Learning Outcomes
By the end of this section, you will be able to:
- 1 List major trends and developments in retailing.
- 2 Discuss the reason for these trends and developments.
Trends in Retailing
As consumer behavior changes and as technology advances, marketers must make changes to stay relevant in the minds of their target market. During the late 1800s, the department store began the transition away from small mom-and-pop stores. In the 1920s, the first supermarket opened. In the 1950s, door-to-door selling was in full swing. In the 1980s, infomercials became mainstream. In the 1990s, online shopping got its start. In the 2000s, traditional brick-and-mortar stores began online sales. The rise of social media began in 2007, which created new selling opportunities (see Figure 18.14). Then, in 2017, the United States saw a slight shift back toward traditional store retailers. But, alas, in 2020 as the COVID-19 pandemic arose, that shift reversed again to online. These are just a few examples of how retailing has evolved with the times in the last century. As consumers get busier with their work and social lives, retailers find new ways to create value with the products they are selling. Let’s take a deeper look at some of the more recent trends in retailing.
Social Commerce
Social commerce is the blend of e-commerce and social media. With the rise of social media, brands have found new ways to engage and create lasting relationships with consumers. Many brands use social media as an additional marketing tool to engage more personally with customers. Retailers can do so in a variety of ways, from shoppable posts to influencer videos and everything in between.
Let’s take a look at Macy’s, an iconic American department store chain founded in 1858. Macy’s has weathered many changes in the retail landscape, and today it utilizes social commerce in a variety of ways. In 2020, the company opened its ambassador program to people outside the company—influencers who would promote Macy’s products through affiliate links or shoppable videos on social media.28 The pay is 5 percent commission on sales. Why this shift to working with influencers? Simple. Consumers tend to trust the opinion of influential individuals over company-created marketing. And for Macy’s and numerous other retailers, the strategy has worked because social commerce grew 30 percent from 2019 to 2020.29
As social media has grown since the inception of Facebook in 2004, marketers and social media apps alike have taken advantage of the ability of consumers to interact with brands and to purchase products directly in-app. For example, Instagram’s Shop and Checkout feature allows consumers to purchase products immediately without ever leaving the app.30 With the onset of the COVID-19 pandemic, the ability of consumers to purchase products while staying sheltered in place resulted in a change in behavior that is likely to endure in the coming years.
Online Stores in Offline Spaces
Have you ever purchased something online and picked it up at the store? This is what is referred to as online stores in offline spaces. While this practice was slowly gaining traction among larger retailers, the COVID-19 pandemic accelerated this trend drastically throughout nearly every industry. Retailers that already had the technology in place and/or were already testing such practices made a fairly easy transition to this new demand. Others closed their doors forever or scrambled to update their strategies to include some form of online sales.31
Walgreens, the second-largest pharmacy chain in the United States, was extremely successful in making such changes on the fly. In 2019, the company began allowing customers to order items online and pick them up at the drive-through window, which was previously primarily used for prescription pick up. Because the drive-through window was already established at Walgreens, it put them at a unique advantage to transition quickly to offer online orders in offline spaces.32
Same-Day Delivery
While most might think of Amazon Prime as the originator of same-day package delivery, the concept has actually been around for decades but was less prevalent in retail. Companies that offer legal and financial services have long had same-day delivery of their documents. In addition, restaurants have been offering guaranteed on-time delivery for some time. Florists have also offered one-day service for many years, particularly for funeral arrangements. And while Amazon Prime made the practice much more widespread throughout retailing, the now-defunct company Kozmo.com likely pioneered the practice in 1998.33
Kozmo was an online retailer that promised one-hour delivery of “videos, games, DVDs, music, mags, books, food, basics & more,” including Starbucks coffee.34 The company was popular with young professionals and college students, but it couldn’t stay afloat and closed in 2001. The company likely inspired the US Postal Service Metro Post, which allowed Amazon to offer same-day delivery of packages in San Francisco in 2012.35 Fast-forward to today, and many retailers, including Amazon and Walmart, offer same-day delivery in larger, well-populated areas.
The Emergence of Digital Wallets
Digital wallets are software-based systems that allow for secure transactions. Digital wallets were first used in the late 1990s, but today they offer more security and allow users to save numerous passwords and payment methods. The system allows users to quickly make online purchases without having to remember passwords or dig through their physical wallets to get cash.36 They also allow users to pay for products and services in-store directly from their phones, allowing for touchless payments.
If you are familiar with the Apple Store or the Google Play Store, you’ve likely used digital wallets. When you purchase online on one of these devices, an automated display will come up asking if you would like to save your log-in and payment information. Once saved, each time you log in to the same website or begin to make a purchase, the digital wallet will auto-fill your information. While digital wallets are a huge time-saver for consumers, they also benefit retailers by capturing a sale that might have been lost due to inconvenience.
Knowledge Check
It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.