The rate of consumer behavior change accelerated dramatically over the past two years. The rise of omnichannel, shifts towards hybrid work, the growth of leisure activities, and increased economic uncertainty all contributed to rapid and unpredictable shifts 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.
This report provides an overview of some of the major shifts in consumer behavior patterns that have emerged over the past two years. Using foot traffic data, we identified six aspects of changing consumer behavior in six different retail categories: home improvement, dining, beauty, grocery, department stores, and superstores. We also conducted an online survey using Pollfish on March 10-11, 2022 of 384 Americans aged 18-64; the sample was weighted according to age and household income levels to represent the distribution within the US population. The survey results complement our foot traffic data to provide more color as to the sentiment driving the shifts.
In the early days of the pandemic, grocery and superstores witnessed a phenomenon known as “mission-driven shopping.” Shoppers focused on accomplishing as much as possible in fewer visits made longer and less frequent trips to the store. Recently, however, mission-driven shopping has declined and foot traffic data from the past few quarters points to the emergence of the opposite trend: shoppers are making shorter, more frequent grocery and superstore runs when compared to 2019.
Grocery visit data for the last three quarters of 2021 shows that median visit durations decreased by 5.4%, 2.4%, and 3.6% in Q2, Q3, and Q4, respectively, compared to the same quarter in 2020. But while grocery visit duration is decreasing, each location is seeing more visits – the average number of visits per venue in Q2, Q3, and Q4 of 2021 was 11.0%, 7.0%, and 6.8% higher, respectively, when compared to the same quarters in 2020.
Yet, the growth in demand does not appear to be slowing. Beyond the continued visit strength many grocery chains are seeing, one of the major impacts of the pandemic was a greater shift to at-home cooking. In our latest survey, 57% of respondents noted that cooking was one of the adopted new behaviors and over 70% expected pandemic-driven hobbies to keep going.
The shift therefore speaks to the long term impact of new behaviors and patterns that were driven by the unique pandemic environment. The continued uncertainty driven by inflation, increased gas prices and ongoing COVID concerns alongside this heightened propensity for at-home cooking could keep the grocery wave going far longer than originally expected. Isolating the areas where those changes have a longer term potential can go far in helping to understand which retail segments could turn short term opportunity into long term growth.
Diving into a specific superstore chain like Target shows that the increase in visits and decrease in visit length has happened gradually. Since 2019, there has been a slow but gradual decline in the length of Target visits, from 34 minutes median visit duration in Q1 2019 to 31 minutes in Q4 2021. At the same time, Target’s visit frequency has gradually increased, with the average number of quarterly visits per visitor rising from 2.8 in Q1 2019 to 3.3 in Q4 2021.
Part of the shift towards shorter, more frequent visits may also have to do with the increase in online shopping. According to the survey we recently conducted, around 52% of respondents reported doing more online grocery shopping since the start of the pandemic. At the same time, 62% of respondents reported visiting the grocery store more often or about the same amount as they did before the pandemic.
This might mean that a significant share of shoppers now view their trips to the store as complementary to online shopping. Whereas before the pandemic, most consumers did their grocery shopping in store, many consumers now place their larger orders online and make quick, frequent trips to the store to grab items in between deliveries.
The move towards shorter and more frequent visits does not just affect basket size; it can also impact the type of products consumers look 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 who understand the implications of this shift and learn to cater to visitors’ unique time-frequency balance will benefit.
Cross-shopping patterns reveal how many of a given chain’s consumers also shop at other chains. By diving into cross-shopping patterns, retailers can identify products they are missing, or products that are not being marketed, displayed, or priced effectively. Retailers can thus gain a deeper view of the competitive landscape and pinpoint their strengths and weaknesses around specific categories. As an example, seeing major growth for a specific segment like home improvement could prompt a general merchandise retailer to emphasize those products.
