Retail is evolving – How to leverage better logistics to increase customer engagement and build trust

The retail market is rapidly evolving, and retailers today must contend with two trends: consumers have more options than ever before and, at the same time, they are becoming more intentional with their spending.

Retailers themselves must evolve to maintain and grow their share of the wallet by establishing and fostering trust with consumers, including:

• Trust in a product’s quality;
• Trust in a consistent customer experience across channels; and
• Trust that the brand is operating sustainably and in the best interests of its customers.

So, how can brands increase consumer engagement and build long-term loyalty and trust, all while meeting the changing needs of the consumer? It will require taking control and owning a greater share of the interactions with consumers. It is no longer enough to just interact with a consumer at the time of an initial sale. With 10% of global fashion sales coming through resale channels, many brands today are only thinking about 90% of their brand experience. The growth in trends like resale, repairs and rentals should be viewed as opportunities to control the full brand experience – rather than threats – allowing brands to continue to interact with a consumer throughout the lifetime of a product.

“Ultimately, brands and retailers must earn their customers’ trust by delivering a seamless, memorable experience at every touchpoint, both online and offline. Supply chain and operational teams are key to ensuring this consistent experience, which is critical for protecting investments in customer acquisition and fostering long-term customer loyalty”. 

Kamran Iqbal, Commerce Strategist, GXO 

This evolution can be achieved through improved logistics and leading providers like GXO are evolving with retailers to stay ahead of these trends. While it may not seem so at first glance, the supply chain is the closest thing to consumers, with multiple touchpoints throughout the product lifecycle, from shipping and returns, to unboxing and even efficient aftercare. All this is governed by what happens within the four walls of the distribution center – and the quality of all these touchpoints matters more than ever before as it could be the last impression a brand leaves on its customers.

Creating a consistent brand experience across channels

Based on everything we’re seeing, it’s clear that consumers want more flexibility in how they engage with a brand. Consumers today are looking to leverage the full omnichannel experience, for instance buying online and returning in person, or interacting with a brand or product in person, but completing the buying experience online. But they also want a consistently high-quality brand experience regardless of the channel.

This blending of experiences is not how many retailers are organized: brands have historically segmented how they interact with customers – separate digital and physical teams all targeting same customer. Today’s market requires a different approach. There is one end customer and brands should take an integrated approach to interacting with them, ensuring a consistent experience throughout all a customer’s interactions with the brand. The unboxing experience for a digital customer, including gift wrapping and other personalization, should be just as exceptional as the in-store experience of a physical shopper.

The ability to burnish – or tarnish – brand reputation doesn’t end with fulfilment. Indeed, a 2022 survey found that 57% of shoppers are willing to abandon a brand entirely after just one poor post-purchase experience*. On the back end, repair services not only reflect a brand’s sustainability ambitions but also exhibit an overall commitment to clients via seamless aftercare and servicing. These offerings align with customer care concerns, as repairs contribute to a halo effect of enhanced brand perception through high customer service standards that extend beyond initial purchase. GXO leverages advanced technology and skilled staff to manage the entire repairs process, including inspection, refurbishment, repair, repackaging, quickly getting goods back into circulation.

“There is a saying – “in many ways the only constant is change” – in the world of retail I think that is very true. The expectations of a retail customer continue to evolve, and at great pace. With the right support & capability, retailers and brands have a great opportunity to harness the evolution and put themselves and their products centre stage, with end-to-end control over all brand interactions.”

Tony Mannix, Strategic Advisor Retail Logistics, GXO

Gaining control across all channels

The holy grail for maintaining brand consistency and building consumer trust is achieved by retaining end-to-end control over all brand interactions – and this doesn’t end with the initial sale. Rather that is just the beginning.

