S.H.O.P.: Making a Habit of it

Welcome to S.H.O.P., our series examining the changes in retail and commerce. Over the course of four weeks, we’re exploring some of the key topics around the past, present, and future of retail, looking at the technologies and behaviors that have enabled – and transformed – shopping as we know it.

This week, we’re looking at how consumers’ shopping Habits have changed. On the podcast, Dee talks to Loren Padelford (Shopify Plus), Michelle Curtin (Head of Personal Shopping at Brown Thomas), and Colin Harmon (founder of 3fe Coffee) about the social changes that are driving new trends across the sector. Listen below, and read on for Anna’s companion post.

Last week, we explored how physical retail environments are changing in the wake of ecommerce, and how businesses need to adapt to these new ways of shopping – or risk extinction.

However, it’s not just the physical spaces that are changing; consumer habits and behaviors have been undergoing a major metamorphosis over the past few years too.

Some of these changes in behavior have been massively accelerated by the pandemic, which has seen many consumers pivot to new ways of shopping. Confined to their homes, people have been experimenting with buying things online that they wouldn’t normally purchase online: for example, one study found that in the UK, the number of people doing a weekly grocery shop online has doubled since the start of COVID-19, with the number of over-55s grocery shopping online tripling from 8% to almost a quarter.

As we saw last week, however, many of these emerging new shopping habits were already starting to form long before the pandemic, thanks to the rising influence of SaaS and B2B on retail. So while these shifts in consumer behaviors may be expedited by current circumstances, many unexpected industries were already exploring how to adopt B2B strategies for B2C – without losing the personal customer relationships that are at the core of their businesses.

Learning from B2B

For Colin Harmon, owner of the award-winning coffee shop 3fe, those personal customer relationships have been the cornerstone of his career. Indeed, it was seeing Harmon develop these personal relationships with his frequent customers that inspired Intercom’s founders to develop a tool for internet businesses to get closer to their own customers.

“There’s a sense of interaction and making and doing and having; I suppose a sense of purpose,” Harmon explains. He describes how working in the coffee shop facilitated this by fostering ongoing relationships with habitual customers:

“What you’d see is that [someone] will come in and buy a bag of coffee, and they’ll be back on that same day the following week, and you’ll catch up and say, ‘How did your kids get on with the swimming lessons?’ or ‘Did you get that job?’ And that interaction would continue every week as they come back and buy a cup of coffee or a bag of beans. You become very much a part of people’s lives, and coffee is a catalyst for these social experiences.”

As the most habit-forming bean – and the unofficial drink of networking, catch ups, and awkward first dates – it’s perhaps no surprise that coffee fuels these types of repeat interactions and conversations. But it’s not intrinsic to the product – rather, it’s baked into 3fe’s business model.

“Subscription services have been steadily on the rise for years now. Consumers have been paying monthly for their music, favorite shows, and even their daily meditation – so why not their coffee?”

Harmon knows that it’s not just about the perfect flat white. “We don’t really sell coffee,” he says. “We sell social experiences.” Keeping that going during a time of social distancing might seem like a challenge, but Harmon and team have already been building the infrastructure they need to continue offering those social experiences for years – via personalized subscription services.

Subscription services have been steadily on the rise for years now. Consumers have been paying monthly for their music, favorite shows, and even their daily meditation – so why not their coffee?

3fe was one of the first Irish coffee shops to offer their coffee beans this way. For Harmon, it was a way of making that personal, bespoke service scaleable, and allowing him to expand beyond Dublin. The social element, he says, “can be in coffee shops, but it’s also an online experience now as well.” He notes:

“People look forward to getting that bag of coffee in the post. It’s a ritual. We have customers that have been subscribers for six or seven years now, and they love that feeling every week when it comes. So it’s quite a personal experience, despite how people would usually interpret internet sales.”

The rise of subscription services

Once the domain of utilities, phone bills, and cable TV, the subscription model gradually expanded into consumer-grade software with the rise of SaaS. Now, it’s practically the default for software: in 2018, Gartner predicted that by 2020, all new software entrants and 80% of historical vendors would offer subscription-based business models. What they didn’t anticipate, however, was just how many non-software entrants and vendors would be doing the same.

Just as enterprise SaaS changed the software industry in all sorts of ways, the advent of the non-software consumer subscription model has had all sorts of repercussions for how we relate with brands and products. Now, you can buy almost anything as a subscription service, from household essentials (like coffee) to, essentially, your household itself (like leasing IKEA furniture).

