Value creation in post-pandemic retailing: a conceptual framework and implications

At the beginning of the Covid-19 pandemic, consumers faced a globally spreading, novel virus that seemed uncontrollable and was associated with severe disease course and death. This challenged consumers’ safety needs (Maslow 1943) and motivated changes in consumer behavior primarily pertaining to the area of health (Campbell et al. 2020; Galoni et al. 2020). In line with regulatory focus theory (Higgins 1997), health behaviors motivated by a prevention focus aimed at avoiding a Covid-19 infection, whereas behaviors motivated by a promotion focus reflected consumers’ desire to stay healthy or sustain and improve their overall physical and mental health.

Love and belonging needs pertain to humans’ genetically programmed social nature to be in the company of and relate with others (Csikszentmihalyi 2000). Social distancing guidelines challenged this need for connectedness as governments temporarily shut down public spaces and facilities that usually offered consumers the opportunity for social encounters, such as parks, stores, bars, restaurants, theaters, or gyms (Brocato et al. 2015; Csikszentmihalyi 2000). Following official “stay-at-home” orders, many consumers practiced self-isolation and minimized their physical social contact (Galoni et al. 2020). Working from home and the closure of schools and universities also lowered the connectedness with co-workers and fellow students and changed individuals’ organizational identification (Ashforth 2020). Accordingly, pandemic consumer behaviors of connectedness were partly motivated by prevention-focused strategies of avoiding or postponing offline interactions, such as staying at home and replacing physical with online interactions. At the same time, consumers sought physical connections and engaged in behaviors driven by promotion-based motivations, such as seeking meaning in the few remaining physical encounters in their immediate environment.

Esteem needs comprise the desire to positively evaluate oneself, to view oneself as worthwhile, and to seek esteem from other people (Maslow 1943). Central to fulfilling esteem needs are experiences of achievement, competence, accomplishment, social reputation, recognition, or appreciation (Crocker and Park 2004; Leary and Downs 1995). Limiting the opportunities to experience self-esteem through mastery in sports, education, and culture, the pandemic challenged the realization of a positive self. Likewise, through the requirements of social distancing, the pandemic prevented various forms of social recognition and appraisal and, for example, limited the opportunities to buy and display status or luxury goods that typically serve esteem needs (Csikszentmihalyi 2000). Consumers driven by a prevention-based motivation sought to avoid negative states through, for instance, purchasing home entertainment products, movies, and games for distraction. In contrast, consumers driven by a promotion-based motivation actively sought experiences that would enhance their self-esteem, such as learning or improving skills or hobbies to experience feelings of mastery (Campbell et al. 2020).

Self-actualization refers to consumers’ desire for self-fulfillment and for realizing one’s full potential (Maslow 1943). It describes individuals’ motivation to achieve personal growth and advanced self-development, create a meaningful life, and assume personal responsibility (Beaumont 2009; Lefrançois et al. 1997). In its traditional view, self-actualization also entails notions of self-transcendence, which include non-self-referent motivations, such as service to others or dedication to a higher cause like environmentalism (Koltko-Rivera 2006). Hence, self-actualization motivates socially conscious consumer behavior that benefits society at large, as it can motivate actions that satisfy both others’ and the individual’s own needs (Brooker 1976). Therefore, self-actualization can drive consumers’ value-based consumption practices. In line with this notion, we propose that consumers’ value-based consumption during the pandemic comprised promotion-based motivations, such as engagement in sustainable consumption, and prevention-based motivations, such as avoiding overconsumption and waste.

