The Future of Retail: One-stop shopping as the status quo
Fast-changing consumer expectations are placing one-stop-shop retailers at an advantage. As 2030 approaches, retailers limiting their offerings to a less patient and more demanding consumer could prove to be a mistake.
As we explore the landscape of the future for retailers, there are several key areas retailers need to identify, understand, and address to stay competitive in the next eight years. In the previous blog of the Future of Retail 2030 series, we took a broad look at the conditions retailers need to prepare for in 2030. Many retailers are unprepared today and will be left behind if they don’t catch up. What should retailers do to drive growth and protect margin in a world of omni–channel delivery?
In this, the second blog in our series, we will focus on consumers’ interest in one-stop-shopping, and how retailers need to adapt to survive in the future of business 2030.
Shifting shopper culture
The retail landscape today is vastly different from even 10 years ago, and without catching up, retailers have no chance of surviving next year, let alone in 2030. There are multiple factors impacting both market conditions and success, and one of the most important is the evolving consumer. They’re not the same group of past traditional shoppers, from demographics to habits.
One of the most marked divergences from the norm is customers’ rapid adoption of new retail trends enabling less complex or exhausting shopping experiences. According to NRF research in 2020, 93% of surveyed consumers said they were “more likely to choose to shop at a specific retailer based on convenience.”
The allure of the one-stop shop
Today’s consumer has more options than ever before. With this vast market providing competing price points, varying fulfillment speeds, and huge breadth of product offerings, retailers with the ability to provide the best of everything are at a major advantage over those whose products are more niche. As more retailers expand their inventory to include more categories, the appeal of one-stop shopping will continue to grow in tandem.
COVID-19 entirely upended what consumers seek while shopping. Clean carts, full shelves, and ability to shop quickly in one place are now requirements rather than pleasant surprises. In a world where customers want to minimize their exposure to strangers, a one-stop shop is deeply appealing due to its promise of only one place to wander rather than a combination of various stores’ cleaning standards and multiple groups of crowds. Considering fluctuating gas prices during a time of increased frugality, stores providing a well-rounded shopping experience are at an obvious advantage.
Safe one-stop shopping isn’t limited to brick-and-mortar, in-store visits. With the rise of e-commerce to limit exposure to the public, online shopping is a dependable way for consumers to get all their needs met without cross-shopping. Retailers able to provide a full shopping experience encompassing the customer’s every need without requiring a store visit are at the leading edge of the future of retail.
Although safety from viruses will not always be a major priority for shoppers, the experience will no doubt mold shoppers for the long-term. EY confirms this belief with their recent research.
Consumers have more purchasing options than simple brick-and-mortar today. E-commerce is growing quickly. Statista forecasts 2021 United States e-commerce sales to amount to $429.2 million, and in 2025, sales will reach $563.4 million.
Once shoppers choose the products they want from the retailer they prefer, they now have multiple fulfillment options. Big box retailers are expanding their pick-up and delivery capabilities, including fresh grocery, large electronics (like televisions), and apparel to encourage one order from one store. Catering to consumers’ preference for convenience over comparison-shopping, the choice of same-day delivery or pick-up further discourages cross-shopping and places them at a stark advantage.
Consumer patience is low. Three- to four-day shipping is considered “fast” by just 42% of shoppers, according to a report by eFullfilment Service.
According to Raydiant, as of May 2021, 74.5% of shoppers used buy-online, pick-up in-store (BOPIS). What drives this consumer decision? BOPIS combines the convenience and safety of shopping from home while delivering extremely fast fulfillment, as evidenced by multiple one-stop retailers’ fast-turn promises, like Target’s standard two-hour readiness window.
This underscores consumers’ decreasing patience, and a one-stop shop appeals to their desire to get everything at once, quickly, without needing to shop around.
Competing in the one-stop-shop future of retail
How do small retailers cope with these rapid changes threatening a decades-long status quo? Real-time, comprehensive planning and forecasting with insightful data sources and deep analytics can create as much visibility as possible, especially as retailers introduce additional categories to their business. Staying niche and rigid with shopping choices could prove catastrophic.
Adding a category with a new, robust data set (or even multiple sets) can overwhelm one department, let alone the entire business. By mastering onboarding and maintaining these data sources with fidelity, teams can glean greater insights across the enterprise. Also, by connecting all key functions to success within a retailer, like financial planning, merchandising, category planning, and logistics, each respective department can better prepare for the use and analysis of the data across all scenarios.
For instance, breaking down the silos isolating merchandising and marketing teams can help a retailer identify opportunities to highlight new product offerings and better position as a one-stop shop. With this information, marketing leaders can tailor temporary promotions to encourage larger baskets, such as offering a free promotional product with the purchase of a qualifying new hair care item if the retailer traditionally only sold cosmetics. Then, merchandisers can adequately prepare stores with product to meet demand for that promotional item and other complimentary items in that category, while potentially scaling back online or third-party inventory to balance margin in what might be an unproven category for the retailer.
Even though consumers are choosing to prioritize convenience, their purchasing decisions are still highly dependent on cost. In the next blog of the Future of Retail 2030 series, we’ll look at how affordability impacts retailers’ ability to balance margins and stay profitable, especially during times of market volatility. With quick and frequent fluctuations in consumer confidence, retailers need to be more resilient and more prescient as they navigate the next 10 years.