Are Americans Ready to Return to Stores?

We dug into the latest data from leading research and consultancy firms, including McKinsey, Deloitte, and Forrester, to learn how customer preferences have changed and what this means for retailers.

Absorbing the initial impact of COVID-19

In the months immediately following the outbreak of the coronavirus in March 2020, businesses and consumers were thrown into chaos. Retailers faced severe disruption to their supply chains, lockdowns forced non-essential stores to close, and ongoing uncertainty made operational planning almost impossible.

On the consumer side, safety fears and shelter-in-place directives prompted a significant change in behaviors and a rapid shift to online shopping.

Between 2015 and the first quarter of 2020, e-commerce sales as a share of total US retail sales had risen steadily from 6.9% to 11.4%.

Then in the second quarter of 2020 alone, this figure jumped by almost the same amount to 15.7%. By May 2020, more than six in ten adults had made an online transaction for the first time, such as buying groceries or ordering restaurant delivery.

Brick and mortar isn’t dead

Following the sharp rise in e-commerce adoption, some experts predicted that consumers would never return to stores. A year and a half on, however, we can see that the initial impact was temporary. Although e-commerce has continued to grow strongly, in August 2021, brick and mortar stores recorded 5% growth year over year. And consumer confidence is rising.

A report by Deloitte shows that:

The number of consumers who felt comfortable going to the store rose from 34% in April 2020 to almost 73% in May 2021.

Similarly, a survey conducted by McKinsey at the end of August 2021 reveals that almost half of US consumers are now reverting to normal behavior outside their homes.

In particular, when asked about their activities in the last two weeks:

• 89% of consumers said they had shopped for groceries or necessities
• 75% had shopped for non-necessities
• 38% had visited a shopping mall

Since February 2021, this represents an increase in these activities of 8%, 16%, and 13% respectively.

The rate of vaccinations is a possible factor in this rising confidence. At the time of writing, almost 70% of the US population 12 years of age or older has been fully vaccinated.

The role of physical stores will evolve

While consumers returning to stores is great news for retailers, the pandemic prompted a variety of behavioral changes, some of which seem to be sticking. Online spend now accounts for 37% of total retail spend, up from 27% before the pandemic. Much of this increase represents an acceleration of a trend already in motion, but the implication is clear: omnichannel is here to stay.

McKinsey reports that around 60 to 70% of consumers across categories now shop and research both in-store and online. At the same time, digital-driven experiences such as buy online, pickup in store (BOPIS/Click & Collect) grew in adoption by around 35% during the pandemic, and 71% of consumers intend to continue its use.

But despite the increase in e-commerce, many consumers still prefer to shop in person.

According to Forrester, one of the key reasons cited by consumers was online shopping frustrations, alongside the desire for community and immersion. For many people, in-person shopping is a social experience and without it their quality of life has been impacted. Consumers also appreciate immediate availability, the opportunity to see and feel products, and a lower chance of having to make a return or exchange.

Looking ahead

Although customer attitudes and expectations seem to have shifted dramatically, it’s important to note that this was just an acceleration of the current evolution of the retail industry rather than a revolution. The changes happening and solutions being implemented now would have happened in three to five years’ time were it not for the pandemic.

Brick and mortar stores will continue to be an integral part of the retail shopping experience, but their role is evolving. As we move forward, retailers should consider how they can take advantage of opportunities in the following areas:

• Rethink store design to integrate digital experiences and serve customers seamlessly across all channels.
• Develop omnichannel capabilities and leverage digital services such as BOPIS/Click & Collect and curbside pickup alongside capitalizing on the growing influence of social media.
• Invest in technological solutions to reduce the friction associated with in-person shopping, such as scan and go or self-checkout options.

The situation may remain fluid for some time to come. Adopting a flexible strategy and keeping a sharp focus on consumers’ changing attitudes, behaviors, and preferences will allow retailers to thrive as we move into the “next normal.”