The COVID-19 pandemic significantly impacted the way we shop. With lockdowns and social distancing measures in place, consumers turned to online shopping to buy everything from groceries to new items to spruce up the homes we were confined in. Now, three years after the pandemic began, consumers are once again turning to brick-and-mortar shopping, and the number of in-person sales is growing faster than e-commerce for the first time ever. Many consumers today are placing a stronger focus on the shopping experience itself, and mainly shopping online when focusing on convenience and low prices.
As consumer behaviors rapidly shift, the strategies necessary to attract and retain retail customers must shift as well. The rise in accessibility of online shopping means that competitive prices and good products are no longer enough to draw in customers. It’s no longer possible for retail stores to operate as purely transactional locations – they must curate a memorable and personalized consumer experience in order to stay competitive and profitable.
As brick-and-mortar retailers look to improve financial performance, expand their business, or navigate evolving challenges, it’s critical to consider changing industry trends and their impact on financial success, while identifying ways to adapt accordingly.
Today’s Consumer Turns to In-Person Shopping More than E-Commerce
As the COVID cloud continues to lift, consumers are increasingly seeking the in-person experiences they lacked throughout the pandemic. This is strongly reflected in recent retail trends.
For the first time ever, we saw brick-and-mortar sales grow faster than e-commerce – with 18.5% growth in physical sales compared to 14.2% e-commerce growth. And this rate continues to grow, as 94% of consumers headed back to brick-and-mortar stores over the last year. And this growth shows no sign of slowing; research from Forrester predicts 72% of all U.S. retail sales will occur in brick-and-mortar stores.
The Rise in Experiential Shopping
The new reality is that consumers are seeking opportunities for in-person experiences, beyond social aspects. This shift toward experiential shopping significantly impacts the ways brick-and-mortar shops shift their strategies as well. While in the past, most retailers operated out of purely transactional spaces, today’s retailers are evolving into lifestyle hubs and experiential destinations, with entertainment options operating alongside traditional shopping options.
Malls and shopping centers can no longer replicate the tried-and-true combination of retailers and restaurants that may have worked in the past. Instead, they need to focus on creating an overall experience that appeals to a wide range of customers. This could include offering a range of entertainment options to encourage the average consumer to step through their doors – whether it be movie theaters, roller coasters, concert venues, arcades or pop-up shops, events, and immersive exhibits.
Cohesive Branding in Malls and Retailers
As malls and retail centers shift focus towards experiences, they must also consider rebranding to meet the needs of today's consumers. Brand leadership is key to attracting customers, and shopping centers must find new ways to attract and engage with consumers through personalized shopping experiences and interactive displays.
Consider a mall or shopping center. Creating a cohesive brand that links entertainment options with traditional stores not only attracts new customers, but supports the traditional retailer. This can be achieved through the creation of a community-driven, vibrant, and curated space that offers experiences alongside shopping options, which actually goes back to the origin of malls.
Malls were originally intended to help integrate their surrounding community – housing more than just stores, but also educational centers, museums, and parks. As malls grew in popularity, continuous replication of the original mall design meant that rather than becoming intentional, community-driven spaces, they became epicenters for profit and shopping. Now, we’re able to fulfill the original dream of malls, simply by meeting the changing needs of today’s consumer.
The Road Ahead
The shift back to in-person shopping is a relief to many retailers, but they shouldn’t assume that it’s back to business as usual. In order to keep up with shifting consumer demands, malls and retailers should consider incorporating more experiential shopping experiences into their service offerings, which when properly branded and promoted could translate to new shoppers and greater customer retention. While shifting strategies isn’t easy, it will help retailers stay in line with consumer expectations so that in-person stores and malls can successfully evolve with the times and be around for many more years to come.