Valentyna Melnyk: Shopping will never be the same

Smartphone shopping is on the rise.

At the start of any new year it's natural to look ahead, and the retail sector is no different. What changes are on the horizon? What trends will affect retail businesses in 2015 and beyond?

Technology is bringing change at increasingly rapid speeds, but it has also made New Zealand part of a global community where international trends can be easily identified.

In many areas, including big data collection, communication with customers and creating brand loyalty, retailers in Europe and the United States are leading the way. What follows is a round-up of some key global trends that Kiwi retailers should be aware of.

Smartphone apps are one of the fastest-growing developments in overseas retail. Many supermarkets in Europe have developed their own apps that consumers can download on to their phones, enabling them to be contacted at several key times. For example, they can receive a "product of the day" offer while they are at home or, upon entering the store, they can be sent a personalised offer that can be redeemed during their visit.

Likewise, American upscale department stores communicate with their customers via similar apps, but the process can be even more elaborate because the customers are segmented and only get offers matched to their segment profile.

This approach has been hugely successful for two reasons. Firstly, it delivers an element of surprise - what will today's offer be? - and a large number of shoppers have said this increases the enjoyment of their shopping experience.

Secondly, by being able to register the moment a customer enters the store and sending an offer at that time, the app engages the customer at the moment of their purchase, rather than via the flyer. I believe the first retailer to introduce this in New Zealand would enjoy great benefits, including the first mover advantage.

Internet and loyalty programmes are also going through a period of change as retailers find their effectiveness reducing over time. On the one hand, loyalty programmes have created the expectation of more personalised and customised offers but, at the same time, consumers often have huge concerns about privacy. They are also turned off when, upon signing up for a programme, they are subsequently "bombarded" with emails.

For example, research has shown asking any questions about income really puts consumers off and that merely presenting them with a choice about membership level enhances their trust in the company, which is the building stone of loyalty.

Retailers need to find their way around these issues and develop loyalty and communication programmes that engage consumers in a positive way. One option is to offer two levels of sign-up - generic membership without personal data (a "no questions asked" approach) and a more personalised programme that requires the collection of some personal data. A more modern option may be the option of downloading - or not - the store's mobile phone app.

Another significant development in retail is the introduction of "levels" within supermarket house brands to increase quality perception (as their quality, actual or perceived, may differ among categories). In New Zealand, Foodstuffs has its "Pams" and "Budget" ranges, while Countdown has its "Signature Range".

If we translated European practices to the New Zealand market, we would see Pams dividing its offerings into, say, "Pam's Premium" and "Pam's Everyday", with stores still stocking a "Budget" range. In Europe this move was shown to increase the percentage of house brand products sold by retailers.

- Associate Professor Valentyna Melnyk is a marketing and consumer behaviour specialist from Massey University's business school.

-Business and civic leaders, organisers, experts in their field and interest groups can contribute opinions. The views expressed here are the writer's personal opinion, and not the newspaper's. Email: editor@hbtoday.co.nz.