Retailers adapt to new business models and changing shopper trends

Digitalisation has led to new models like marketplaces, direct-to-consumer, and social commerce.

New business models, channel expansion, and evolving shopper expectations are reshaping the retail industry, according to a new report from Euromonitor International and the National Retail Federation (NRF).

The report said that digitalisation has given rise to innovative business models such as marketplaces, direct-to-consumer, and social commerce. Non-retail companies like social media platforms, streaming services, and gaming networks are now vying for consumer attention and spending. These platforms, originally designed for other purposes, are increasingly integrating commerce features. 

For instance, ByteDance, the parent company of TikTok and Douyin, has leveraged its app's vast reach to boost its e-commerce capabilities. Douyin, in particular, saw a 50% increase in online sales of beauty and personal care products in Q1 2024 compared to the same period in 2023, making it China’s leading online retailer for this category.

Retailers are also shifting from single-channel to multichannel and omnichannel models, aiming to enhance customer engagement through various touchpoints. The challenge lies in harmonising these channels to offer a seamless customer experience.

The food sector, traditionally dominated by grocery stores and restaurants, is also experiencing shifts due to changing consumer habits and technological advancements. 

Whilst physical stores still account for the majority of food spending, categories like e-commerce and on-the-go foodservice (including delivery and takeaway) are gaining ground. It is expected that  these channels will continue to expand through 2028, driven by value and convenience.

Additionally, shoppers now demand better offers, enhanced recommendations, better service, and faster delivery. Economic conditions, technological advancements, and personal values influence these expectations. 

The importance of finding bargains has dropped by 16 percentage points over the past decade, but quality, sustainability, and authenticity are increasingly crucial.

Meanwhile, the report identified the challenge of balancing competing priorities, such as price versus values, as most impacting the future of retail.

“Retailers, brands and others servicing the retail ecosystem need to balance this tension and the others to stay relevant in the eyes of their customers today – let alone in the future,” it stated.