Whether it’s artificial intelligence, demographic shifts, social commerce or contactless payments, it is difficult to find an area of retail that is not undergoing transformation today. And retailers are facing fundamental shifts in the rules and relationships that define consumers’ path to purchase.
“Retail Reinvention: A Framework for Future Growth,” a report from Euromonitor International published in partnership with the National Retail Federation, takes a look at three key areas where transformation is occurring in retail: the emergence of new business models, channel expansion and shopper expectations.
Retail remains, at its core, about delivering the right product at the right price to the right customer. However, the way that happens has changed dramatically.
“Rapid digitalization paved the way for new business models like marketplaces, direct-to-consumer and social commerce,” says Michelle Evans, global lead of retail and digital consumer insights at Euromonitor International.
“On top of that, you see companies that didn’t even start in retail, like social platforms, are now competing for shoppers’ attention and spend,” she says. Euromonitor estimates that 17% of ecommerce sales in the United States were from DTC channels in 2023 and that social commerce sales in the U.S. will more than double in the next five years.
While new entrants are impacting the retail landscape, retailers are also expanding into other spaces — launching online marketplaces and entering the retail media space. The line between retail and other industries is becoming increasingly hard to distinguish.
Whether it’s buy online, pick up in store or curbside, scan-as-you-go or showroom purchases, the demarcation between physical and digital sales has become increasingly difficult to define. And that’s just the point of sale.
Customers today are adept at moving across a complex mix of touchpoints and technologies throughout their shopping journey — regardless of whether they are purchasing an everyday essential or a premium product. For example, even in a heavily physical retail sector like grocery, 58% of consumers use a device to browse for food purchases, according to Euromonitor’s Voice of the Consumer: Digital Survey 2024, a survey of internet-connected consumers in 20 countries.
And the ease of services like grocery delivery, buy online, pick up in store and meal delivery are changing consumers’ definitions of convenience and value. All of this raises the bar in terms of what consumers want from both digital and physical channels.
Consumers not only expect the shopping journey to move as nimbly as they do. They also want retailers and brands to listen to their feedback and respect their values. “The internet — and social media in particular — gave people a louder voice, leading to a dispersal of influence and a flux in power dynamics that changed shopper behavior,” Evans says.
“Our data shows a large proportion of shoppers engaging with brands on social media through ‘follows’ and ‘likes’ or providing direct feedback, and that only goes up among more digitally savvy shoppers. Consumers today have more influence than ever before, and they know it.”
To learn more about the forces shaping today’s retail landscape as well as the tools to navigate it, check out the NRF member-exclusive extract or access the report from Euromonitor.