Reshaping Retail: The Surging E-Commerce Wave and Changing Consumer Shopping Habits

The COVID-19 pandemic drastically accelerated shifts in shopping habits and e-commerce growth. As stores closed and social distancing took hold, consumers gathered online for everything from groceries to home goods. E-commerce penetration dived from approx. 16% in 2019 to more than 19% in 2020 in the U.S. alone.

E-commerce sales are expected to grow 10.4% in 2023. Since 20.8% of retail purchases are expected to take place online in 2023.

For retailers and consumer packaged goods (CPG) companies, adapting to this e-commerce explosion is crucial. Legacy brick-and-mortar players must optimize their digital strategies and integrate robust omnichannel capabilities. Pure e-commerce companies are required to find new ways to attract and retain customers in an increasingly crowded space.

Retail Analytics Market is expected to reach USD 29.9 billion by 2032, growing at a CAGR of 21.2%, according to a latest study by Emergen Research.

Engaging in this environment requires rethinking branding, promotions, product assortments, and delivery models. Companies must leverage data and personalization to enhance digital experiences. Interactive content and AR-powered virtual try-ons drive engagement. Also, many brands are exploring new revenue streams like digital marketplaces, subscriptions, and direct-to-consumer models.

In 2022, e-commerce accounted for nearly 19% of retail sales worldwide. Forecasts indicate that by 2027, the online segment will make up.

Logistics and fulfillment require major investments to handle rapidly rising order volumes. Reducing delivery times and offering BOPIS (“buy online, pick up in-store”) options are key to satisfying demanding consumers. Sustainability should be considered in packaging and last-mile efforts.

In a report by Stackla, 67 percent of consumers said their online purchasing increased since the start of the pandemic and 27 percent of people said their online shopping has increased a lot. Additionally, consumers plan to maintain these online shopping habits with 91 percent saying they’re likely to continue purchasing more items online in the future—and 52 percent saying they’re very likely to do so.

However, e-commerce is table stakes and physical stores still matter. Brands must optimize locations and enhance in-store experiences to boost foot traffic. The role of brick-and-mortar is evolving to be more experiential.

The result for many retailers will likely be a hybrid model with seamless omnichannel integration. Customers expect flexibility in how and where they shop. Fulfilling orders from local stores and providing consistent experiences across channels helps meet demands.

Inflation and the cost of living greatly impact consumers' shopping habits, and this will likely continue well into 2023: People are trying to make the most of their money. Price-conscious consumers are adapting by buying secondhand, off-brand products, and cheaper alternatives to popular big-ticket items.

As shopping continues shifting online, brands must rethink processes from product development to merchandising. Speed, agility, and digital-first thinking are essential to serving the e-commerce customer. But human experiences will still matter for certain purchases. Retailers able to provide the best of both worlds are poised for success.

As average selling prices rise, consumers are purchasing less or walking away with fewer items for the same amount of spend. Consumers are now utilizing digital price comparison tools and digital coupon tracking to combat inflation. In a recent Gartner consumer community survey, more than 30% of consumers said they are utilizing digital price comparison and coupon tracking tools.

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