The new retail environment

Consumers have built increasingly complex shopping experiences for themselves, from what they buy to how they buy it.

Retail-

As businesses reopen, they are being faced with uncertainty about whether consumers will take to new in-store experiences, but embracing changes to ecommerce that were made as a stop-gap until stores could open again could be the path forward..

In March 2020 alone, e-commerce sales gained 40.4% over 2019. According to analysis by Ed Strapagiel, year-over-year growth of e-commerce sales is expected to increase in the next few months as consumers across all demos become more accustomed to shopping online.

Markus Giesler, associate professor of marketing at York University’s Schulich School of Business, tells strategy that, pre-COVID, retail was a conventional binary: in-store or online. Now, Giesler says, with the emergence of what he describes as an online-enabled experience economy, more personalized experiences are facilitated by heightened connectivity, advances in analytics and artificial intelligence.

COVID-19 has further complicated the shift from bricks and mortar to ecommerce, this has morphed retail into hybrid experiences that now include ecommerce, in-store, curbside pickup, click-and-collect, live-streaming and even the old-fashioned phone.

Consumers that were once resistant to online shopping have tried it out of necessity, a learned behaviour that is likely to stick around. Savvier consumers are building increasingly complex shopping experiences for themselves, Giesler says, and becoming more open to try virtual reality and other emerging ways of experiencing products without leaving the home.

According to Giesler, large-format stores are almost becoming warehouse for delivery services, where products wait for home delivery, personal shoppers or to be picked up. And what about brands that were investing heavily into in-store experience pre-COVID?

“In the short term, those who were investing into transformative, adventurous spaces, to put it simply have some tough luck,” Giesler says. “The challenge now is to redirect and make 3D spaces that bring the products alive in its absence.” Still, he says, as soon as shutdowns are fully lifted, he expects physical retail will have a comeback and people will want to get out of the home, and there will be a renaissance in people making a trip the mall an occasion – even though that might take some time.

© Gordon HawkinsThe actually products consumers buy online is changing as well. Prior to the pandemic, Giesler explains, there was a consensus about what we thought were products that required going to a store, with the occasional DTC upstart like mattress brand Casper breaking through that kind of thinking. Now, however, ecommerce has exploded across categories, and ones previously dominated by bricks and mortar, such as apparel, beauty and fresh food, are seeing large increases as well.

“Consumers used to turn to one-stop-shop for everything,” Giesler says. “That’s probably going to change a bit more in the direction of having many different e-commerce platforms. They use one for organic groceries, another for health-related needs, another for meat, and so on.”

But because of the lack of physical retail, businesses of all stripes will be augmenting their e-commerce approach with more personal connections, either directly communicating through Instagram and foregoing conventional websites altogether, or even communicating directly via phone.

Giesler says it’s setting up a strange scenario of e-commerce orders, initially meant to circumvent in-person interactions now having in-person chats for reassurance. This is what Inabuggy, for example, is experiencing. The five-year-old same-day grocery and assorted household products delivery player whose practises are informed by AI and machine learning, facilitates deliveries to its target condo and high-rise market and bolsters personalization through in-person calls. This “human touch” was especially important during the pandemic, according to founder and CEO Julian Gleizer, as many condos had more stringent security measures in place. Hardware brands have also worked to incorporate the guidance and advice customers once received from staff in-store to digital channels.

“It’s all about real time interaction between consumers,” Giesler says, as ecommerce increasingly mixed with storytelling and direct interaction. For example, in China, InTime, the country’s largest department store, is expanding live-streaming product demos as online sales were boosted by 20%.

Across demographics and social classes, Giesler says segments that might have ignored sales dropped into their inboxes are now becoming more attentive to promotions through direct communications, especially ones that offer free delivery. Not only is the customer a savvier user of e-commerce platforms, they are taking the time to suss out better deals. “We have a lot more time at home, but it’s also a bit of a sport and almost like a hobby, being someone who discovers a new deal or platform,” Giesler says, adding if a brand does interesting and attractive promotional campaigns that incorporate that storytelling element, they will have a more attentive audience.