Hybrid shopping, sustainability concerns are reshaping the retail landscape: IBM

Retail Industry reshapes with Hybrid Cloud and AI to help meet shifting consumer shopping and sustainability preferences, says IBM’s report.

“Rising consumer preferences for sustainability and shopping journeys splintered across multiple digital, physical, and mobile touchpoints.” That’s one of the conclusions of a recent study by the IBM Institute for Business Value (IBV) and the National Retail Federation.

The study, Consumers want it all, surveyed over 19,000 consumers in 28 countries about shopping habits, consumption patterns, factors affecting brand and product choice, and willingness to change behavior based on personal values and beliefs. 

Although the report is across all consumer-packaged goods, it offers insights relevant to the food and beverage industry. Overall, the report has two main takeaways:

1. Consumer shopping behavior has changed

Hybrid shopping – mixing physical and digital channels in shopping journeys – is on the rise as shopping habits consumers adopted out of necessity during the COVID-19 pandemic are becoming routine. Retailers must become more agile to meet customers where they are, integrating digital and in-store experiences.

  • 72% of respondents say they use the store as all or part of their primary purchase method.
  • Top reasons respondents choose to visit a store include touching and feeling products before buying them (50%), picking and choosing their own products (47%), and getting products right away (43%), though what in-store shoppers are looking for varies by product category.
  • 27% of respondents report hybrid shopping is their method of choice, and Gen Z consumers surveyed are most likely to be a ‘hybrid shopper’ compared to other age groups.

2. Sustainability has become increasingly important to purchase decisions and brand preferences since 2020

  • Purpose-driven consumers, who choose products/brands based on their values like sustainability, are now the largest segment of consumers surveyed (44%).
  • 62% of respondents are willing to change their purchasing habits to reduce environmental impact, up from 57% two years ago.
  • Half of respondents say they’re willing to pay a premium for sustainability – an average premium of 70%. This is roughly double the premium from 2020.
  • However, there’s a gap between intention and action – only 31% of respondents say that sustainable products made up most or all of their last purchase.

“While many surveyed consumers still place high value on the traditional in-store shopping experience, they also now expect the flexibility to build their own shopping journey – according to the behaviors prevalent to their age range, available tools and the product category they are looking to purchase. This ‘hybrid’ approach is a fundamental shift in consumer behaviour,” said Mark Mathews, Vice President of Research Development and Industry Analysis at the National Retail Federation.

Luq Niazi, Global Managing Director IBM Consumer Industries said: “The survey shows over the last year, sustainability became increasingly important to consumers, though there’s still a gap between their intentions and actions due to lack of information in the buying process. Increasingly, it’s becoming essential that retail brands demonstrate sustainable choices and options in each step of the customer experience.  At the same time, hybrid shopping has taken hold in most categories, particularly in home goods and apparel; and while stores continue to play the predominant role in grocery, hybrid shopping is growing in these categories too. Despite the impact of COVID-19, our experience with clients shows many leading retail brands are continuing to rapidly transform operations, customer experience and supply chains with technologies like AI, hybrid cloud, and blockchain to help serve these multiple customer preferences.”

“As the pandemic reshapes consumer behavior, retailers in Singapore need to become more agile in integrating digital and in-store experiences. Omnichannel efforts are as important as ever, and those without the correct data systems in place will be disadvantaged. It’s important for retailers in Singapore to have a longer view and we believe that technology can help them to extract what the real demand will be, and to ensure the correct supply chain is in place to drive fulfillment to react to that demand, even as the demand continues to change,” said Colin Tan, Technology Leader, IBM Singapore.