To address the value-creation dimension of hyperfunctional shopping, retailers need to create next-level functional shopping experiences, both offline and online. To meet customers’ needs for time-efficient and convenient, effortless shopping, stationary retailers can make use of new technologies (Dekimpe et al. 2020), such as autonomous shopping systems like Amazon Go’s cashier-free shopping or Whole Foods’s pick-up stations, where customers order groceries online and later collect them in-store (de Bellis and Johar 2020; Valinsky 2020). Similarly, retailers can leverage technology so customers can delegate stages of the customer journey (Hoyer et al. 2020; Reinartz et al. 2019). Examples include voice-based ordering (e.g., Amazon’s Alexa) and smart devices that order products automatically, such as smart fridges. While these developments were already evident in pre-pandemic times, the pandemic has fundamentally accelerated consumers’ adoption of such technologies, which is also reflected by the growth of touchless commercial interactions during the pandemic (Scates 2020). In line with this, the global e-commerce transaction value made through voice assistants is forecasted to rise tremendously from $4.6 billion in 2021 to $19.4 billion in 2023 (Juniper Research 2021). Consequently, retailers face the challenge of balancing the advantages of technology with the dangers of alienation for both customers and employees (Bolton et al. 2018).

In addition to considering consumers’ reliance on technology, retailers should reassess their store concepts to foster functional offline shopping experiences. In particular, retailers can make shopping more efficient by establishing functional shopping zones as store-in-store concepts. For instance, the German drugstore chain dm grouped all men’s products in a dedicated and differently designed area, allowing male customers to buy all products they need in one place (RetailAnalysis 2019). Catering to consumers’ increased interest in hyperfunctional shopping that emerged from the pandemic, grocery retailers can group the most frequently purchased products in a separate “kiosk zone” near the entrance for immediate purchases. To facilitate functional experiences online, retailers should anticipate the needs of their first-time users. For instance, the grocery delivery provider Instacart initiated a “senior support service” to support older first-time customers in placing their online orders (Boyle 2021).

With their brick-and-mortar stores, supply chains, and consumer data, retailers are in a preferred position to create holistic health customer experiences, especially in the field of health prevention. As such, a recent survey by Deloitte with 16,000 European respondents indicated that 44–51% of consumers generally feel comfortable having health interventions like sight or hearing tests and measurements of blood pressure, glucose, or cholesterol carried out in nonclinical retail settings (Hop et al. 2023). Likewise, a growing number of US retailers like Walmart, Target, and Amazon have increased their investments to integrate healthcare products or services into their retail spaces (Monteros 2022). In light of these developments, retailers are advised to define their role and invent novel offers to deliver holistic health experiences in the future. For instance, the American supermarket chain Hy-Vee offers individual nutrition counseling in their stores and online (Douglas Moran 2021). In a similar way, DIY stores could offer services preventing common home improvement injuries, and grocery retailers could analyze customers’ purchases and provide a health index of their shopping cart at the checkout or through an online platform. Focusing on employees’ mental health, Starbucks offers employees free subscriptions to a meditation app and free therapy sessions (Umoh 2020). Retailers could engage in similar practices that turn shopping into a positive mental health experience for their customers, such as providing chillout zones in garden centers, offering yoga classes during lunch breaks, or organizing meetups that also strengthen the local community. Examples include the UK-based supermarket chain Waitrose, which offers in-store yoga classes to account for the target group’s increasing interest in wellness (Pijak 2018), and the UK-based shopping centre:mk Milton Keynes, which recently invested in a zen-style chillout area to provide relaxation for stressed consumers (Murrer 2023). With the pandemic leading to a heightened appreciation for health and self-care, consumers will likely prefer retailers who accomplish to deliver experiences that appeal to customers’ health and well-being in post-pandemic times. While retailers that have provided health-related services during the pandemic, such as having test centers or offering vaccinations on-premise, might have particularly positioned themselves as suitable for providing health experiences to their customers, the challenge is to determine which healthcare offerings consumers will value in post-pandemic times. For example, it seems intuitive or reasonable that grocery retailers might venture into offering nutrition advice at their retail locations or providing consumers with a health index of their shopping basket; however, such health interventions might backfire as not all consumers want to be confronted with their dietary habits. Accordingly, it is important for retailers to carefully select those types of interventions that match their target group’s needs, the type of retail space in terms of the available floor space and potential visibility or consumer privacy concerns, and the retailing context itself.