Walmart customers’ cross-shopping with five other discount retailers – Big Lots, Family Dollar, Dollar Tree, Dollar General, and Five Below – between Q1 2021 and Q4 2021 shows a gradual quarterly increase in the share of Walmart shoppers who also shopped at the other discount retailers. The change is important in that it highlights the growing competition taking place in value-oriented general merchandise retail. As a result, the need for clear differentiation in terms of offering or experience becomes a priority to help attract key audiences.
Diving deeper into Walmart cross-shopping data reveals even more. While the share of cross-shopping with other discount stores increased across the board, the magnitude of the increase was unevenly distributed. Whereas cross-shopping from Walmart to Family Dollar and Dollar General increased by around 1% between Q1 and Q4 of 2021, cross-shopping to Big Lots, Five Below, and Dollar Tree saw a far more dramatic increase of about 4 to 5% during the same period.
Critically, Walmart has maintained a massive visit share even when compared to these rising retailers. Yet, the competitive landscape is clearly heating up for value oriented retailers. Armed with this data, retailers and CPG companies can ask – What categories are stronger at Big Lots, Five Below, and Dollar Tree than at Family Dollar and Dollar General? Can improving these categories help Walmart recapture some of its visit share?
The changing dynamics in this space may also help explain moves ‘upmarket’ by companies like Five Below and Dollar General. The growing competition in this space is critical to understanding key strategic decisions by Walmart and others to cement their role in key markets for core audiences and in more aggressive moves to expand reach.
Cross-shopping data can also be used to understand the category competition between general merchandise retailers and specialty stores, and to identify new in-store placement opportunities.
For example, according to our survey, 87.8% of respondents aged 18 to 64 visited a physical store as part of their electronics buying journey, and only 12.2% buy electronic products fully online. Diving into the cross-shopping patterns between a general merchandise retailer such as Target and a specialty store such as Best Buy may provide insight into where consumers prefer shopping for electronics, which can help both retailers and electronics manufacturers make more informed business decisions.
The data indicates that cross-shopping from Target to Best Buy increased throughout 2021, which means that, despite Target’s efforts to beef up its electronics section, there is still a significant draw for electronics at specialty stores. But the data also shows that cross-shopping also increased from Best Buy to Target, and this increase was significantly larger than the reverse.
Obviously, the increase in cross-shopping to Target is heavily due to Target’s incredible success and growth over the past year. Still, the fact that more Best Buy shoppers are now being exposed to Target’s electronics department means there is increased competition for these specialty retailers, and that there is a growing opportunity for electronics companies to reach interested consumers - especially from an exposure perspective - by partnering with Target.
The ongoing demand for in-store engagement in the electronics space also helps explain the heavy push Target and others are making into that segment. Finally, it speaks to the continued ability of Best Buy to buck the trend that affected many other retail segments with the ongoing consumer desire for greater guidance when making an electronics purchase.
The past two pandemic years have caused numerous changes in consumers’ dining habits, and one of the changes that can be seen across different restaurant categories is the change in visit times. Many customers are now visiting restaurants, coffee shops, and fast food places during different times of the day than they were before COVID, and it looks like some of these behaviors are here to stay. The change in dining hours has significant implications for the entire dining space.
In the coffee space, late morning visits have become more popular. Visits between 9 AM and 12 PM accounted for 25.0% of visits in Q1 2020 but increased to 27.6% by Q4 2021.
In the Quick Service Restaurants (QSR) space, on the other hand, both later evening and especially late night visits gain in popularity throughout the pandemic.. Late-night visits between the hours of 9 PM and 12 AM made up 11.5% of visits in Q4 2021 compared to 9.5% of visits in Q1 2020. This rise in evening and late-night visits has come at the expense of lunchtime visits, as visits between the hours of 12 PM and 3 PM accounted for just 25.2% of the visits in Q4 2021, down from 28.1% of the visits in Q1 2020.
These shifts may have sweeping implications on the type of food, products, and experience customers are seeking – according to our survey, 45% of respondents stated that the change in dining visiting hours has affected their product selection. Restaurants and restaurant partners who want to cater to customers under the new normal need to understand the full implications of the change in dining hours, which may impact the menu, the physical restaurant setup, and staffing needs of restaurants.
