GWPrime

Understanding the Shift in Retail Behavior

A mix of online and in-person shopping is likely to be the way forward in retail, and location technology will play a key role in ensuring a good buying experience for consumers.

Online Shopping
By Snehil Manohar Singh

The World Bank had forecast that despite the recovery of the global economy post the Covid pandemic, economic output would be about 2% below pre-pandemic projections by the end of 2021. What does this mean for digitally reliant retail?

Even before Covid unsettled the traditional way of life, the world had been seeing a steady shift in people’s spending behavior. This shift revolutionized the way supply chains/logistics were looked at. Stores that used to be predominantly based at physical locations, carrying out physical transactions, started to shift to digital platforms, selling products and services online.

At the height of the pandemic, factors like reduced purchasing power of the people and high internet connectivity translated to purely offline businesses faring poorly while worldwide lockdowns by governments ensured that the trend of shifting stores and services online gained further momentum. However, this shift came with its own share of problems: delivery time and shipping costs were of concern to sellers while buyers could not necessarily receive orders at their convenience.

A new model

The shift in people’s spending behavior led to the emergence of a new model of consumption, the hybrid model, which combines online and offline shopping experiences. In retail and e-commerce, this model means that consumers can buy their products online but choose to pick up the items from the nearest physical store. This model is also called ‘Buy Online, Pick Up In-Store’, or BOPIS. Among other advantages, it offers flexibility to consumers and reduces costs for sellers.

While e-commerce giant Amazon is mostly known for its online model, it also offers an excellent example of how the hybrid model works. Customers can order products online and pick them up at their convenience at local stores later on. Target and Walmart are the other big names that offer the BOPIS facility.

Why a hybrid model?

A report titled The New Face of Local found that instead of being entirely dependent on online offerings, the retail behavior of consumers indicated that less than 18% of US consumers prefer to research and buy products exclusively online. The report, published by Uberall and MomentFeed, is based on a survey of over 1,000 U.S. customers, and analyzes nearly 80,000 business locations’ local online performance. “Our report shows that as economies reopen, people are much less likely to distinguish between online and offline, and instead prefer a consumer purchase journey that blends physical and digital experiences in a non-linear fashion,” says Nick Hedges, Chief Strategy Officer and EVP, North America, Uberall.

The report indicates that an overwhelming majority of consumers (69%) use Google to find local business information, including reviews. Further, 20% people also use Apple Maps, Yelp, and/or Yahoo to find information about nearby businesses. However, the study notes that despite Google’s dominance, consumers actually use a multitude of search platforms and directories to find local business information. One out of five consumers surveyed said that besides using the search giant, they also used industry specific websites and apps to find local business information.

The shift in people’s spending behavior led to the emergence of a new model of consumption, the hybrid model, which combines online and offline shopping experiences.

A key point in the study was the foundational support that physical stores provide to e-commerce — 66.4% of consumers were more disposed towards buying something online if they had the option of returning it to a local physical store. In fact, of the consumers surveyed, 74% relied on physical stores at some point during their purchase process, even if the transaction ultimately happened online.

According to Hedges, “This is a strong indicator that consumers want a real-life experience in their journey — whether to evaluate the physical product in a store and/or the convenience of being able to take it home the same day.”

What lies ahead

However, this does not mean that the online shopping experience is seeing a decline. On the contrary, online searches have made it possible for multi-location businesses to execute hyperlocal marketing campaigns — driving local awareness, in-store traffic, and more calls for appointments and orders. This is where Location Intelligence, or LI, becomes relevant. Location Intelligence is used to understand consumers’ and buyers’ behavior associated with their travel patterns and where they live and work. The technology can help businesses gain more visibility and target the right customers. “Through deep analysis of spatial data, businesses are empowered to make more informed decisions about distribution channels, communication strategies, and pricing models. All of these help a company develop a competitive advantage in the market,” said Jonathan Matsheketsheke, Senior GIS Data Analyst, JCDecaux, to GW Prime in an exclusive interview in June this year.

A hybrid or BOPIS model offers businesses the opportunity to keep costs in check. Location Intelligence thus becomes more pertinent than ever for businesses looking to increase their market penetration in hyperlocal settings. By using methods such as IP address marketing, GPS marketing, proximity marketing, beacon marketing, and blueprints location-based marketing, businesses can promote themselves in a highly targeted manner. This, in turn, will lead to a localized experience that benefits not only consumers but also local and multi-location businesses.

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