This blog post will explore the various ways in which online shopping has changed the retail landscape. From the shift in consumer behaviour to the impact on brick-and-mortar stores.
Changes in Consumer Behavior
The rise of online shopping has had a major impact on consumer buying behaviours.
With the rise of online shopping consumers have had an increase in convenience. With the ability to shop anywhere and at any time they please. With this level of convenience the need to go to a physical store has dropped. Lastly, consumers now have the ability to pick from more brands that a physical store may not have in stock.
Not surprisingly, year over year, online grocery sales increased 103%, according to the Adobe Digital Economy Index. This is likely due with consumers no longer wanting to spend their time physically shopping. As referenced in the article, it’s also likely that buying habits have changed since Covid-19.
Consumers now have more power over their buying patterns, with the ability of comparing prices on rival websites. This rise in knowledge has led to the increase in discounts and deals that may have otherwise not been available. It has forced brands to be more transparent with pricing and their pricing strategy.
According to the latest research from Gartner, by 2023, online spending will make up for more than 50% of all consumer spending. With mobile devices making up almost 60% of it.
The power isn’t all with the consumers however, all of this browsing and purchasing creates a lot of data. This data can create personalised shopping experiences based on recommendations from browsing and purchasing history. This can create an environment of constant ads and personalised offers, creating unwanted or unnecessary purchases.
The 2022 Obsess survey The Metaverse Mindset: Consumer Shopping Insights highlighted 70% of people who have browsed a virtual store bought something.
Bigger purchases outside of our daily lives have also been impacted by the growth of online retail. Everything from buying a car to planning a holiday is easily achievable. This has led to companies such as Holiday Best filling the gap in the market.
Impact on Brick-and-Mortar Stores
The rise of online has seen a fall in the demand for Brick-and-Mortar stores. These are some of the impacts that physical locations have felt.
Decreased Foot Traffic
With some of the points mentioned above, there has been a sharp fall in the number of consumers visiting stores. This reduction has seen a decline in store purchases and a large percentage of stores closing down.
The CRR is an independent research body which provides analysis of retail sector trends. According to their data shops were closing at a rate of 47 per day in 2022.
Adaptation and Innovation
Since the pandemic a large number of traditional retailers have looked to invest in online platforms. This has caused a large migration to online focused shopping experiences. In order to fill the same level of demand, many online shopping systems now feature a click-and-collect option.
Branding and Identity
Many physical stores have now shifted their brand and identity towards digital platforms. With a keen focus on their social media and website image, moving away from traditional signs and designs. This has led to many brands looking to rebrand their image to maintain their market position.
Changes in Supply Chain and Logistics
This increase for online shopping has led to a massive increase in the demand for logistics. This has put pressure on supply chains forcing innovation to keep up with demand.
Warehousing and Fulfilment
The demand for warehouse space has risen massively partly thanks to the pandemic. Along with this many companies are looking to adopt automated systems to reduce staffing needs. This automation is looking to optimise the inventory management and use AI to improve efficiency
Globalisation & Last-Mile Delivery
Although we may only see the delivery driver, many items have travelled across the world to be dropped at our door. During the Suez Canal Evergreen situation online retailers saw a fall in stock levels. This increase in globalisation has left us ultra reliant on outdated shipping and delivery methods. This is forcing innovation to improve efficiency and costs of delivery.
The Pandemic’s Impact
Although the pandemic has led to a massive change in consumers buying behaviours, it is not the only cause. According to Digital Commerce 360, “Ecommerce was growing fast before COVID-19 hit“. This can be for a number of reasons from an ageing population, busier lifestyles and smaller households. However, it has shown to consumers that buying online is easier and can be just as fast.
Online shopping has undoubtedly transformed the retail industry, impacting consumer behaviour, brick-and-mortar stores, and supply chain logistics. As technology advances, it is crucial for retailers to adapt and innovate in order to thrive in the digital age.
This innovation is not only through their products and online stores, but also with their branding. Understanding the growth and changes in consumers should be part of their branding and marketing efforts. While online shopping offers convenience and a personalised experience for consumers, it also presents challenges. With these challenges comes opportunities for businesses to stay competitive in an ever-evolving market.