“Just as enterprise SaaS changed the software industry in all sorts of ways, the advent of the non-software consumer subscription model has had all sorts of repercussions for how we relate with brands and products”

For analyst Ben Evans, it’s not about where things are being sold, or even what is being sold, but how it’s being sold:

“You could always tell yourself that sure, people would buy that other industry’s product online, but not yours. I think we all now understand that anyone will buy anything online, given the right experience, and if your retail model is based on being an end-point to a logistics chain then you have an existential problem.”

The right experience

What does that “right experience” look like? For many consumers, it takes the form of a subscription model.

Des Traynor, our Chief Strategy Officer and Co-founder, explains the far-reaching implications of the shift to subscriptions:

“This shift moves us from brand promiscuity to brand loyalty. This idea that you now pick one razor blade manufacturer and you’re done. You never choose razor blades again. We go from chaotic revenue that we can’t easily predict to predictable revenue because we know that they’re going to keep coming back. It enables a world of ‘try before you buy’ instead of the old world, where you buy the product and then find out if it’s any good – ‘buy before you try.’ It turns a previously complex sales process into a simple sales process with self-serve sign-up.”

Subscription models are innately customer-centric. With subscription models, consumers aren’t locked into lengthy contracts, giving them more control and flexibility – and putting the onus on businesses to keep delivering value for them. Because, to put it bluntly: if they don’t consistently deliver great experiences, customers will churn.

“With subscription models, consumers aren’t locked into lengthy contracts, giving them more control and flexibility – and putting the onus on businesses to keep delivering value for them”

As Tien Tzuo, founder and CEO of Zuora, so succinctly puts it in his book Subscribed: Why the Subscription Model Will Be Your Company’s Future – and What to Do About It:

“We have new expectations as consumers. We prefer outcomes over ownership. We prefer customization, not standardization. And we want constant improvement, not planned obsolescence. We want a new way to engage with business. We want services, not products.”

Ultimately, what the subscription model promotes is a new way of thinking for both consumers and companies, one that encourages both parties to think beyond fleeting, once-off transactions and invest in longer term, ongoing, personalized relationships.

This time, it’s personal

In this respect, it’s worth taking a cue from other existing, relationship-based B2C models to inform what our new habits might look like going forward – as well as how they can be optimized for digital platforms.

It goes without saying that personal shopping is an industry that is heavily reliant on, well, the personal connection. But how can that connection be maintained?

“Personal shopping is very intimate,” says Michelle Curtin, the Head of Personal Shopping for Women’s Wear in Brown Thomas, a luxury retail store in Dublin. “I’ve known some of my clients for 15 years at this stage. So you really do care about them.”

For Curtin and her clients, shopping is so much more than just a transaction. “Shopping for a lot of people is a part of their identity,” she says. “It makes you feel powerful. You have that experience of coming into a store, meeting with experts, really enjoying that element of it.”

“Personal shopping is very intimate. I’ve known some of my clients for 15 years at this stage. So you really do care about them”

Pre-pandemic, Curtin worked out of Brown Thomas’ luxurious personal shopping rooms, which, she says, added to the overall experience. So how has she transitioned from such a sensory, in-person experience to the digital realm? First and foremost, Curtin emphasizes maintaining the personal relationship, using phone calls to check in on her clients and see how they’ve been doing during these difficult times. From there, she tries to replicate as much of the familiar experience as possible.

“Essentially, I would prep a room in the same way that I would if you were physically walking into that room,” Curtin says. “I use a camera and tripod, and it’s almost like presenting a TV program in many ways.” While the client can’t try on the products in real time, she’s able to talk them through it and offer styling suggestions in that initial call, before sending out the chosen products to them afterwards.

Forming new habits

Curtin’s approach works so well because, as with 3fe, the foundational infrastructure is already in place. While the tactile elements of the shopping experience may be missing, in its absence the other key benefits – the bespokeness, the personalization, the sense of an ongoing relationship with someone who gets you – are only brought further to the fore.

As Des says, looking at consumer behavior through this lens changes a lot: “how we think about marketing, how we think about what our product is, and how we think about what customer success actually is.”

Just like coffee is about more than coffee, shopping is never just about buying an item. The changes in our shopping habits and behaviors aren’t a reflection of some new and surprising truth; instead, they reveal what consumers have been wanting all along.

In our next episode, we’ll be looking at the companies that have been facilitating these new Online ways of shopping by supporting businesses and consumers from purchase to delivery. Did you miss last week’s episode looking at the history of the Store? Listen back here.

Original artwork for this series was created by self-taught artist/illustrator Elijah Anderson. You can find out more about his work here.