How Work from Home Culture is Rewriting the Retail Rulebook

How is the shift to WFH impacting consumer behavior?

In 2004, less than 5% of workplaces allowed employees to work from home. Three years into the pandemic, 25% of all jobs in North America ^[1] are projected to become completely remote, with 60% of employees looking to work from home all or most of the time. Remote work is clearly here to stay, not only impacting our daily lives but also initiating a deep shift in consumer preferences and behaviors. Amidst these sweeping changes, here are three significant ways in which consumer purchase decisions will evolve and what retailers can do to leverage these insights for success:

1. Improved convenience and access a strong purchase driver

2. Niche no more: The era of healthy and sustainable choices

3. Going local and eco-friendly: Strategic localization investments

1. Improved convenience and access a strong purchase driver

Today’s consumers expect safety and convenience, and retailers are thinking of new ways to save them time and energy. They want to be met on their digital platform of choice, have their every need anticipated, and have access to innovative buying options across channels and geographies. Considering the rise of hybrid work models and the dramatic shift from in-person to online shopping, the demand for digitally enabled retail concepts ^[2] is expected to grow, focusing on end-to-end experiential retail, even for categories such as grocery. Scaling e-commerce operations focused on digital UX, and a seamless omnichannel experience will continue to be important, as will making visibility into supply chains a key tenet to customer convenience. Tracking inventory levels, with advanced analytics capabilities determining product demand and supply, will be crucial to ensuring this very competitive edge, preventing stockouts, and keeping customers engaged and informed in the era of digital-first retail.

2. Niche no more: The era of healthy and sustainable choices

Working from home has freed up a lot of time for people since they no longer spend an average of 54 minutes a day commuting, saving them 62.5 million hours every week ^[3]. The extra time is being invested in making healthier decisions and changes in daily lifestyles: consumers are now choosing to make their own meals instead of dining at restaurants – a pattern that is expected to persist even after restrictions are lifted. The data coming in from sales of organic recipe mixes, health supplements, and grab-and-go meals all point to the emergence of new consumption patterns. Bold new choices of flavors, a wider variety of cuisines in demand, and new opportunities for expansions into the seasonings, dressings, and sauces (SBS) category have all inspired manufacturers to get creative – many are finding new ways to make food products more exciting and are cross-selling flavors from different cuisines to draw in new consumers.

This eye for conscious choices is not limited to simply themselves – consumers are also rejecting brands that do not actively offer sustainable products and services. The pandemic has massively, and perhaps irreversibly, bolstered demand for what was once regarded as a niche, Gen-Z-specific interest. Sustainable sourcing and packaging are now favored by a majority of customers, who are willing to pay a premium ^[4] for such products. Retailers must, therefore, actively look at incorporating environmentally friendly policies and practices into all aspects of production — drawing from data across supply chains, distribution networks, and products themselves to accelerate R&D cycles for packaging and shipping alternatives, e.g., reused shipping boxes, biodegradable wrapping paper, and plant-inspired design. Retailers can also capitalize on this shift in consumer behavior by offering buy-back programs or offering used products for purchase as a means of building sustainability credentials. However, claims of being eco-friendly should be backed by action: sustainable practices should be authenticated using real data, such as carbon footprint or food-miles measures ^[5], to keep consumers informed at all touchpoints.

3. Going local and eco-friendly: Strategic localization investments

Working from home has caused consumers to be on the lookout for products that are authentic and artisanal. Thanks to social commerce, particularly through platforms such as Instagram, people are also increasingly likely to overlook the draw of a big brand and opt for ethically sourced products from local stores. This change in preference has also been bolstered by population shifts out of urban centers ^[6], prompting retailers to reevaluate store locations and coverage as well as invest more in e-commerce and instant deliveries.

In line with these developments, formulating and implementing well-positioned localization strategies for granular target markets should be a focus for the foreseeable future. To start with, intensive consumer-focused market research needs to be conducted in new locales, with products catering to more focused geographies and marketing strategies infused with translated, localized, and topical content. Supply chain-wise, the shift from large urban centers to the suburbs will necessitate investments in micro-warehouses as well as partnerships with 3PL & 4PL to cater to spread-out consumer bases. Accordingly, inventory and delivery across multiple warehouse sites should be reconfigured and automated to ensure a seamless consumer experience, away from urban store locations: this could involve optimizations including smart case picking, electronic shelf labels, intelligent workflows, real-time pricing optimization, and inventory tracking.

Quality-conscious consumers are the future

It is evident that this realignment of shopping criteria and individual lifestyles due to the now commonplace WFH culture signifies a radical shift for the retail industry. Consumers are clearly no longer just looking for low-cost items; a range of factors play a role in their purchasing decisions, with the primary mantra being quality above quantity. This shift is likely to be permanent, posing a challenge to retailers and manufacturers in attracting and retaining customers. The future is promising if companies take a more proactive, progressive, and pioneering approach to their sales, products, and digital presences, using available advanced technology and analytics. Knowing your customers, understanding their needs, and even anticipating their desires to proactively address their needs will continue to be the differentiator for successful businesses in the era to come.