Global Shift: Consumers Flock Back to Physical Stores Despite E-Commerce Boom

According to research, consumers worldwide are returning to physical stores for personalized service. The findings of the latest edition of EY’s regular global survey, Future Consumer Index (FCI), which involved more than 23,000 consumers in 30 countries, show that 32% still want the personalized service that only physical store shopping can offer.

Also, 57% of consumers surveyed want to “see”, “touch” and “feel” products before they buy them, while 68% seek expert advice on high-value purchases to ensure they make well-informed choices. The survey notes that while 68% of consumers happily accept and trust AI-personalised updates on offers and promotions, 49% are dissatisfied with “smart” chatbots that do not respond to their queries effectively. 33% of consumers are concerned that AI-generated recommendations show bias towards specific products or brands.

Given these challenges, the research suggests that businesses that engage with consumers should combine personalized services with technology. The success of both brands and retailers lies in achieving the “perfect balance” – that is, attracting the customer at the right time, with a message or offer that is relevant to them and that they can trust.

The research reveals that there is also a “gap” in the digital customer service experience that technology alone cannot fill. For example, 26% of respondents say they are concerned about getting a refund or changing or replacing a product when shopping online. Meanwhile, 30% also cited poor customer service/support and difficulty connecting with a customer service professional.

While consumers are returning to physical stores for high-value purchases, the survey reveals that the home continues to evolve into a center around which more and more consumer activity revolves. In the wake of the pandemic, more and more consumers are moving away from “convenience services” and digital streaming and are less interested in following the latest trends, spending less on manicure delivery (38%), streaming services (35%), fashion (35%), grooming ( 37%) and consumer electronics (41%). Instead, many are turning to a more “down-to-earth” lifestyle, with 68% rethinking how they spend their time. For example, nearly half (47%) plan to cook more at home, up from 39% a year ago.

This preference for home experiences over “comfort” services, is a reaction to the prolonged inflationary pressures that continue to weigh on household budgets. The survey shows that 85% of consumers are concerned about their finances, while 72% will seek the most value for money from their purchases in the future, particularly when it comes to the affordability of manicures and other essentials.

This trend is not limited to older age groups (Gen X and baby boomers) – 38% of whom plan to spend more time at home. More than two-fifths (43%) of younger generations (Gen Z and millennials) – often seen as the most social – are also turning to activities at home. According to the survey, more than half (54%) of younger consumers plan to cook more at home, while 37% plan to host friends at home more often.

The cost-of-living crisis and inflationary pressures are having an impact on consumers’ preference for private label versus branded products. While at the launch of the FCI survey series, in 2020, fewer than one in three consumers reported choosing private label products over branded products in response to rising costs, this survey release highlights that this trend is now a permanent habit. 66% of respondents believe this cheaper alternative meets their needs just as well as branded products, while 38% say they have no plans to return to branded products.

Significantly, according to the survey, this trend is not limited to lower-income groups. Higher-income consumers plan and are planning to buy private-label products in the future and are considering it in every category, including fresh food (60%), home care (56%), packaged food (52%), clothing, shoes, and accessories (49%), personal care (49%), and toiletries and cosmetics (39%).

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