New consumption patterns: towards a reinvented retail?

Consumption patterns have drastically changed. Companies that respond with innovative solutions are thriving.

Subscriptions and recurring purchases were already gaining momentum before the COVID-19 pandemic, but the health crisis has only accelerated this trend. Indeed, the subscription economy is exploding.

Consumers were becoming more environmentally conscious, and this trend has been reinforced by the health crisis.

Furthermore, the rise of e-commerce is fostering new consumption patterns.

How are retailers adapting to these new consumption patterns?

The rise of the second-hand market

The second-hand market is doing more than well, given consumers' financial concerns and budget consciousness.

Additionally, environmental considerations increasingly influence second-hand purchasing decisions. Indeed, 51% of American consumers consider sustainability important, while this figure rises to 61% in the United Kingdom.

France follows the trend

In France, the trend follows the same curves. In 2019, 39% of French people bought at least one second-hand clothing item or fashion accessory, and 48% of consumers plan to buy more in 2020***.

Pure players dominate the sector

The rise of this new market has given birth to pure players in the sector, and their growth is impressive.

Vinted, the second-hand fashion platform between individuals valued at 1 billion euros, represents 700 to 800 million euros in annual transaction volumes in France.

Since April 2020, luxury resale companies Fashionphile, Rebag, Vestiaire Collective, and The Luxury Closet have attracted more than $134 million in total investments****.

Major brands are joining in

While this market initially escaped major retail brands, they are now beginning to take interest:

• Walmart has launched a dedicated website offering customers approximately 750,000 used items
• Gap and JCPenney are following suit

The second-hand market is not limited to clothing. IKEA, for example, plans to open a second-hand store this year that will offer repaired and restored IKEA products as part of its efforts to evolve toward a circular economy model.

On the consumer side, millennials represent 33% of second-hand buyers.

Purchasing behaviors are evolving toward more ethical and sustainable product choices, reflecting consumers' preferences for responsible and ecological consumption.

Digitalization of customer relations in the subscription economy

Digital transformation strongly impacts the retail sector, particularly within the subscription economy framework.

With the advent of e-commerce and digital channels, retailers now have new levers to improve customer experience.

Digitalization offers the opportunity to adopt an omnichannel approach, thus enriching customer relations through different points of sale and communication channels.

CRM at the heart of strategy

CRM (Customer Relationship Management) plays a key role in customer knowledge, enabling companies to offer personalized offerings.

Customer satisfaction becomes an essential indicator, measured and improved through data collected via digital customer journeys.

Loyalty programs are also evolving, offering a more personalized relationship with each customer.

Subscription as an experience vector

Furthermore, subscription allows retailers to offer customers a coherent digital and multichannel experience, integrating:

• Private sales
• Exclusive offers
• An optimized purchasing journey

This omnichannel marketing strategy aims to improve customer experience, while strengthening loyalty and increasing customer satisfaction.

In this context, prospects become central actors in customer relationship management, offering companies the opportunity to transform prospects into loyal and engaged customers.

The digitalization of customer journeys thus becomes a major asset for companies wishing to enrich their relationship with consumers and offer personalized and digital experiences.

Optimizing customer experience in new consumption patterns

In new consumption patterns, particular attention is paid to customer experience.

The omnichannel and multichannel approach places the customer at the center, thus enriching the customer journey through various touchpoints.

Companies collect customer data to personalize customer relations and precisely meet their expectations.

Continuous experience improvement

This act of continuous improvement of customer experience includes using digital channels to offer an enriched and personalized shopping experience.

Relational programs and customer marketing target new customers and seek to improve customer knowledge for more effective segmentation.

By adopting these principles, companies can place customers at the center of their strategy to adapt to new consumption patterns.

Rental is gaining ground

Renting rather than buying: today, consumers no longer define themselves by what they own, but they prioritize the experience they can have through using a product.

Always seeking flexible solutions, they expect brands to provide quick and economical solutions that free them from constraints and adapt perfectly to their lifestyle.

For several years now, rental has no longer been reserved for real estate or cars; it extends to many everyday items.

