In-store and online shopping has declined \this year

In-store and online shopping has declined this year

Consumer interaction with physical stores has declined

Consumer preference for in-store shopping is declining amid the current cost-of-living crisis and the price consciousness of consumers. Consumers also expect to reduce their interactions with physical stores in the longer term. In November 2022, 61% of consumers said they had significant interactions with physical stores, a slight decline from November 2021 (67%), and 58% expect to interact with physical stores post-cost-of-living crisis (see Figure 6).

Last year, 72% of consumers were expected to interact with physical stores after the pandemic, but the current research reveals only 61% of consumers are currently interacting with them. The cumulative effect of the pandemic and geopolitical crisis is taking its toll.

61%

of consumers say they are shopping at physical stores today, compared to 67% a year one

Figure 6. Consumers expect their interactions with physical stores to decrease in the long term

_{^{Source: Capgemini Research Institute, Consumer demand survey, October–November 2022, N=11,300 consumers; Capgemini Research Institute,}}_{^{What matters to today’s consumer}}_{^{, January 2022; Capgemini Research Institute,}}_{^{The great consumer reset: COVID-19 and the consumer products and retail consumer}}_{^{, November 2020. Note: Question asked was "Please indicate your frequency of using physical stores when shopping with retailers. Please rate on a scale of 1 to 7, where 1=very low interaction and 7=very high interaction." Post-pandemic refers to when consumers were asked in November 2021 of their expectations for physical store interactions during the post-pandemic period, i.e., at some point in the future when they believe the pandemic was over.}}

Many economies have reported a decrease in their retail footfall because of the cost-of-living crisis. Most recently, total UK footfall decreased by 11.8% in October 2022 and 13.3% in November 2022.

Footfall took a stumble in its slow return to pre-pandemic levels as rising prices and tightening purse strings meant many fewer consumers made trips to the shops. October marked the first full month of higher energy bills for many families after the price cap rose 26%, reducing household discretionary spending.” ¹⁷

Helen Dickinson OBE, Chief Executive of the British Retail Consortium

While overall interactions are down from November 2021, the preference for in-store shopping increases with age, as it did last year. For example:

69% of Boomers, aged 57–75 years old (73% in November 2021) say their level of in-store interactions is high today compared to only 45% of Gen Z, those aged 18–24 (53% in November 2021)
In the longer term, post-cost-of-living crisis, 62% of Boomers expect their in-store interactions to be high (76% in November 2021) versus just 48% of Gen Z shoppers (66% in November 2021) (see Figure 7).

_{¹⁷ British Retail Consortium, “Footfall stumbles in October,” November 2022.}

Figure 7. Consumers’ preference for in-store shopping increases with age and online shopping decreases with age

_{^{Source: Capgemini Research Institute, Consumer demand survey, October–November 2022, N=11,300 consumers; 992 Gen Z consumers, 3,264 Millennial consumers, 3,332 Gen X consumers, 3,712 Boomer consumers. Note: Question asked was "Please indicate your frequency of using physical stores/online channels when shopping with retailers. Please rate on a scale of 1 to 7, where 1=very low interaction and 7=very high interaction."}}

Consumer interaction with online channels has decreased but stabilized in the long term

In our survey conducted in November 2021, 38% of consumers said they had significant interactions with retailers’ online channels and expected to maintain this level of engagement post pandemic. While the share of consumers interacting with retailers’ online channels had come down to 33% in November 2022, the longer term outlook increases back to 38%, suggesting a stabilization of online interactions and overall growth from pre-pandemic times (see Figure 8).

33%

of consumers say they are shopping at online today, compared to 38% a year one

Figure 8. Consumers expect their interactions with online stores to stabilize in the long term

_{^{Source: Capgemini Research Institute, Consumer demand survey, October–November 2022, N=11,300 consumers; Capgemini Research Institute,}}_{^{What matters to today’s consumer}}_{^{, January 2022; Capgemini Research Institute,}}_{^{The great consumer reset: COVID-19 and the consumer products and retail consumer}}_{^{, November 2020. Note: Question asked was "Please indicate your frequency of using online channels when shopping with retailers. Please rate on a scale of 1 to 7, where 1=very low interaction and 7=very high interaction." Post-pandemic refers to when consumers were asked in November 2021 of their expectations for online interactions during the post-pandemic period, i.e., at some point in the future when they believe the pandemic was over.}}

As last year, among the generation segments, Millennial shoppers (aged 25‒40) show the strongest preference for online interactions (40% today and 47% post-cost-of-living crisis). Gen Z shoppers are at 32% today and 42% post-cost-of-living crisis, and Boomer shoppers have only a limited preference for online today (25%) and post-cost-of-living crisis (29%) (see Figure 7). Of shoppers with children, 41% prefer online shopping interactions compared to 29% of shoppers without children, increasing to 47% and 34%, respectively, in the longer term.

Our research last year revealed that consumers are spreading their purchases across physical and online channels. This is also the case this year. In November 2021, 57% of grocery shoppers said they go to the store to purchase the bulk of their groceries, supplementing this with small online orders as required. In our November 2022 survey, a similar percentage of consumers (56%) say the same.

A large share of consumers is spending less on groceries

We asked consumers how their current weekly spending on groceries compares to before the rise in the cost of living. Around 40% of consumers in our current survey say they are spending less on groceries across all three channels, with a notable increase from November 2021 for online delivery at home and curbside pickup channels (see Figure 9).

Figure 9. More consumers are spending less on groceries than before the pandemic

^{Source: Capgemini Research Institute, Consumer demand survey, October–November 2022, N=11,300 consumers; Capgemini Research Institute, What matters to today’s consumer, January 2022.}