Skip to content

Consumer Behaviour and Trends Dominating Retail Industry in 2021

The year 2020 gave a significant shift to the retail sector. Consumer behavior and shopping patterns are no longer the same i

On January 1, 2020, as we turned our calendars to welcome the New Year, we never expected the turn of events that followed. Businesses had no clue that a virus would impact the economy and life by bringing the world to a halt.

As the pandemic prevailed all through 2020, with stay-at-home orders, lockdowns, and phased unlocking, it uniquely reshaped the retail sector. There has been a drastic fall for brick-and-mortar stores, department stores, and malls, apart from reducing retailers’ real-estate footprints.

The world started to respond and act differently, and customers were no different. Their shopping patterns and behavior are no longer the same in what we now called the beginning of the ‘new normal’ era.

However, the same pandemic has also been the main driver for the retail sector to adopt the technology. Digital technology played a vital role in day-to-day living during the lockdown. Most customers opted for online shopping even for their essentials to maintain social distancing and stay safe. And the digital-first approach to shopping is here to stay, even post-pandemic (1).

A shift in Customer Preferences

The pandemic has made unprecedented changes in customer preferences that no amount of brand advertising could do.

Preferences have never been easy to change since they are stubborn and often impervious to marketing communication pleas. However, a pandemic changed the game faster than what brands could have imagined.

Almost overnight, hardwired mall shoppers and reluctant fence-sitters were pushed into the deep end of the online commerce site. And in a matter of days, there comes a high level of comfort in online shopping.

Even though the digital shift had witnessed reluctant spurts from time to time, the COVID-19 acted as the catalyst which online firms and ecommerce platforms were hoping for.

It is also safe to say that

we were crushed down with the tsunami of change instead of an organic and gradual shift.

And as there has been a mutation in the consumer world, with most of them being tempted to continue on their digital journey forever, retailers should be visionary and smart enough to help consumers navigate between online and offline experience journeys (2).

The Emergence of Localization

During the lockdown period, customers suddenly started to recognize local Kirana stores. The hyperlocal model, promoting trust and speed, is convenient and safe for customers who are comfortable shopping at the all-in-one grocery stop. On-demand hyperlocal delivery would become the new normal for groceries, medicine, laundry services, and other essential services, even post-pandemic.

Retailers are now working to offer customers experiences both digitally and in physical stores. Technology adoption in retail is accelerated and embraced, unlike previously. Even smaller retailers, with customers shifting to purchase online, leverage the physical + digital model (3).

Boost to E-commerce

With new customers choosing e-commerce during the lockdown and regular customers who continue to shop online, it became evident that digital consumerism would become the new normal (4).

There is a surge in the services’ usage, including contactless payment and curbside pickups, with health and safety becoming the priority.

Businesses have even started to leverage technology to offer personalized experience mimicking in-store experience with digital; shopping turning the new normal and customer experience becoming key to retail growth.

Data insights from search engine tracking tools and social media platforms support customer behavior and purchase patterns, eventually leading to customer loyalty. The retail industry is fully aware that adopting personalized commerce solutional, better ROI is easily achievable with retaining the customer.

Boosting Sales with Retail Tech

Since shoppers prefer omnichannel platforms, investing in technology and online options has become an integral part of the retailer’s business strategy.

Retail rules are now being rewritten, leading to long-lasting changes. Customer preferences are changing rapidly with the unprecedented pandemic, leading to businesses’ adoption of innovation to address them.

Brands are also leveraging AI and other digital tools to uncover better customer experiences. Retailers are choosing more accurate machine learning-based demand forecasting with quicker implementation compared to conventional approaches (5).

Apart from chatbots, personalization tools utilize data science and machine learning technologies to offer personalized experiences. RFID tags, IoT devices, and machine learning that comes with digital transformation have reduced direct interactions during the lockdown.

The retail pace is leveraging technology even in last-mile delivery for health and safety reasons. And, we are expecting that it would remain so even in the post-pandemic era (6).

Omni Channel Retailing

COVID-19 has turned virtual shopping more real than it has ever been, and retailers have started looking at innovative methods to improve sales. It includes offering virtual trial rooms and video-based sales calls. With the offline and online integration, retail is likely to expand further (7).