Online shopping skyrocketed over the pandemic. According to our survey, around 60% of respondents aged 18 to 64 state that they now do more online shopping than they did before the pandemic. So why do people still visit stores, despite e-commerce’s wide and growing penetration? Consumers hope to get an added value that they cannot get online.
Shoppers today crave personalized, efficient, and sustainable shopping experiences, and brands that want to stay ahead of the curve are putting efforts into giving customers the engaging experiences they are seeking. Today’s innovative stores are successfully nurturing their customer-brand relationships – when brands offer more than just a store to their customers, they get more in return.
In August 2021, Bloomingdale’s opened its first small format store, Bloomie’s, in Fairfax, VA. According to Bloomingdale’s release from July 2021, Bloomie’s is a “service-driven experience … designed for discovery,” where customers can shop, have a bite to eat, grab a coffee or a cocktail, and set up a meeting with a stylist.
Foot traffic data shows that Bloomingdale’s bet on Bloomie’s is paying off. The Comparison between the median length of stay at Bloomingdale’s stores nationwide with Bloomie’s, shows that customers are consistently spending significantly more time at Bloomie’s than at Bloomingdale’s. In February 2022, the median length of stay at Bloomie’s was 47 minutes, compared to 29 minutes at Bloomingdale’s nationwide.
This dramatic difference in the length of stay demonstrates how much added value Bloomingdale’s, and Bloomingdale’s customers, are getting from this new small-format experiential-oriented store.
Dick’s Sporting Goods has also been seeing success with its experiential-focused stores. In September 2021, the company opened Public Lands in Cranberry, PA, a concept store focused on outdoor experiences. Similar to the Bloomie’s/Bloomingdale’s comparison, the median length of stay at Public Lands is consistently longer than the visit length to Dick’s nationwide stores.
Opening and operating an experiential store like Bloomie’s or Public Lands is likely more complex and costly than running a regular, run-of-the-mill shop. And partnering with an experiential store to sell products may also require making a larger investment and taking a bigger risk, since there are currently so few experiential stores in existence. But the data shows that, in this case, the greater risk is likely to lead to higher reward.
Home improvement foot traffic skyrocketed in 2020. As people began spending most of their time at home, consumers with newly flexible schedules poured time and energy into fixing up their living space: According to our survey, 35% of respondents aged 18 to 64 stated that they had taken on new home improvement and DIY projects since the pandemic.
But the leading home improvement players understood that success in retail comes from also cultivating a loyal base of core customers rather than exclusively relying on occasional, circumstance-driven visit surges.
And while everyday Americans were visiting home improvement stores in droves, visits to home improvement retailers from the category’s core customer base of professional contractors had tapered off. Due to the pandemic, many people felt uncomfortable inviting others into their homes for renovations or remodels, impacting professional contractors.
As the pandemic continued, and although home improvement visits were still surging, leading home improvement retailers launched or expanded their loyalty programs to get professional contractors back into their stores. In July 2020, Lowe’s revamped its Lowe’s for Pros loyalty program and began offering members a free year-long subscription to HomeAdvisor, a digital marketplace that connects homeowners with professional contractors.
After all, if Lowe’s for Pros members could find jobs, they would need to come to Lowe’s to get supplies; and if the contractors’ jobs came through Lowe’s loyalty program, the contractors would likely want to maintain their membership and loyalty to Lowe’s. And in the fall of 2020, Home Depot upgraded its Pro Xtra by adding earnable shopping perks as customer rewards, and improving the user experience
Meanwhile, other retailers used loyalty programs to transform the short-term opportunity into long-term gains. Tractor Supply, one of the biggest beneficiaries of the pandemic DIY surge, launched its first mobile app in June 2020 and upgraded its Neighbor’s Club loyalty program in April 2021. Other home improvement and home furnishing retailers, such as At Home, Ace Hardware, and Floor & Decor, have been operating loyalty programs for years. These retailers were able to use these existing programs to turn one-time COVID-related visitors into regular customers.
