In the Future of Retail, We’re Never Not Shopping

Werner Reinartz

March 10, 2016

Most retail outlets — whether conventional brick-and-mortar shops, digitally enhanced stores like Macy’s in the U.S. or Burberry in the UK, or online stores — assume a traditional three-stage consumption model. The customer experiences a need, shops to satisfy the need, and then consumes or uses the product purchased (I need shoes, I buy shoes, I wear them).
The vocabulary of retailing reflects this model, assuming in particular that shopping is the central component of this model. Marketers will talk about shopping trips, shopping missions, shopping baskets, shopping lists, and destination trips. What’s more, current practice for the most part still rests on the idea that many decisions on which particular product to buy are made in the store — whether physical or online. Hence, brands engage in an arms race of persuasion and hard-sell tactics (prices, promos, presence) at the point-of-sale order to sway the customer when she is ready to transact.
But winning in retailing today is less and less about control of the shopping experience because there is no longer a clearly defined shopping stage. The model is changing as new technologies allow people to bring the purchase of the product that satisfies their need closer to their first perception of it. And this makes the perception of the need — rather than the shop — the stage that marketers need to control.
This paradigm shift — and it really is that — is apparent in three ways:
Instant purchasing. To begin with, consumers increasingly transact right when the demand (need) occurs. Today, when you discover in the shower that you have run out of hair conditioner, you can order a new bottle through Amazon Prime then and there. And tomorrow, perhaps, when you’re watching a streamed movie or browsing Pinterest, you’ll will able to point and click on a character’s suit or tie and buy it right away — without ever going to a retailer’s site. This change obviously simplifies consumers’ lives but it is also rendering the traditional retailer store largely obsolete.
Automated purchasing. We’re increasingly seeing many types of product being purchased automatically — Amazon’s Dash button is an obvious move in this direction. The move to “intelligent” products is another. The latest generation of Whirlpool washing machines, for example, can autonomously order a pre-specified amount of washing detergent after a set number of cycles. Especially for fast-moving-consumer-goods, this development will also significantly push non-store based sales.
Subscription-based purchasing. The growing popularity of subscription-based platforms are also undermining the primacy of the store as the main customer touchpoint. In categories as different as music (Spotify), video (Netflix), transportation (Zipcar), underwear (MeUndies) home delivery restaurant meals (Delivery Hero), groceries (Blue Apron) news (Blendle), and razors (Harry’s or Dollar Shave Club) a subscriber can either pick conveniently and immediately from a broad selection at the moment of need, or simply sign up and receive a regular delivery — without engaging directly with any other intermediary. It’s not so difficult to see the subscription model evolving in other ways (which is perhaps why there are so many new entrants in this area).
In this environment, shopping as a discrete activity in a given place and time takes a distinct back seat. Rather, the transaction becomes an ambient activity that is executed everywhere (at home, on the go, at work, in leisure) and anytime. In addition, all steps in the entire cycle of “need occurrence,” “shopping” and “actual consumption” become more and more naturally integrated into the daily mental and physical routine of consumers. As a physical store is largely superfluous in this emerging purchase process, the traditional value-adding functions of the store-based retailer (creating an assortment of products, providing product information, enabling the transaction, providing physical distribution services) are also called into question.
In a digital economy, then, there may be relatively little need for stores as we traditionally understand them, and the retail business will change to reflect this new reality.

Werner Reinartz, Professor of Marketing at the University of Cologne, researches firms’ customer strategies and is the author of Customer Relationship Management: Concept, Strategy, and Tools.