Businesses are exploring integration strategies to enrich customer value propositions and reduce costs. They are now focusing on building a unified shopping experience across different marketing and sales channels.

Revolutionizing Retail Spaces with Technology

Technology would be the key driver as we advance for the industry. And hence, retailers must invest in tech infrastructure work towards ramping up their facilities.

From check-out free to touch-free shopping, transactions to merchandising, technology would accelerate the industry by reducing physical interaction.

Retailers can also look at permanent technological innovation with apps, automated replenishment, crowd control measures, electronic award programs, contactless shopping, and touchless technology.

Moreover, integrating physical and digital retail with AI and virtual reality is already making its way to the Indian retail space. The marketing is expecting that the trend would only grow further.

Both online and physical stores are most likely to embrace immersive technologies and intelligence to understand consumer needs and psychology. We expect a collaboration between brands and consumers, considering it’s the hour’s need (8).

Changes in Shopping Spaces

Apart from being only a point of sale for brands, retail stores would also serve as a platform to attract, engage, and retain customers.

Retailers are looking at offering unique experiences for their customers and are looking for high-quality spaces; however, it is low in supply.

Brands could also differential their offerings with flagship stores, showrooms, specialty stores and extend flexibility to interact with specific customers.

Even though contact-less shopping and home deliveries are becoming the new normal, there are expectations that malls and store design may shift away from the standard box layout towards the more green and outdoor area’s inclusion to offer an experience with better light and ventilation.

We expect that such developments would shape the way people shop in malls or on high streets from now on.

Moreover, retailers and developers should also prioritize the health and safety of employees and customers. Improving hygiene and safety precautions with stringent sanitization and social distancing adoption would be the key to win back customers’ confidence (9).

Collaborating with Customers

As the world is slowly heading towards recovery, one thing that has become certain is that the pandemic’s impact on the way we live, work, travel, buy, and consume is huge. While some of these changes were short-term, some of these changes are here to stay.

The consumer in the new era will be very careful and more demanding. During the pandemic, consumers prioritized savings overspending along with the digital shift. More people across India are now getting comfortable with online shopping.

However, according to most experts, there will be a change in consumer-brand relationships, and brands need to consider new ways to interact and do business with their customers.

According to Murtaza Bakir, Country Manager for Mintel India, and Sri Lanka (10), Indian consumers want brands to offer affordable and quality products and services to balance budgets and achieve their ambitions.

They want brands to assure them and take the lead in helping to shape a better vision that Indians can aspire and identify with, and thus building their trust.

Global Consumer Trends 2021 report (11) highlighted how consumers are coming together to connect and support each other amid the pandemic. And since cooperation and support is a common consumer goal, brands need to offer their consumers a platform to help each other.

It is high time for brands to find innovative ways to engage with their consumers who feel personal and invited. They must find a way to connect with consumers that keeps them relevant in the post-pandemic world (12).

The Indian Retail Industry Post-Pandemic

The overnight shift, which changed the way, small retailers interacted with their customers, drastically changed. Among those, the most vulnerable ones are the smaller retailers with no online presence that depend on their customers to walk through their doors.

A recent survey indicated that 90% of shoppers were hesitant to shop in stores because of coronavirus concerns (13). And what happens if we were all forced to close again after a matter of months if another wave of the virus occurs?

It has made having a thoughtful digital presence important to stay afloat, especially for smaller retailers. As most brick and mortar stores selling non-essential items had to close down in March, people turned online.

While digital transformation would play a key role in many businesses’ survival, it doesn’t mean that physical stores won’t be around within a year. It means that retailers’ reliance on a singular interaction channel would multiply, and it is the key.

The coronavirus pandemic has introduced an opportunity for small retailers to rethink their business strategies, generate new revenue, engage with the existing revenue stream, and build efficiency (14).

Whether one is a business looking to build a digital presence from scratch, revamp an existing presence, or still unsure about going digital, there are several avenues one can consider when looking to get closer to their customers. It is vital for small and medium businesses to feel encouraged and empowered to rethink and reshape how they move forward with their businesses.