A few examples :

1. Pre-loved is growing 3x faster than the overall global apparel market. In the U.S. alone, the pre-loved market is expected to reach $73 billion by 2028 with resale growing 6.4x faster than the broader retail market**. Given this scale, resale is something brands need to be seriously considering, especially as consumers are already repurposing second-hand products without the brand’s involvement. Yet today, only one in five luxury brands have brand-owned resale offerings.
   This type of brand-owned, second-hand market already exists in other industries. Just look at the automotive sector, where brands drive significant revenue through their “Certified Pre-Owned” programs. We envision a similar evolution with pre-loved, where customers buy second-hand items directly from a brand, giving customers confidence in the quality and authenticity of a product.
2. Renting is another retail trend that, while only a fraction of the resale market, is expected to double from $1.12 billion in 2021 to $2.33 billion by 2030***.
   It is no surprise that consumers are increasingly turning to rentals. Rentals offer the ability to try out new trends or designers before committing or to get something you truly love when you know you will only wear it once – for instance, wearing a designer gown to an upcoming wedding or gala or wearing the luxury watch of your dreams.
   But, the rental market should not only appeal to consumers. It also offers retailers the ability to monetize the same unit again and again, while creating less waste impact.

Pre-loved and rentals allow the brand to retain control over the customer experience and open up entirely new revenue streams.

So, what’s the catch? Diving into pre-loved and rentals would create significant new logistical challenges, including returns management, repairs, and authentication.

This can be expensive and margin dilutive – but it doesn’t need to be. Returns have become a core part of the online shopping experience, and as with the return process, there are economies of scale. You just need the volumes.

GXO’s sophisticated logistics solutions combine global warehousing and distribution scale, industry leading technology, and specialized capabilities including returns, repairs, customization and ecommerce expertise. Everything a brand needs to cost effectively take used inventory and clean it, repair it and repackage it to be sold or rented to the next customer…all to a brand’s consistently high standards.

“As the preloved and rental channels grow in importance and become additional – and highly profitable – ways for brands to engage their consumers, the effectiveness of the supply chain underpinning these interactions becomes ever more critical in ensuring a seamless consumer experience.”

Baris Oran, Chief Financial Officer, GXO

Looking forward

Consumer preferences are creating the need for brands to continue to evolve beyond just an omnichannel experience and begin to consider the full product lifecycle. In many markets, legislation is set to accelerate these trends and further shape consumer preferences. In the EU, for example, the Digital Product Passport, which is expected to go into effect as soon as 2026, will require traceability of products throughout their useful lives, creating a detailed digital record of a product’s lifecycle.

While responsibility and compliance will likely fall on retailers, forward-thinking retailers can leverage this as a catalyst for continued advancement and leadership in the sustainability revolution.

We are clearly seeing seismic shifts in consumer behavior, and innovative brands must evolve to capture a bigger slice of a different looking pie. As the largest pure-play logistics provider and the clear technology leader, GXO, too, is constantly innovating and evolving, and we stand ready to ensure our retail customers can win on this shifting playing field.

Baris Oran, Chief Financial Officer, GXO

De twintigjarige financiële carrière van Baris Oran omvat senior leidinggevende posities bij internationale marktleiders, onder meer als CFO van Sabanci Group, een van de grootste beursgenoteerde bedrijven in Turkije.

Tony Mannix, Strategic Advisor Retail Logistics, GXO

Tony boasts a 35+ year career in logistics. A Chartered Fellow of the Institute of Logistics & Transport, he worked for several retailers managing in-house operations, which gave him a clear insight into the retail world. He brought this vision to Clipper, where he served as CEO, and now to GXO.

Kamran Iqbal, Commerce Strategist, GXO

Kamran has 15+ years experience as an end-to-end ecommerce solutions expert, working closely with brands to execute and grow their DTC and B2B ecommerce channels. At GXO, he shares his extensive industry knowledge to help drive digital transformation and omnichannel success for brands and retailers.

_{*https://www.businesswire.com/news/home/20220829005108/en/New-Consumer-Report-Reveals-How-Return-Policies-Impact-Customer-Retention}

_{** https://cf-assets-tup.thredup.com/resale_report/2024/ThredUp_2024_Resale%20Report.pdf}

_{***https://www.voguebusiness.com/story/technology/fashion-rentals-make-or-break-year}