Raydiant’s new series, the Future of Shopping, interviews experts and thought leaders with a goal of better understanding what organizations can do to prepare themselves for what lies ahead.
The following is an interview we recently had with Rhonda Stinson, Sr Functional Solution Architect, Plantensive.
How has consumer shopping behavior evolved over the past 5 years?
When we look back at shopping trends over the last 5 years, even prior to Covid, we have seen an upswing in online mail order and online omni-channel shopping. If you are unfamiliar with the term “Omni-Channel”, that is a retailer that has both an online store front (website, mobile app or both) as well as a brick-and-mortar store. Busy lifestyles and a trend towards using technology to make our life a bit easier has shown us that many consumers are willing to pay a slightly higher price point for the ability to shop from the comfort of their home, office, or “on the go”. We have also found through shopping trend analysis, many customers, from all walks of life and income levels, are not only willing to pay a small percentage more for their items, but they are also willing to pay into subscription services.
Additionally, they may add a few additional items to get to checkout minimums to qualify for free and/or expedited shipping thru mail services. Of course, Amazon is a company name that people around the globe will recognize, and many have the opinion that Amazon was the innovator of mass market online shopping.
If we focus in on the last 2 years, we are seeing more and more delivery type services pop up out of situational necessity. Essential purchases such as the grocery and drug chains and the restaurant industry, have quickly reacted to the pandemic situation by coming up with touchless or low touch solutions. Additionally, we have found that the numbers continue to trend skywards with online shopping services like Instacart, Amazon delivery from Whole Foods, Uber Eats, GrubHub, Walmart +, as well as innovative ideas such as meal subscription boxes that is complete with all ingredients and a recipe card, etc, etc, etc… The list just keeps going. A simple google search could provide many options for any type of product line a shopper is looking for. Out of the plethora of services, most consumers could stay in their homes without ever walking into a store or restaurant for as long as necessary. Now, let’s say a customer can’t afford or doesn’t want to pay the premium price for delivery services, most larger retailers now offer the ability to purchase items online and the shopper can select a time to pick up items curbside that an employee has shopped (aka picked) for them. Historically personal shoppers were for the rich and famous. In today’s standards, many shoppers are trending to a form of this format of shopping.
What are the top 3 trends shaping the way consumer’s shop?
Ease of online returns. Previously, the majority of the online shopping patterns appeared in the hardlines segment which consists of products like appliances, hardware, automotive parts, etc. As shoppers became more and more familiar with online shopping, shoppers started venturing out into purchasing their Softlines… think linens, apparel, shoes, etc. That was surprising for many because most consumers want to touch and/or try on Softlines to ensure a soft texture, a proper fit, or a myriad of different viewpoints. Due to the ease of returns through those online or omni-channel options, customers tend to be a bit more likely to purchase these items online. If there is sufficient time for return and replacement prior to needing the item, there is no harm in the online approach. For those articles that are needed right away, maybe a dress for a last-minute event or a broken appliance, that is when we typically see consumers heading out to a brick-and-mortar store.
Lockdowns and mask mandates – many consumers are concerned with subjecting themselves, and their loved ones, to germs. The new normal of wearing a mask, especially for those in a location with a higher population density, does not lend to shoppers wanting to venture out and brave the stores. Sanitizing hands and shopping carts, then dealing with mask band breaks and screaming children that won’t keep a mask on, can be maddening. Delivery services and online curbside options just made life so much easier. Lockdowns have also opened more time for families to complete activities that otherwise would have been taken up by commutes, office time, soccer, ballet class, going to the gym and other activities that took us away from our homes. With sheltering in place actions, we have found that more customers have started home improvement projects, eaten out less and spent more quality time with family.
Supply chain disruptions and price increases – due to the challenges of obtaining raw materials, we are finding that more and more shoppers are stocking up on essential items as they find them in local stores.
- Furniture manufacturing is, on average, 6-9 months from order to delivery. Some are ordering new furniture and waiting months and months for delivery, but there are also many others that are looking at secondhand items via Facebook Marketplace, Craigslist or thrift/consignment stores.
- When looking at essential items like paper goods, I would dare say that, while paper goods currently appear to be stocked to capacity (or close to it), most households now have an extra pack or two of toilet paper and paper towels.
- If you consider food, we are also finding that there is an upswing in home gardening and home food preservation. Try to find canning jar lids right now. They are difficult to find, which in years past, have been plentiful. Packs of seeds, gardening tools and materials, canning supplies; all were once plentiful, now are consistently out of stock. Customers are utilizing online methods to locate those items that are hard to find otherwise.
What’s the future of shopping?
Now that the retail industry has garnered a smoother foothold on mail order and omni-channel, I forecast that the trend will continue to upswing. Work and personal demands will continue to evolve meeting the demand for online purchase efficiency, but the difference is…online shopping for delivery or curbside pickup has become a new normal and it opens that time that a shopper would typically shop.
Do I believe brick and mortar stores will go away? No, I don’t. Consumers will always have the need to obtain an item quickly due to various reasons. I do, however, see the existing brick and mortar locations reducing storefront inventory to reduce overall square footage for a customer shopping pattern. The evolving square footage would then move to increase space in the backroom area for a micro-fulfillment center. The adjustment would allow for a heavy increase in pick efficiency for curbside pickups. For those in a smaller footprint store, other offsite square footage could be utilized for micro-fulfillment processing with a 24-hour turnaround as time would be required to send the pick packs to the storefront. We see robotics trending for order picking and order fulfillment optimization. These practices are already in place in many warehouse situations today.
What are 3 actionable steps an organization can take to prepare for the future?
From a customer, and from a bottom-line sales perspective, you must understand the way stores were designed prior to the online shopping boom. When customers enter a brick-and-mortar store, many retailers will design a store layout to include “impulse buy” items in the path line to “destination” purchases. Think about how many times you have gone into the store simply to pick up the staples – milk, bread, eggs, etc – only to walk out of the store with 10 additional items and an additional $30-$50 out of your wallet. This is by design. It is a way for retailers to increase bottom line sales. Now, think about the path you take to get to those destinations to buy items. They are typically in the rear of the store. Customers will walk down any given aisle to get to the item they are going for; while passing by chips, cookies, soda, peanut butter, etc. All items that we may not have on our grocery list but look so amazing. We like to treat ourselves to those creature comforts. In an omni-channel online purchase for local pickup situation, you tend to have lower final checkout sales amounts in online shopping because consumers are not walking those isles. They may be paying a bit more for a subscription or adding up to the minimum checkout amount, but retailers are still missing out on those impulse buy sales. Merchants need to find creative ways to include that in the online shopping market. We have seen retailers add in panels in their online store front to recommend pairing items, previously purchased items, etc.
Omni-Channel retailers need to become very efficient in order picking for curbside pickup. Design and create intuitive pick-paths for your stores. Increase micro-fulfillment capabilities either in backroom stock areas or with a solid pick path using shelf schematics and position locations within the storefront. The employees that are charged with picking the online orders for curbside need that information to make order picking more efficient. Speed is money and the faster your employees can pick those items, the faster you can respond to other orders to increase sales. Focus in on delivery and other points of product allocation to customers. This approach is not going away and pole position in this area is premium.
Loyalty and partnerships with vendors are an important part of securing the appropriate volume and price point for each retailer. However, in the past year, due to supply chain disruptions and challenges of obtaining (and maintaining) raw goods, supplier diversification became imperative.