The American market leads the way

Clothing rental is already well established in consumer habits across the Atlantic:

• American Eagle
• Urban Outfitters
• Ann Taylor
• Banana Republic

These brands have been present in this niche for several years.

French innovation in rental

In France, the clothing rental market is still in its infancy. However, offering this new consumption mode is also a way for major brands to innovate.

Le Grand Dressing offers men the opportunity to renew their wardrobe once a month, in a completely personalized way, starting from 39.90 euros per month.

Rental for children: a promising market

Rental is an interesting consumption mode for parents of young children. Why burden yourself with purchasing clothes, toys, and accessories when children grow quickly?

Rental of children's items offers a practical and economical alternative for parents who are environmentally conscious and seeking flexible solutions.

Petite Marelle, for example, offers parents the opportunity to rent educational toys for 3 to 6 months. At the end of the rental period, parents can either buy the toys or return them. They are then repaired and refurbished to give them a second life.

Adapting to nomadic lifestyles

Rental is also a response to adapt to consumer lifestyles, which are increasingly mobile.

Furniture rental, for example, is a flexible and economical alternative to purchasing for people who don't want to invest thousands of euros in buying furniture that won't be able to adapt to their increasingly nomadic lifestyle.

Liberation from ownership constraints

Rental is also a way to free customers from constraints related to ownership in other areas of daily life.

This is the case with sports equipment rental, which allows customers to free themselves from constraints such as:

• Repairs
• Maintenance
• Storage

This is also the promise of Decathlon Rent, the long-term bike rental program with no commitment.

The sharing economy and flexible shopping habits, such as online purchases and rental, align with current consumption trends, favoring responsible and thoughtful purchasing practices.

Subscription seduces retail

Furthermore, 87% of retail leaders surveyed have seen an annual increase in their revenue thanks to subscription programs, with 17% reporting that these programs' contribution to revenue has "increased significantly," meaning by more than 50%.

Acceleration due to the health crisis

The health crisis has accelerated changes in consumer behavior: in a context of uncertainty, consumers prioritize flexible, economical solutions that don't require significant commitment.

Gradually, subscription is transforming the entire retail sector.

Response to consumer needs

The subscription model responds to several consumer needs:

• Speed
• Ease
• Security
• Personalization

Subscription becomes a way for retailers to transform their relationship with customers and generate recurring and predictable revenue. It's also a way to establish a solid relationship with the most loyal customers.

Distribution giants are joining in

It's not surprising that major distribution names are launching subscriptions to build customer loyalty online and in stores. This is notably the case with Walmart, which just launched its new competitive membership program Walmart+.

However, thanks to e-commerce and digital technology, these principles can be applied to both major brands and startups. The key is finding ways to meet these new consumer expectations, no matter where they are, even if it's at home.

E-commerce and subscription-based consumption patterns illustrate a transformation in ethical consumption practices, where consumers increasingly favor ecological purchases and sustainable consumption.

The impact of new trends on consumption patterns

Consumer purchasing behaviors are constantly evolving, influenced by marked preferences for more responsible and sustainable product choices.

Personalization of customer relations

To meet customer expectations, it is crucial that each customer must feel unique, which requires a personalized and effective customer relationship strategy.

These changes reflect a global awareness, where shopping habits are increasingly oriented toward ethical purchases and sustainable consumption.

The sharing economy in full expansion

The sharing economy and online purchases facilitated by e-commerce have become central aspects of responsible purchasing practices.

Many consumers now adopt ethical consumption practices, favoring ecological and thoughtful purchases. This trend toward responsible consumption is a clear indicator of current consumption trends.

Omnichannel experience optimization

Customer experience improvement involves relationship optimization, taking into account the voice of the customer to enrich the relationship and offer a unique customer experience.

In an omnichannel context, customer interaction through different channels allows to transform customer experience and strengthen brand image.

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Sources:

() thredUP () GDS, May 2020 () French Fashion Institute (IFM) (****) Glossy (*) thredUp (**) NAPCO Research and Ordergroove