Understanding the Shopping Revolution: Part One

Mar 4, 2022

It’s one thing to go shopping, but it’s quite another to understand what’s going on psychologically when we do. Shopping is a behavioural science, underpinned by a complex series of rules and insights that help professionals in the business influence our shopping habits and decisions.

We are in the middle of a shopping revolution, and there’s a lot to be said. As someone who has been regarded as an expert “shopper marketing” by way of a previous career, here are some thoughts.

The Customer is in Charge

We have never had so many things to buy, or ways to buy them. New forms of communication via social media, messaging services and apps have brought producers and consumers closer together.

Using trillions of gigabytes of data, manufacturers know better than ever what customers want. Their products can be delivered direct to the doorstep. The traditional middleman, who for centuries piled hidden cost on hidden cost, is being squeezed out. Producer push has been replaced by consumer pull.

Today, the customer is in charge.

Let’s Look at the Revolutionary History of Shopping

A recently published Special Report from The Economist entitled The Retail Renaissance stated: “One-to-one is shorthand for today’s upheaval in the world of shopping.”

With its customary clarity, The Economist began by putting the entire phenomenon of retailing into historical context. The first retail revolution “occurred in the Elizabethan era when craftsmen, who until then had traded one-to-one with customers, set up the first shops to peddle other people’s wares, earning mark-ups on what they sold.”

The Industrial Revolution changed all that. Factory production led to the mass marketing of goods based on economies of scale. Driven by a phenomenon known as “advertising” – then in its infancy but now all around us – mass production supported mass consumption.

Then came the third retail revolution, today’s digital age, which turned that model on its head. In the jargon of retailing, a consumer “pull” system has transformed the producer “push” system – effectively putting you and me in the driver’s seat.

We Live in a D2C World

Increasingly, we live in a D2C (direct to consumer) world. And the shift is hardly subtle. Lockdowns and social distancing measures have created serious obstacles for bricks-and-mortar retailers, while online platforms have thrived.

That doesn’t mean traditional retail is dead, but it is becoming very different. D2C brands have seen the majority of sales growth come from their own channels, and online and offline models have increasingly converged.

While more retailers are certainly going online, D2C brands are also increasingly opting for in-store distribution. Put another way, wholesale is becoming retail as brands are reappropriating the stores. Why?

Stores are shifting to a new economic model to adapt to what customers want. Consumers haven’t changed, pandemic or no pandemic. They continue to flock to main street stores and shopping malls. Consumer “muscle memory” doesn’t vanish overnight.

Our Findings: Data-Driven Shopping is Unstoppable

As The Economist reports: “Yet the data-driven shopping upheaval is unstoppable. It will change the nature of stores, so that physical and digital shopping seamlessly interact. It will disrupt marketing, because online ads target shoppers more accurately than any broadcast jingle or billboard.”

According to Coresight Research, a US based global data firm whose focus is on “disruption at the intersection of retail and technology” the US lost almost 10,000 stores last year, while the UK lost a whopping 16,000 and 183,000 retail jobs.”

And while Coresight Research does not offer comparable numbers for Canada, our retail apocalypse was equally devastating – with casualties including long standing household names such as Reitman’s, Aldo, Le Chateau and dozens of others.

Some of this was precipitated by the pandemic, but not all. Stagnant real wages, accelerating household debt, the emerging “experience economy” – which puts recreational services ahead of clothing and accessories as a consumer priority – were also to blame.

As was the short-sightedness of many traditional Canadian and other national retailers who were unable or unwilling to adapt to changes in consumer preferences and new technologies.

The net effect of all this disruption is the rise of the “omnichannel” – the amalgamation of the offline and online worlds.

To learn more about this fascinating topic, come back for part two of this series titled: Welcome to the omnichannel world.

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