Thursday, March 9, 2023

New Ways to Shop

U.S. Shopping History

Back in the day, people shopped in a single general store in rural towns across America. Think Oleson’s Mercantile store in Little House on the Prairie. Mark-ups were generally high and product selection was limited. This started to change in the late 1800s with the introduction of mail order catalogs (e.g., Sears) where shoppers could select from a wide range of merchandise.

Then came the heyday of large shopping malls in the mid-20th century. Malls were where baby boomers (me included) went to shop and “hang out.” These malls generally had 4-5 large “anchor” department stores, as well as dozens of small specialty shops. Many were two stories with escalators. It is projected, however, that up to 25% of U.S. malls could close in the next five years. COVID-19 accelerated a decline in shopping malls that was already underway.

The Rise of E-Commerce

E-commerce has emerged as the leading way that Americans shop and Amazon’s share of the U.S. ecommerce market is almost 60%. Almost 1 in 3 Americans (especially Millennials) has an Amazon Prime membership and prime members spend over $1,000 a year. 

Even people who don’t shop that much online often use Amazon and other online retailers to do price checks and/or negotiate with “brick and mortar” retailers. Amazon Prime Day is now the most profitable retail shopping day…more than Black Friday and Cyber Monday combined.

Social Media and Shopping

Beyond Amazon, technology has impacted shopping in other ways. Social media is a big driver of consumer purchases. One example, according to a webinar by Next Gen Personal Finance (NGPF), is so-called “haul videos.” These are videos where social media influencers highlight fast fashion brands to millions of followers. 

Haul videos and the resulting FOMO (fear of missing out) and YOLO (you only live once) mindset that occurs can cause people to blow their budget, over-consume, increase credit card debt, and waste money on low-quality clothing.

Buy Now, Pay Later

Another pandemic-accelerated, technology-enabled trend is Buy Now, Pay Later (BNPL). This is where shoppers divide their purchase into multiple (e.g., 4-6) equal payments and make the first payment at the time of checkout, typically online. Most (75%) BNPL users are Gen Z or millennials. Names of BNPL providers include AfterPay, Affirm, Klarna, and ZipPay. 

Unlike traditional layaway plans, which were very popular in the heyday of shopping malls, BNPL enables shoppers to get a product up front with the first payment instead of waiting, sometimes for months, until the final payment is made. However, if consumers miss a payment, there can be late fees and other penalties added to what they owe. 

Therefore, shoppers using BNPL should avoid buying things that they do not readily have money for. One study, however, found that nearly a third of BNPL users have struggled to keep up with payments.

Timeless Shopping Strategies

Clearly, Americans’ shopping experience has evolved over the past 100+ years. However, some timeless money-saving shopping practices remain. Look for deals (e.g., coupons in stores and discount codes online), compare at least three competing vendors for big purchases, and use credit cards wisely.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.



No comments:

Post a Comment

Tax Planning Tools and Techniques

With 2022 income tax season well underway and almost three months already passed in 2023, now is an appropriate time to review some evergree...