Consumers are increasingly looking at hybrid shopping options, but they are also increasingly purpose-driven in their purchases, representing large opportunities for retailers than can effectively blend their digital and in-store options.
That is among the key findings from the second annual IBM and National Retail Federation global consumer retail study, conducted by the IBM Institute for Business Value. The study, “Consumers want it all: Hybrid shopping, sustainability and purpose-driven brands,” surveyed 19,103 consumers across 28 countries last fall.
“Like all parts of industry, consumers have been through the ringer the last two years, but they have also adapted,” Lug Niazi, global managing director of IBM Consumer Industries, said on a conference call Wednesday announcing the results of the survey.
The full survey was released Thursday morning.
Niazi said the survey indicated that hybrid shopping — a combination of e-commerce and in-store experiences — was here to stay. However, 72% of respondents still indicated a preference for stores as their primary buying method. The survey also found that 44% chose products and brands that align with their own values, but while sustainability is important, fewer than one-third of consumers reported sustainable products made up more than half of their last purchase.
Not surprisingly, online options continue to grow, Niazi said. “We know that consumers continue to drive a far greater degree of their product learnings online,” he said.
The survey found that 42% of respondents learned more about products or brands online and 32% cited social media as a resource. While 65% said they still shop in store, 50% did so via mobile apps and 42% through websites.
“The store is still important because … people still want to feel and touch [products],” Niazi said. “[But] this idea of hybrid shopping means you need to have hybrid capabilities in store, you need to have digital capabilities.”
Niazi pointed to Party City as an example of a brand that has shifted to a “360-degree view of the customer.”
“They also had to transform their fulfillment capabilities in order to meet customer demands and transform their supply chain,” he said.
As expected, the survey found younger generations were more likely to prefer a hybrid mix of buying options, with 37% of Gen Zers buying in store, 36% choosing hybrid options and 28% preferring online. Those numbers shifted to 38%, 30% and 32% for millennials and 51%, 23% and 27%, respectively, for Gen X. Baby boomers still preferred in-store experiences, with 60% choosing that option.
IBM said that 37% of people overall have used curbside pickup as retailers search for the right blend of e-commerce and in-store experiences. Niazi said that hybrid options benefit from cloud deployments that can collect and enable robust customer data platforms.
The hybrid experience is also enhanced when brands adopt AI.
“What we are seeing is big retailers really driving value with AI,” Niazi said, noting that Kroger had adopted AI not only in its call centers, but also for pickup and notification processes. Ahold Delhaize utilized it with great success to reduce cart abandonment.
The survey also identified opportunities for retailers with something called the “purpose-driven consumer.” This is someone who identifies with the brands they do business with. In the survey, 44% said they would prefer to shop at brands/retailers that have shared values on health and wellness. That compared with the “value-driven consumer,” identified in the survey as the 37% of consumers who value convenience and products/services that simplify their lives.
“Purpose-driven is pervasive across all four major product categories (apparel and footwear, grocery, personal care and beauty, and home goods),” Niazi said. “They do a lot of research online.”
Broken down further, the survey found the purpose-driven consumer was more likely to do research online (75% vs. 59%), more likely to buy more than what’s on their shopping list (64% vs. 52%), more likely to get inspiration from social media posts (61% vs. 39%), and more likely to introduce the brand or product to friends and family (58% vs. 36%).
An opportunity lies in the ability to take advantage of the “data-intensive” consumer, Niazi said, before switching to sustainability trends among consumers. Ironically, the same general trends permeate this segment as well.
Half of respondents said they were willing to pay a premium for sustainable brands, and 62% said they were willing to change their purchasing habits to reduce their environmental impact. However, only 31% said their last purchase was made up of 50% or more sustainable products.
The same consumers who are sustainability-driven are likely to be purpose-driven, Niazi said.
“There is huge value to be unlocked for our industry if we can do everything we can [to connect with the purpose-driven consumer],” he said.
As to other trends IBM is seeing, a shift to using stores as fulfillment centers is growing, resulting in a shifting of the supply chain.
“What we are seeing is the transformation of stores becoming micro fulfillment centers and the shift of DCs supplying directly to the consumer,” Niazi said, noting that this shift is requiring greater levels of AI to effectively plan and forecast inventory needs.
The result is that fewer goods will be in stores and more will be needed at fulfillment centers and DCs, or even shipped directly to consumers by manufacturers.
“Demand sensing and the ability to respond in real time or near real time is a critical capability we see going forward,” said Karl Haller, partner at IBM’s Consumer Industry Center of Excellence.
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