Our examination suggests that retailers should deliver inspirational and social-interactive benefits to create advanced hedonic offline and online customer experiences. While inspirational benefits relate to marketing activities that stimulate ideas within customers, which then transform into consumption-related goals (Böttger et al. 2017), social-interactive benefits relate to the conscious inclusion of “social others” in the customer journey (Hamilton et al. 2021). A conceivable approach to providing inspirational benefits in both on- and offline retail environments is the reliance on technology, such as augmented reality (AR) or virtual reality (VR) (Heller et al. 2019; Hoyer et al. 2020; Schmitt 2019). For instance, the cosmetics retailer Douglas offers an app to virtually try out products, such as lipsticks and makeup, at home but has also installed “AR Beauty Mirrors” in its physical outlets to enable a COVID-conforming way of testing these products in-store before purchasing them (Douglas 2021; Rondinella 2019). Similarly, the fashion retailer American Eagle introduced a new VR jeans guide on Snapchat that allows customers to assess the fit of the pants from a three-dimensional perspective (Nix 2021). Employing such technologies might significantly foster multisensory product imagination in online retail environments and facilitate mental product simulation as well as shopping inspiration both offline and online. Indeed, previous research underscores the role of AR/VR in enhancing customer experiences (Wedel et al. 2020).

Retailers can further deliver inspirational benefits by rethinking the design of physical and online retail environments as well as the design of product presentations. Some retailers have already initiated corresponding plans. For instance, in its Munich flagship bookstore, the German book retailer Hugendubel appeals to customers not by presenting books in established categories, such as travel, cooking, and religion, but by organizing the entire store layout around larger themes, such as “live and enjoy” or “window to the world,” where India travel guides are placed next to books about Indian cuisine and Hinduism (Sieg 2019). Furthermore, to engage their online customers, retailers should leverage new possibilities of video content (Heller et al. 2019; Hoyer et al. 2020; Huyghe et al. 2017; Li et al. 2020). For example, Home Depot inspires its customers to start DIY projects through online tutorial videos (http://​videos.​homedepot.​com), describing activities such as how to lay floor tiles or how to prepare walls for painting. A relatively new format that links online live streaming with e-commerce is referred to as “live commerce” (Arora et al. 2021). For instance, Walmart live-streamed events with famous TikTok creators presenting their favorite beauty products, and users could buy these products directly from Walmart (Perez 2021). This also serves as an example of the importance of collaborations between retailers and external partners. Replacing offline shopping experiences, live commerce usage has grown by 76% during the pandemic and bears the potential of becoming a source for hedonic customer experiences in the new normal (Statista 2021b).

Retailers can provide social-interactive benefits by creating community experiences that integrate and engage others in social customer journeys. The US supermarket chain Giant, for example, offered free virtual cooking classes “to bring the family together around the table” during the pandemic (Browne 2021). Similarly, offering social-interactive benefits during the pandemic, a German grocery retailer combined shopping with dating, encouraging singles to go shopping on Friday evenings (Bobillo 2021). As an illustration of how retailers can engage in online community-building, the home décor boutique The Feathered Farmhouse activates its online community by initiating a “What’d Ya Do With It? Wednesdays!” series on Instagram (https://​www.​instagram.​com/​thefeatheredfarm​house). Customers share pictures of Feathered Farmhouse products in their homes and inspire other customers’ home decoration. Likewise, to foster social-interactive experiences across on- and offline channels and create a hybrid connectedness, Levi’s encourages customers to use an online co-watching video app in-store to virtually shop with friends (Papagiannis 2020).

Since consumers increasingly value responsible consumption, retailers have to find ways to integrate responsibility as a new facet of customer experience. Two plausible ways are through responsible store concepts and responsible processes.