The data shows that the home improvement and home furnishings’ loyalty programs have largely borne fruit. Since Q1 2020, all major brands analyzed have seen a rise in the share of loyal visitors, as measured by consumers who visited a retailer at least twice in a given quarter. This increase in loyalty is all the more noteworthy given that during times of economic instability, customers often become more sensitive to prices and less loyal to brands.
Customer demographics are not a behavior per se, but it is impossible to talk about consumer behavior patterns without mentioning demographics and their impact on shopping habits.
In 2020, the American household income fell for the first time since 2011. Brands that successfully adapted to their customer’s economic fluctuations came out stronger.
The beauty sector returned to growth relatively early in the pandemic, and performed well throughout most of 2021 and continuing into 2022. One reason for the sector’s success is the leading beauty chains’ capacity to adjust to their consumers’ changing economic situation. Similar to many American households, Ulta’s customers also saw its household income decrease between 2019 and 2021. Between Q4 2019 and Q4 2021, Ulta consumers’ average household income decreased by $2,035 and median household income decreased by $1,962.
Although household income decreased, foot traffic to Ulta actually increased. Throughout 2021, nearly every single month outperformed its Yo2Y traffic, with July 2021 seeing a 22.6% increase in visits.
How did Ulta succeed in drawing more visits from consumers with less disposable income? The beauty retailer found a way to include more value oriented brands alongside high-end products under one roof, which ensured that there was something in the store for everyone – including those who had recently seen a dip in their income.
Ulta also regularly offers coupons, appealing to visitors on a tighter budget. And budget shoppers who may not know about Ulta’s price and product range can learn about the retailer at Ulta’s new concept stores inside Target.
Retailers and retail partners need to stay up to date with demographic shifts in the population at large, and in the customer base of specific brands in particular so that they can find the best ways to meet the customers’ changing needs and expectations.
Consumers are making shorter, more frequent visits to grocery stores and superstores. This is a marked change from the mission-driven shopping of the pandemic’s early days. The move towards shorter, more frequent trips may have sweeping implications for store layout, product selection, and promotion strategies. It could also reduce the ‘zero sum game’ competition that was so prevalent in key sectors early in the pandemic. While elements like increasing gas prices could affect this shift, the longer term return to multi-visit trips appears to be significant and lasting.
Increasing Competition in Key Segments. Looking at changes in cross-shopping between different types of retailers can help identify categories that need improvement, and can help retail partners identify new opportunities for in-store product placements. It can also help contextualize key decisions from major brands. As some sectors – like value oriented retail – see increased competition, expect a more strategic focus on widening product offerings and expansions into new markets as a means of strengthening key positioning and attracting new audiences.
Dining times shifted over COVID, and at least some of that change is here to stay. Dining visit times changed over the pandemic, and it looks like some of the time change is here to stay. Restaurants and restaurant partners who want to cater to customers under the new normal need to understand the full implications of the change in dining hours, which may impact the menu, the physical restaurant setup, and staffing needs.
Consumers want a store that’s more than just a store. Shoppers today crave personalized, efficient, and sustainable shopping experiences. Experiential stores, such as Bloomingdale’s Bloomie’s and Dick’s Public Lands, are successfully nurturing their customer-brand relationships by drawing customers in to interact with the brand for a longer period of time. They also offer a unique opportunity to diversify offerings so as to best reach key audiences in specific markets, and provide the ideal experience on a location by location basis. As an example, small format locations offer an ability to efficiently enter more expensive real estate markets with a targeted focus. Understanding the unique needs of each market and location is essential for optimizing the experience and merchandising for that audience.
Successful loyalty programs can transform a short-term circumstantial boost into long-term gains. The home improvement sector received a major boost in the early days of COVID as consumers with newly flexible schedules invested time and energy into improving their living space. Home improvement retailers have successfully leveraged loyalty programs to turn this short-term surge into long term gains.
Keeping track of changing consumer demographics can pay off. Consumer demographics also impact shopping behaviors, and retailers that know their customers and devise strategies to cater to a range of demographic segments will reap the rewards. The ability to adapt to these changes can play a significant role in driving sales in a rapidly changing economic environment.