Last Updated on August 10, 2023 by Morgan Beard
The retail industry has undergone significant changes in recent years, with the rise of e-commerce and the changing habits of consumers. As a result, retailers must be strategic in their real estate decisions to stay competitive. By being aware of the psychology that influences consumer shopping behavior, retailers can optimize their real estate strategy to meet consumer demands and enhance a positive customer experience.
Understanding Consumer Habits Influence on Retailers
Consumer habits refer to the established patterns of behaviors, actions, and patterns that people exhibit when shopping for goods and services. Consumer behavior refers to the actions and decision-making processes of consumers when purchasing goods or services. This includes the entire process of researching, evaluating, selecting, and buying products or services, as well as the post-purchase evaluation and feedback.
These are influenced by a variety of factors:
Cultural values, traditions, and beliefs shape consumer purchasing behaviors and purchasing decisions in significant ways. For example, in some cultures, it is customary to haggle over prices, while in others, it is considered impolite to do so. Cultural norms also influence the types of products that consumers purchase. For instance, in countries where rice is a staple food, rice cookers are more popular than in other regions.
Technology is rapidly changing the way retail consumers shop, making it more convenient and accessible than ever before. Online shopping, mobile apps, and social media have transformed the retail landscape, leading to the rise of e-commerce and omnichannel retailing. Younger consumers, in particular, are more likely to use technology to research and purchase products, while older consumers may prefer traditional brick-and-mortar stores.
Demographic factors such as age, gender, income, and education level, affect a consumer’s buying behavior. For example, younger consumers tend to be more interested in sustainable and eco-friendly products, while older consumers may be more focused on health and wellness. Older consumers may be more swayed by brand sponsorship or peers’ usage.
Personal preferences and lifestyle factors can also influence consumer habits. For example, some consumers prefer to shop at smaller, boutique stores that offer a more personalized shopping experience, while others prefer the convenience of large, one-stop-shop retailers. Health-conscious consumers may prefer organic and natural products, while busy professionals may prioritize convenience and time-saving products.
By taking these factors into account, retailers can develop a deeper understanding of their customer’s needs and tailor their real estate strategy to stay ahead of the competition.
The Role of Real Estate in Retail
Real estate plays a critical role in the success of a retail business. The right location can attract foot traffic, increase brand awareness, and boost sales. On the other hand, a poor location can result in low foot traffic, decreased visibility, and ultimately, a loss of revenue. For this reason, retailers must be strategic in their real estate decisions and carefully consider a variety of factors before signing a lease or purchasing a property.
Consumer habits should influence your retail real estate strategy. Store location, cost per square foot, comps area all important factors. At the core of your retail success is a real estate strategy that meets consumers where they want to be met.
Understanding Consumer Shopping Habits
Consumer habits have a significant impact on retailers’ real estate strategies. Retailers that fail to adapt to changing consumer habits risk losing market share and falling behind their competitors. Let’s take a closer look at some examples, and how retailers can adapt to these changes.
With the rise of e-commerce, many consumers are now opting to shop online instead of visiting physical stores. This has led to a decrease in foot traffic in some retail locations, particularly in the case of stores selling commodity products that are easily available online. As a result, retailers may need to reconsider the size and location of their physical stores and potentially consider downsizing or relocating to a more cost-effective space.
Many consumers now use multiple channels to make purchases, including online, mobile, and in-store. This has led physical retailers to adopt an omnichannel approach to their business, where the online and physical stores are integrated to provide a seamless shopping experience. Retailers must consider how they can leverage their physical locations to complement their online offerings, such as by offering in-store pickup or returns for online orders.
Consumers value convenience when it comes to shopping, and retailers are responding by opening stores in locations that are easily accessible, such as near public transportation or in high-traffic areas. Retailers are also experimenting with new store formats, such as smaller stores in urban areas or pop-up shops, that are designed to provide a more convenient and localized shopping experience.
Consumers are increasingly seeking out unique and memorable shopping experiences, and retailers are responding by investing in-store design and creating interactive and immersive shopping environments. This has led retailers to seek out prime locations in high-traffic areas or tourist destinations, where they can create flagship stores that showcase their brand and provide a memorable shopping experience.
Many consumers are now prioritizing sustainability when making purchasing decisions. Retailers are responding by adopting sustainable practices in their operations and selecting locations that are aligned with their sustainability goals. For example, retailers may choose to open stores in LEED-certified buildings or in areas that promote sustainable transportation options.
Consumers today are looking for more than just products when they go shopping. They want a complete experience that entertains, educates, or inspires them. Retailers are responding by integrating entertainment or experiential elements into their stores. For example, a clothing store might have a runway where customers can model the clothes they try on, or a technology store might have interactive displays where customers can test out new products. Retailers must consider how they can incorporate these elements into their stores, and how their physical location and store design can enhance the overall experience.
Data analytics is an essential tool for retailers to understand their customer’s behavior and preferences. Retailers can use data to identify trends and patterns, such as the time of day or week when foot traffic is highest, or which products are most popular among certain demographics. This information can inform retailers’ decisions about where to open new stores, what products to stock, and how to design their stores to maximize sales. For example, data may reveal that customers in a particular area are more likely to buy products related to a particular hobby, which can inform the product mix at a nearby store.
Consumer Habits Influence Retailers Real Estate Strategy
The future of retail real estate strategy is all about adapting to the changing habits and behaviors of consumers. Their shopping habits have a significant impact on the retail sector, and retailers that fail to adapt to changing consumer trends risk losing market share and falling behind their competitors. Understanding how consumer habits influence retailers will assist in your organization outlining a real estate strategy that mets customers in the way they buy.
However, retailers that adopt an omnichannel approach to their business, prioritize convenience, invest in store design, and provide unique shopping experiences that entertain, educate, or inspire customers can attract new customers, retain loyal customers, and enhance the customer experience for current customers. By leveraging consumer behavior research and customer profiles, retailers can create tailored real estate strategies that maximize their chances of success.