From broadband to brick-and-mortar: Evolving retail strategies for the digital age

In my previous article, "How Broadband Is Reshaping the Retail Industry and What It Means for the Future," I highlighted the key findings of my research into the influence of broadband internet on the U.S. consumer packages goods (CPG) landscape. Through my research, I found that high-speed connectivity has transformed consumer behavior by empowering shoppers with effortless access to product details, price comparisons, and convenient online purchasing. 

What I observed was that brick-and-mortar behavior evolved gradually. From 2004-2019, we saw a 14% decrease in trips to the store and a 17% decrease in the number of retailers visited. However, offline spending stayed roughly flat with only a $0.4k increase over the same period. While we see that the landscape is changing, the “retail apocalypse” is more headline hype than reality. 

To further my research, I analyzed the impact of broadband internet proliferation from 2004 to 2019 on consumer behavior in the U.S. CPG sector. Utilizing extensive household panel and retail scanner data covering over 40,000 brands across approximately 900 categories, I looked at nine key outcomes: brands purchased, shopping trips, retailers visited, offline spending, online spending, online spending share, prices, price dispersion, and demand elasticities. By integrating U.S. Census and FCC data to track broadband expansion, the data revealed a gradual evolution with modest average effects. 

The most notable changes I observed were in age and household income. Younger households cut offline trips and retailers substantially, but their CPG online purchasing doesn’t always rise post-adoption, suggesting reallocation of time online rather than pure channel substitution. This trend may be indicative of future trends, not a cause for panic among brick-and-mortar retailers. Instead, retailers should focus on evolving their offerings and strategies to keep up with changing consumer needs.  

Retailers need to evolve 

There are things brick-and-mortar retailers can do to stay ahead of changes in consumer behavior while still catering to older generations who prefer in-store shopping. 

Develop omnichannel strategies 

Retailers like Target, Best Buy, Ulta Beauty, and Walmart are illustrative of brands that have thrived by adopting omnichannel strategies that integrate online and in-store experiences. AI adoption is presenting retailers with creative opportunities to develop innovative omnichannel strategies, including virtual try-ons, smart stores, enhanced customer service, personalized recommendations, and more to come.    

Experiential engagement 

Retailers that provide unique experiences or products not replicable online have found great success. Apple, for example, hosts Today at Apple, a series of free workshops, sessions, and events where customers can learn new skills, get hands-on experience with products, and engage dynamically with the brand. Sephora is another excellent example that has created ways for consumers to engage in-store, such as makeup tutorials, personalized skincare consultations, and brow waxing, thereby creating a tailored, personal connection with shoppers. Additionally, Nike enhances customer engagement by offering customized products through its Nike By You service and creating immersive, technology-driven, community-focused in-store experiences at locations like the Nike House of Innovation.

Create a seamless user experience

By creating an omnichannel strategy and unique experiences for consumers, retailers should continue to find ways to create a seamless experience across all channels. This requires a significant investment in technology and infrastructure, which can be challenging for smaller retailers. However, as more people gain access to high-speed internet, consumer behaviors will continue to grow and evolve, and retailers of all sizes and types will stay competitive by creating a seamless user experience.

Protect and secure customer information 

Another critical challenge is the need to protect customer data and maintain cybersecurity. Retailers — whether online or in-store — must ensure customer information is secure. 

Protecting data requires ongoing investment in:

• Cybersecurity measures
• Employee training
• Regulation compliance

The rise of broadband internet has undeniably reshaped the U.S. CPG sector, but the narrative of a "retail apocalypse" oversimplifies a complex evolution. My research reveals that while younger consumers are shifting toward online shopping, older and more affluent households continue to value in-store experiences, underscoring the need for retailers to adapt without abandoning their physical presence. 

From 2004–2019, broadband adoption coincides with gradual, demographically uneven shifts in the CPG sector–fewer trips and retailers visited and modest online gains–giving retailers time to adapt via segment-specific omnichannel investments rather than wholesale retreat from stores. By embracing innovation and adaptability, retailers can transform challenges into opportunities, ensuring they remain vibrant and competitive in this dynamic digital age.

Uyen Tran is an assistant professor of marketing at Thunderbird School of Global Management at Arizona State University, where her research focuses on the impact of broadband internet on the U.S. retail sector. Her work explores how information influences consumer behavior, drawing on empirical industrial organization, information economics, and the economics of education. Tran earned her undergraduate degree from ASU, served as a Fulbright teaching fellow in Vietnam, and worked as a transfer pricing associate at PwC. She holds a master’s degree in economics from the University of North Carolina at Chapel Hill, as well as an MBA and a PhD in quantitative marketing from The University of Chicago’s Booth School of Business.