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Retail Industry Reshapes with Hybrid Cloud and AI to Help Meet Shifting Consumer Shopping and Sustainability Preferences

The IBM Institute for Business Value, in collaboration with the National Retail Federation, the world’s largest retail trade association, released “Consumers want it all,” their second global study*, which reveals rising consumer preferences for sustainability and shopping journeys splintered across multiple digital, physical, and mobile touchpoints at NRF 2022: Retail’s ‘Big Show.’

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Hybrid purchasing – combining physical and digital channels in buying experiences – is on the rise, according to a new global study of over 19,000 surveyed customers, as shopping practises acquired out of need during the COVID-19 pandemic have become usual. Retailers must adapt to meet customers where they are by combining digital and in-store experiences.

  • 72% of respondents say they use the store as all or part of their primary purchase method.
  • Top reasons respondents choose to visit a store include touching and feeling products before buying them (50%), picking and choosing their own products (47%) and getting products right away (43%), though what in-store shoppers are looking for varies by product category.
  • 27% of respondents report hybrid shopping is their method of choice, and Gen Z consumers surveyed are most likely to be a ‘hybrid shopper’ compared to other age groups.

The study also shows that sustainability has become increasingly important to surveyed consumers’ purchase decisions and brand preferences since 2020.

  • Purpose-driven consumers, who choose products/brands based on their values like sustainability, are now the largest segment of consumers surveyed (44%).
  • 62% of respondents are willing to change their purchasing habits to reduce environmental impact, up from 57% two years ago.
  • Half of those polled believe they’re willing to pay a premium for sustainability, with a 70% average premium. From 2020, the premium will be about doubled.
  • However, there is a disconnect between intent and action: only 31% of respondents say that sustainable products accounted for most of their most recent purchases.

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“While many surveyed consumers still place high value on the traditional in-store shopping experience, they also now expect the flexibility to build their own shopping journey – according to the behaviours prevalent to their age range, available tools and the product category they are looking to purchase,” said Mark Mathews, Vice President of Research Development and Industry Analysis at the National Retail Federation. “This ‘hybrid’ approach is a fundamental shift in consumer behaviour.”

“The survey shows over the last year, sustainability became increasingly important to consumers, though there’s still a gap between their intentions and actions due to lack of information in the buying process. Increasingly, it’s becoming essential that retail brands demonstrate sustainable choices and options in each step of the customer experience. At the same time, hybrid shopping has taken hold in most categories, particularly in home goods and apparel; and while stores continue to play the predominant role in grocery, hybrid shopping is growing in these categories too,” said Luq Niazi, Global Managing Director IBM Consumer Industries.

He added, “Despite the impact of COVID-19, our experience with clients shows many leading retail brands are continuing to rapidly transform operations, customer experience and supply chains with technologies like AI, hybrid cloud and blockchain to help serve these multiple customer preferences.”

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