The first way creates responsible consumption experiences that depend on new store and assortment concepts built around responsibility. The German grocery retailer REWE, for instance, recently launched a Green Farming Market, housed in an ecologically friendly building, that offers on-premises grown herbs and fish and a local and organic product assortment with market stands where local producers sell their products. Shoppers have access to digital services, such as self-service checkout and pick-up services (Wendorf 2021). This approach illustrates how retailers can combine hedonic and functional customer experiences with responsible consumption. A more extreme example is the Berlin-based department store B-Wa(h)renhaus, which made recycling its core strategy. Its nine vendors offer only recycled and upcycled products—from furniture and clothing to electrical appliances (Broom 2020). More recently, the German outdoor retailer Globetrotter not only launched its first secondhand collection Re:mix 001 but also opened its first Re:Think Store, a store concept that is committed to the continued use of the previous tenant’s inventory, repairing or renting products, promoting secondhand equipment, and community-building through workshops and talks (Ersch-Arnolds 2023a, 2023b). These examples illustrate how retailers can promote and motivate customers to repair and reuse products instead of throwing them away—thereby not only fostering more sustainable consumption habits but also building communities of like-minded customers. Clearly, the pandemic did not initiate the transformation toward responsible consumption; however, it acted as a catalyst that tremendously accelerated consumers’ awareness and engagement with responsibility and sustainability.

A second way retailers can drive responsible consumption is through advanced retail operations, such as reducing packaging waste through sustainable packaging materials, offering refill stations, and experimenting with package-free products. For example, since mid-2023, the German grocery retailer REWE no longer distributes printed flyers but uses alternative channels for its product promotions, thus saving 73,000 tons of paper (REWE 2022). Retailers can also rely on “green IT,” which comprises algorithms that reduce servers’ energy consumption (Murugesan 2008), and, together with their logistics partners, foster green delivery. On the product level, retailers can address consumers’ heightened interest in responsibility by making sustainability information available and facilitating search behaviors based on sustainability criteria (e.g., online filter systems or an offline assortment arrangement). Importantly, retailers who engage in such practices have to find ways to credibly and authentically communicate their responsibility efforts to their customers to avoid suspicions of greenwashing.

While collaborations between retailers, distributors, and manufacturers are nothing new, the pandemic has led to a new form of primarily local collaborations driven by solidarity and support. For example, while in the second quarter of 2020, McDonald’s experienced a drop in sales of almost 25% (McDonald’s 2020a), the discount retailer ALDI was severely understaffed owing to increased demand (McDonald’s 2020b). McDonald’s allowed its employees to work for ALDI, which helped ALDI meet the increased demand, provided consumers with the goods they needed, and compensated McDonald’s employees for pandemic-related pay cuts. This collaboration shows how retailers’ collaborations can increasingly reflect solidarity and corporate citizenship behavior, illustrating the value-creation dimension of hybrid connectedness. Another example of collaboration is that between the European bike retailer Rose Bikes and a travel agency, in which Rose Bikes rented the travel agent’s facilities to open a pop-up store. While such an investment would normally not be profitable, Rose Bikes wanted to “show solidarity with companies that are robbed of their existence by the crisis and support [them] where we can” (Randler 2020). We suggest that retailers establish more collaborations to strengthen their connectedness with the local community in the future. For instance, retailers can rent spaces to new local retailers with a complementary product range, thereby allowing the newcomers to enter the market, extending the product range of established retailers, and providing the local community with an innovative product assortment.

A further form of retailer collaboration is through platforms. For example, Zalando’s Connected Retail program allows local fashion retailers to offer their products on Zalando’s webstore and then ship orders directly to their customers (Zalando 2020). During lockdowns, this platform helped smaller retailers without their own online channels to continue running their businesses. Through this collaboration, Zalando received a broader assortment without extending products in stock, and local retailers gained a new sales channel. By focusing on the value-creation dimensions of hybrid connectedness and responsible consumption, retailers can establish platforms with a focus on local or sustainable products. For example, during the pandemic, physical farmers’ markets set up their own online platforms to make local products available to more customers (Marvar 2021).

