Why it matters:
- Consumers are in the driver’s seat, with more ability to research products and prices and more power to decide where to spend their dollars.
- Shoppers increasingly want to spend at stores that reflect their values.
- Merchants that get it right can reap big rewards, as retail sales are forecast to grow by between 10.5% and 13.5%, to more than $4.4 trillion this year.
The defining rule of retail has been that the customer is always right. Now the balance of power has shifted to the point where the customer is in charge.
Today’s consumer “shops for anything, anywhere, anytime, and does so with a different mindset than even a few years ago,” said Matthew Shay, president and CEO of the National Retail Federation, at the “State of Retail and the Consumer” webinar attended by CO—.
“Understanding the customer and anticipating what they need, what they want, and then offering products, services and the experiences that resonate with that customer is increasingly critical,” Shay said.
Retailers that get that right will reap big rewards, as spending this year is expected to reach record levels. NRF Chief Economist Jack Kleinhenz announced at the webinar that the federation has raised its already optimistic forecast for 2021 and is now predicting that retail sales will grow at the fastest pace since 1984.
The NRF expects retail sales to grow between 10.5% and 13.5%, and to top $4.44 trillion.
Shay and former Macy’s CEO Terry Lundgren moderated discussions with retail executives and experts who identified these defining traits of the post-pandemic shopper:
They’re looking for brands that share their values
“People are even more aware than they had been before the pandemic about economic inequality, social and racial inequality,” said Rachel Bonsignore, vice president of market research firm GfK.
“These issues are coming more to the forefront for people, and becoming much more of an imperative for brands to address.”
Retail executives agreed.
“It’s essential for brands to stand for something else than [just] profits,” said Javier Quinones, president and chief sustainability officer of Ikea US.
“Through this pandemic, one of the big lessons we’ve learned is we are actually stewards of the communities we operate in,” said Vivek Sankaran, president and CEO of supermarket retailer Albertsons Companies. Going forward, “our customers are going to expect us to behave that way,” he said.
[See 10 pandemic-inspired business trends that are here to stay.]
Through this pandemic, one of the big lessons we’ve learned is we are actually stewards of the communities we operate in. Our customers are going to expect us to behave that way.
Vivek Sankaran, president and CEO, Albertsons Companies
They still care about price
While consumers are expressing more concerns about the social values of retailers, getting the best value for their dollar remains their top concern. An Ernst & Young consumer survey in May found that 31% of consumers listed price and affordability as their top priority while shopping, followed by 24% who listed their personal health and their family’s health as their primary concern.
That, however, doesn’t discount the importance of paying attention to concerns like the environment and social justice, said Karen Benway, consumer market leader, east region, Ernst & Young.
Indeed, “many consumers are becoming more aware and purpose driven, and they want to understand and know how retailers are communicating” about values that are important to them, Benway said.
[Read here for a primer on how to price your products.]
They want to shop how, when and where they want
Retail executives said online sales have remained strong even as store traffic has increased this spring.
Sephora was surprised to see how strong its online sales have remained this year, even as store traffic increased dramatically, said Jean-Andre Rougeot, president and CEO of Sephora Americas.
Sankaran of Albertsons is seeing a similar trend.
“People want the convenience of online but still enjoy the experience of coming into the store,” Sankaran said.
“People want bricks and clicks,” said Ikea’s Quinones. That’s “probably here to stay despite of the growth we’ve seen in e-commerce.”
They want to feel welcome in stores
Sephora recently completed a study about bias in retail, which revealed that “across retail there is a real issue of racism in stores,” Rougeot said. “A lot of it is unconscious bias, but we as retailers have to make a change.”
Sephora is addressing the issue with events designed to make its stores “a place where everybody feels welcome, independent of your skin tone, your race, your sexual orientation,” Rougeot said.
It also has taken steps to increase diversity in its store staff and in its management, and to support Black-owned businesses with accelerator programs for new beauty brands.
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