Question

Black Friday – the day after Thanksgiving represents one of the biggest shopping days and marks the first official day of Christmas shopping. However, in 2018 sales on this day were 9% lower than the previous year and represent a trend in the retail market – revenues of departmental stores have either remained stagnant or declined (Macy’s stores revenues between 2008 and 2018 stayed stagnant around $26B and JC Penny actually experienced a decline during the same period from $20B to $13B. On the other hand, online giant, Amazon revenues grew from $19B in 2008 to more than $230B). There are similar downward trends of other brick & mortar department stores and a growth in online purchases by consumers.

Explain the principal factors (demographic, socio-economic, lifestyle and behavioral), which have contributed to these trends. Offer specific marketing and economic strategies in which traditional departmental stores/grocers can adapt/reposition their competitive positions to remain viable/profitable.

Answer 1

In the recent past, it has been observed that there has been a favorable shift in consumer demand towards the E-commerce platforms. This trend accrues to various factors, namely:

Demographic factors- it is being driven by a young demographic profile who favor comfort and convenience. Since smartphones and internet have spread in everyday lives, it is very easy to make price comparison parallelly while ordering products.

Socio- economic factors- the cost of assessing internet is negligible and thus affordable for all. In fact, consumers may get better deals and heavier discounts on the internet than in offline shops.

Lifestyle factors- the lifestyles choices are highly influenced by social media. Many brands use the websites such as Facebook, Instagram, etc. as launching pads to target the right age group audience. Thus, consumers are more likely to order products from online sites when they are repeatedly subjected to the very websites. Thus, digital marketing has made shopping enter social life.

Behavioral factors- people often quote shopping equal to therapy and it is bound to be so even more when it is just a click away. Customers gain higher satisfaction as they got more personalized shopping experience. For instance, they can even order a product at midnight and receive by the next day's morning.

To remain relevant in the digital world, the retailers can upgrade themselves by expanding their facilitating services. These include introducing interest free EMI, free home delivery of products, standardization, make new products available at par with E-commerce sites, introduce heavy discounts, etc. They could indulge in warranties and guarantees to make the shopping experience personalized for consumers. Though the most effective strategy would be to give consumers price advantage.