Understanding customer behavior in a changing retail world

Adobe and PK Global surveyed 1,000 U.S. shoppers across five demographics to uncover how consumer shopping behaviors have changed in response to COVID-19.

Retail has undergone more than its fair share of transformations in the past few decades, with the 2020 coronavirus pandemic as the industry’s latest major plot twist. Already under pressure to digitally transform, the crisis forced many retailers to rush toward e-commerce, or face the consequences. With brick-and-mortar locations re-opening and closing at an unpredictable rate — and sometimes closing permanently — the future of retail has been hazy at best.

So with help from research firm PK Global, we conducted a consumer survey to learn more about how COVID-19 has affected customer behavior at essential goods retailers in the food and beverage, health and wellness, personal care and beauty, and household goods categories.

Here’s what we found out.

The purpose behind brick-and-mortar stores is changing

When consumers can buy anything imaginable online, it calls into question why physical shops keep their doors open — especially during a pandemic. The fact is that most people, regardless of age, still prefer shopping for essentials in person. But for older generations, physical storefronts are especially important. Across the majority of retail categories, shoppers ages 70-84 show a greater preference for in-store shopping.

But with 85 percent of shoppers planning to maintain or increase their online spending in the coming months, you might wonder why so many stores are set on retaining their physical space. One good reason is that stores — especially distributed networks of stores, like grocery chains — can use their locations as distribution centers for their online orders. This coordination between e-commerce and local delivery benefits businesses and customers alike, justifying the need for space with faster-than-ever service. Another factor is the rising popularity of BOPIS — buy online, pick-up in store — which has grown 259 percent, according to the Adobe Digital Economy Index. By repurposing brick-and-mortar stores in these ways, businesses have a good reason to maintain or even improve their spaces for the post-pandemic world.

It seems that even a pandemic can’t stop in-person shopping from happening — but it is pushing businesses toward a hybrid digital-physical model than can help them better adapt to change.

Product availability is more important than brand loyalty

Another major side effect of the pandemic was product scarcity, both online and in person. From toilet paper to hand sanitizer to indoor exercise equipment and beyond, customers have had to scramble to get needed products. Adding to the pressure, business-imposed quotas limited the number of items shoppers could purchase in order to prevent hoarding.

The result was that customers had to take what they could get — literally. Often, this meant trying out new brands. Our survey results show that while older generations were more reluctant to switch brands, younger generations were more open to this possibility.

Product scarcity also prompted a new trend in shopping behavior: going directly to manufacturers to get name-brand products. This trend is especially prevalent in shoppers ages 21-39.

The quality of customers outweighs the quantity

As the lines between in-person and digital shopping become increasingly blurry, physical businesses are taking some cues from their online counterparts. In particular, storefronts are starting to see the importance of getting the right customers through their doors, not just the right number of customers. This represents a high-potential paradigm shift in retail business strategy. When brick-and-mortars — especially those with limited hours due to the pandemic — can attract the right customers, their conversion rates increase.

Because of the evolving use cases for physical retail space, it has become critical for business owners to make the most of every in-store minute. As a result, online businesses can expect to see customers spending more time in the “digital aisles” than ever before, with even return customers spending more time online shopping than they did pre-pandemic.

What retail’s recovery from the pandemic will look like

• “Safe store” practices like contactless services and sanitization are the fourth-highest priority for all shoppers. For older shoppers, safety ranks as their third-highest priority.
• For most older shoppers — between 87 and 90 percent — website simplicity and functionality take precedence over new and innovative digital features to account for a wider age range of online shoppers.
• In person, utilitarian technologies like product wayfinding through mobile and inventory availability searching will become more important, while innovative technologies like drone delivery, AR, and VR are taking a back seat.
• Personalization will remain as critical as ever, both online and in person. Between 67 and 75 percent of older generations shop local, finding personalization through relationships. For younger generations, a personalized online experience is more important.
• Privacy will continue to be a top-three priority for all age ranges — especially older generations — and balancing personalization with privacy will be key to earning customer trust.

Rather than ending retail as we know it, COVID-19 has hastened the digital transformation the industry has been going through anyway. For many businesses, the pandemic prompted a necessary investment in digital services for the sake of business continuity. But in the post-pandemic world, all evidence points to a blended model of traditional commerce and e-commerce. With the right technology, retail businesses can continue to adapt physical storefronts to evolving consumer needs, all while extending their reach online.

For more information on the future of retail, check out our full report, The Retail World, Fast-Moving and Forever Changed.