That’s according to a number of retail experts who recently spoke at a virtual event on the state of retail by the National Retail Federation.
“The basis of retail is the core belief that the customer is always right. That’s what retail is about,” Matthew Shay, CEO and president of the NRF, said during the June 9 event. “The balance of power in the information age … it’s shifted even further in favor of the consumer, who now shops for anything, anywhere, anytime, with a mindset completely different [than before the pandemic].”
The rising power of consumers comes amid a huge retail rebound, which spells good news for an industry that temporarily closed up shop when COVID-19 began spreading globally. Since early 2020, shoppers have flocked to digital channels to make purchases, driving the retail industry to innovate and deliver services in new and faster ways. Coming out of the pandemic, consumers and businesses are gaining more confidence, with a handful of tailwinds such as the national vaccination roll out and federal stimulus support. And with states reopening and retailers welcoming patrons back inside, NRF sees a brighter future for the industry.
The association even updated its economic forecast in favor of higher sales, with “clear signs of a strong economy,” Jack Kleinhenz, PhD, chief economist at NRF said June 9. NRF projects that retail sales will grow between 10.5% and 13.5% for the rest of 2021, reaching $4.44 trillion. That’s up from the association’s previous forecast of at least 6.5% growth made back in March. Within that forecast, non-store and online retail sales are expected to grow between 18% and 23%, which is unchanged from previous estimates. For full-year GDP, NRF forecasts 7%, compared to 4.4% to 5% forecasted earlier this year.
The updated forecast reveals consumers are ready to return to normalcy and energize the economy. However, there are some major changes retailers are still adapting as consumers demand even more from brands.
Shopper behavior trends
One of the biggest ways consumers have changed--and are forcing retailers to make shifts--is through the desire for retailers and brands to align with their values. Consumers want to shop with companies whose missions meet their goals, such as sustainability, diversity, integrity of the workforce or political and social issues. In other words, consumers, especially younger consumers, want companies to take a stance.
Unfortunately, opinions vary widely among consumers, which means companies face both risks and rewards for voicing their values.
“Millennials want to buy from brands that share their own values,” said Terry Lundgren, founder and CEO of TJL Consulting Advisors and former CEO of Macy’s. “In some cases, they want to buy from companies that stand up and take a stance on issues. There isn't a unanimity among the minds of these consumers. That means that taking a stand is complicated and challenging to these companies’ reputations. Layer the impact of the panic over the last year and how that's changed shopping behavior, and that's a formula for a long laundry list of issues and questions for brands and retailers to contemplate.”
Finding that nuance between taking a stand and turning off some consumers is a fine line to walk, experts agreed during a panel discussion at the NRF event. However, there is no doubt that a rise in social responsibility has created more emphasis on communities.
“We’ve seen people increasingly say they want to belong to groups that [share values],” said Rachel Bonsignore, vice president of GFK. “Throughout the pandemic, we saw more mutual aid and support for small businesses. It’s a really interesting trend that will continue as people move further away from self interest … and realizing [they] can serve the collective good and mutual interest.”
That social responsibility is playing out in how people spend, particularly among younger consumers who care about climate change and social issues.
“The younger consumer is voting with their wallet,” Lundgren said.
However, fragmentation among consumers leaves some of the biggest retailers in a lurch, asking themselves if they should take a strong stance or sit back and also lose customers if they remain silent on important issues across the country and around the world. Making smaller changes may make more sense for some retailers.
“For mass retailers like Walmart or Target, it's more complicated,” said Melissa Repko, a retail reporter with CNBC. “They are coming up with their own ways to be sensitive and relevant to the time. Target launched an innovator to get black-owned products on the shelves. Walmart launched a new apparel line and more eco-friendly denim washes. [Those moves are] a subtle nod to consumers conscious about the environment. … There are different ways to show they're up with the times and listening to customer values, but they’re picking issues that cut across a wider group of consumers.”
While consumers might not agree what stance retailers should take, 77% do agree brands must behave ethically in line with community expectations, said Karen Benway, consumer market leader with Ernst & Young. And with retail in the midst of a huge revival and transformative growth period, it's vital for brands and retailers to continue keeping up with their demands of consumers.