Consumer Behavior Shifts & How it Impacts Real Estate Part 1
It comes as no surprise that consumer behavior changed substantially over the past two years. For example, the rise of omnichannel, shifts towards hybrid work, the growth of leisure activities, and increased economic uncertainty all contributed to rapid and unpredictable changes in when, how, and where consumers shop. These changes impact every facet of retail strategy, from chain-level considerations like when to open stores, shelf-level arrangements on where to place products, to product-specific decisions for pricing, packaging, and marketing goods.
Placer. Ai, a leader in data science and analytics, breaks down some of the major shifts in consumer behaviors that have occurred over the past two years in their recently released whitepaper, Unfolding Consumer Behavior Patterns in the New Normal. As explained in the report, grocery and superstores witnessed a phenomenon known as “mission-driven shopping” during the early days of the pandemic. Shoppers focused on accomplishing as much as possible in fewer visits. Recently, however, mission-driven shopping has declined and foot traffic data from past months points to the emergence of the opposite trend: shoppers making shorter, more frequent grocery and superstore runs when compared to 2019.
Impact on In-Store Behavior
As explained by Placer.ai, the move towards shorter and more frequent visits impacts the type of products consumers decide to buy in stores, the aisles that customers pass – or don’t pass – during their visit, and the promotion strategies that will be most effective. Retailers and retail partners will benefit if they understand the implications of this shift and learn to cater to visitors’ unique time-frequency balance. New research by ChaseDesign as reported in Forbes, explains that 85% of consumers will do more in-store shopping in 2022 than last year. This figure is up from the 79% of in-store visits consumers reported in 2021. Macy’s saw a shift among consumers heading back into stores and toward clothing for special occasions as well, such as women’s dresses and tailored men’s items. “While macroeconomic pressures on consumer spending increased during the quarter, our customers continued to shop,” said Jeff Gennette, Chief Executive Officer of Macy’s.
With covid restrictions being lifted, shops and restaurants fully opened up, delayed celebrations are finally happening, people are taking in-person meetings, and attending conferences, etc. Many are excited to reconnect, which explains the increase in mall and shopping center visits. Investors looking to invest in real estate should note these consumer behavior patterns and consider investing in retail experiences that extend beyond shopping. For example, malls and shopping centers that offer different experiences such as a variety of restaurants and stores, movie theater entertainment, live music, work out options, or spa and wellness options, stand a better chance of encouraging consumers to visit more frequently while also spending more time at the mall or shopping center.