The pandemic especially affected the consumption of services that involve a high level of interpersonal interaction or exposure to other customers, such as at restaurants, gyms, or beauty salons. Many consumers replaced the consumption of such services with purchasing suitable products and performing the appropriate services to or by themselves. For example, consumers turned to DIY beauty service applications like hair coloring, manicures, or self-tanning at home, with many consumers likely retaining this new habit even after lockdowns ended (Culliney 2020). In line with this, the UK Beauty & Grooming Report from 2022 shows that 85% of respondents perform DIY beauty treatments at home, with 45% doing facials, 29% shaping eyebrows, and 28% carrying out manicure or pedicure treatments (Attest 2022). The consequences of such a change in consumer behavior are evidenced by projections of McKinsey for the US beauty market, according to which particularly conventional beauty services (e.g., nail care services) are expected to have a slower recovery to pre-pandemic levels than other beauty services (e.g., luxury spas or skin-related services) given the confidence consumers gained in performing these simple conventional services with at-home substitutes during the pandemic (Adams et al. 2022). Other examples demonstrate how the collaboration of a retailer with a technology partner allows new services that facilitate value creation through hyperfunctional shopping. As such, the telecommunication company Vodafone and the German grocery chain REWE developed a self-driving snack mobile so customers no longer need to go to the store because the store comes to them (Hübner 2021). While REWE is responsible for the assortment and logistics, Vodafone provides the technology for navigation and real-time data transfer.

Retailers can exploit consumers’ willingness to replace services through product purchases and thereby address the value-creation dimension of conscious hedonism. To this end, they need to not only offer suitable products but also provide the knowledge required to create hedonic at-home service experiences. To illustrate, Sally Beauty opened its first DIY hair salon in 2023, where consumers not only can buy hair care products of professional quality (e.g., colorings) but are trained by licensed stylist-educators on how to apply these products at home (Canner 2023). Similarly, some retailers already offer the expert knowledge that turns the consumption of products into DIY service experiences (e.g., wine retailers offering wine-tasting kits containing wine, a tasting guide, and a map of wine regions), while others need to collaborate with external partners. As an example, haute cuisine restaurants that offer takeaway menus or “finish at home” kits (West and Henderson 2021) could partner with an interior designer to explain how to set the perfect table and create the right atmosphere for exclusive dining at home. In a similar vein, drugstores could partner with influencers or beauty magazines to explain how to create a home spa day and provide bundles with all products needed. Likewise, to create value through experiences of holistic health, retailers can go beyond carrying health-related products in their assortment and provide health- or wellness-related services through collaborations with partners (Callaghan et al. 2021). For instance, to provide in-store yoga classes or nutritional advice, retailers might have to partner with yoga instructors or dietitians. Other examples of retail-health collaborations include Walmart’s partnership with the insurance company UnitedHealthcare to run “Medicare Member Service Centers” (Walmart 2022) and Kroger’s collaboration with Performance Kitchen to offer medically tailored meals (PharmacyTimes 2023).

Finally, to create value through responsible consumption, retailers can underpin the seriousness of their responsibility intentions through strategic partnerships with independent NGOs. For example, the cooperation between the German food retailer EDEKA and the World Wildlife Fund for Nature (WWF) involves co-branding EDEKA’s private-label products with the WWF seal to signal that these products fulfill specific sustainability standards (WWF 2020). Similarly, the fashion retailer H&M partners with ThredUP’s resale-as-a-service platform to facilitate secondhand sales and to realize its sustainability mission (Edelson 2023).

Clearly, while some of the outlined collaborations might have been a temporary pandemic phenomenon (e.g., that between ALDI and McDonald’s), others were more permanent and manifested (e.g., Zalando). Also, while some of the collaborations emerged because they offered equal benefits for both partners during the pandemic, the benefit ratio might change and must be reassessed in post-pandemic times. However, irrespective of whether these collaborations permeated, whether they have been spurred by pandemic solidarity or the desire for an improvement of firm image, they have paved the way for a more collaborative mindset among retailers, which might translate into an increase in collaborations in the future. Specifically, we propose that successful retailers will be those who manage to establish collaboration structures enabling next-level customer experiences on the five value creation dimensions.