As we previously discussed, the coronavirus pandemic’s onset has brought a sea change in the shopping behavior of several Indian consumers. Online shopping’s prominence became a reality as the physical stores were shut down to prevent the virus from the spread.

Consequently, the disruption changed the consumer habits that have hit thousands of offline retail businesses hard, leading to huge crises like job losses.

Today, most Indians prefer online shopping for not stepping outside, resulting in The online retail sector has been booming now more than ever.

According to a McKinsey report (15), about 96% of consumers have adopted new shopping behaviors. About 60% of consumers are anticipated to shift to online shopping in the festive seasons and continue it throughout the pandemic and beyond.

Such huge growth would never have been witnessed without the increased smartphone and internet penetration across the country. It is also worth highlighting that several retailers landed into trouble after being unable to adapt to the unexpected customer demands without proper infrastructure because of this huge disruption.

Overall, the coronavirus disruption managed to change India’s retail landscape radically and has brought a series of whole new trends to the table.

Personalized Online Shopping

Several brands have started to offer unique and personalized online experiences to their customers. Today, most e-commerce websites offer chatbots and virtual assistants to serve customers to the best extent. It facilitates the consumers with the brand 24/7.

They also enable brands to serve as an inexpensive customer service option. This exclusive retail trend of 2021 is convenient for both consumers and retailers.

Even video calls have become the new mode of communication. After realizing the significance of video calls as a potential consultation and sales tool, retailers have effectively utilized them for communicating with their consumers.

Virtual consultations offer superior convenience to demonstrate a product’s function, share product videos, and earn consumers’ trust.

Significant Rise of AI in Retail

AI, artificial intelligence-driven big data retailing analytics have been ripening for ages now. It has led many retailers depending on advanced analytics to find the types of items they must keep in stock in their stores.

The majority of the retailers currently focus on AI marketing outreach to boost their customer base and conversion. Retailers need to establish a proper infrastructure to cater to these changing habits. In 2021, we can expect to see robots in inventory management occupying the shop floor.

Self-driving Delivery Vehicles and Drone Deliveries

As many offline stores across the globe were shut down, retailers discovered innovative delivery modes, including drone deliveries and self-driving product delivery.

Transformation of Physical Retail

During the pandemic, it is a fact that online retail has accomplished a clear victory over offline retail. The ease, convenience, and safety of online retail have drawn consumers into a whole new dimension. The country-wide lockdown even introduced a large number of customers who never shopped online. However, despite such humongous growth, there are chances that these people would return to physical stores as the pandemic fades.

Even though the quickest way to get groceries is to visit a local store and purchase them, most people do not prefer it amid the fear of catching the virus. Hence, several big and small offline stores have started offering their consumers an ‘order online’ and ‘pick up at storage facility.’

Retailers are also allying with ecommerce giants to deliver products at doorsteps. This way, customers can place orders from their preferred offline retailers and get them delivered within a day or two via e-commerce firms (16).

The Way Forward

The retail sector has evolved exponentially in the past several years with growing consumer awareness, rise in disposable income, changing consumer behaviors, and growing integration of offline and online retail formats.

As shoppers become more demanding, retailers would have to innovate their marketing techniques, presence, and order appeal to remain relevant for their customers.

The previous year had been a turning point for the retail industry. As retail players continue to innovate and adapt to changes, they strive to offer a better value proposition for customers looking for a rapid recovery of the sector.

With the coronavirus pandemic changing consumer sentiment and lifestyle it has also hastened space adaptation. Being online and a robust backend is not optional anymore for any retailers.

Every retailer is adopting digitalization rapidly and is investing in technology to improve service. We are expecting that the fast-paced digitalization would open new opportunities and drive change into the industry.

According to a global survey by CBRE (17), 48% of retailers expect demand to improve in 2021, with consumers driving sales upwards. And India would also see a similar trend with its retail activity picking up.

Since there has been a rapid evolution in consumer preference and attitude, retailers and businesses must embrace the new norm and prepare for transformation to offer a seamless shopping experience for their consumers.

With the emerging technology and rise of omnichannel retailing, retailers need to revamp their business strategies and integrate AI and ML to build new experiences and gain consumer trust in the new era.

Latest