and what can be done online and maximizing that as much as possible.
In addition to that, we’re seeing growth in what Facebook calls the metaverse, which is the idea of linking in real life with artificial augmented reality and kind of redefining what’s real life and what’s digital. It’s a continuum. You’re seeing that in gaming and all sorts of things, redefining what’s experiential. It’s unfolding now, and we’re learning about it.
What are you most excited about by the field right now?
As tragic as the pandemic has been, the acceleration of this move to digital, this move to a metaverse, this idea of omnichannel, getting everybody online and people learning to be comfortable with the responsible collection of data, that’s been exciting to see. And the constraints and the tragedies and the lessons that have come from the pandemic have fostered creativity. The newness, this innovation has made marketing exciting. Retailers are now looking for ways to build a cool customer experience in the store.
We no longer have to go to the store to buy routine packages anymore. You can buy those online. Now we have an opportunity to do something exciting and fun and use all these new tools. I’m very happy and proud to know that marketers are leaning into sustainability and social impact initiatives, and we can feel proud of our field because they’re doing the right things; they are taking leadership roles. That’s really exciting. Understanding how to incorporate that in an overall marketing strategy is complex. It makes life much harder. All the constraints and all the changes in behavior that COVID caused have made the challenges in marketing difficult but interesting and exciting. It’s made our field a playground of incorporating creativity. I don’t want to undermine the tragedy of it, but I think there has been a silver lining.
