Retail Market Research: Benefits, Trends & 5 Real-Life Examples
A recent report highlights a dramatic shift in customer behavior, with 50% of customers changing their brand preferences, and 90% indicating they’ll continue to switch brands.1 This trend points to a volatile retail market, underlining the importance for retailers to adapt and innovate to maintain customer loyalty. With evolving consumer preferences, conducting market research through customer surveys becomes increasingly critical.
Learn about the tips, for retail market research importance of market research for retail business, methods, trends, and some real-life examples:
7 Tips for retail market research
Research helps companies truly understand customers, spot new trends, and maintain their competitive edge. Here’s how retailers gather and use that intelligence:
1. Use intercept surveys
Ask for feedback right at the point of experience, in person after a transaction or via a website pop-up. This captures immediate feelings about things like satisfaction, branding, or packaging. Use tools like:
- Net Promoter Score (NPS) – would they recommend you?
- Customer Satisfaction Score (CSAT) – how happy are they?
- Customer Effort Score (CES) – was it easy to shop?
Don’t forget to ask about competitors for a direct comparison.
2. Try mystery shopping
Hire trained shoppers to act like regular customers. They evaluate the store environment, staff knowledge, and overall service. This process uncovers blind spots and leads to direct improvements in service quality and employee training.
3. Segment your customers
Group shoppers by their age, location, purchase habits, or preferences. This segmentation allows for highly personalized messages, better pricing strategies, and the ability to discover profitable niche markets.
4. Conduct shop-alongs
Follow customers through the store, observing their movement and decision-making. Ask them on the spot why they chose one item or bypassed another. This offers genuine insight into shopper behavior and directly informs store layout and display choices.
5. Do competitive research
Systematically study rivals. Look at their pricing models, product portfolios, marketing campaigns, and customer reviews. Knowing their playbook helps a retailer improve its own offerings and find ways to stand out.
6. Monitor social media
Keep a constant watch on online chatter about the brand. Set up alerts for the company name and key products. This allows teams to respond quickly to complaints and engage in positive discussions in real-time.
7. Use geofencing surveys
Set up a virtual perimeter around a physical store. When shoppers enter this area, a quick survey is triggered on their phones. This provides real-time feedback from recent visitors, and can even be used to survey customers leaving a competitor’s location.
Why is market research important for retail companies?
1- Better understand your target market and customers
Market research gives retailers the core data on customer behavior. This knowledge allows them to tailor products, services, and marketing efforts to match current market trends. It informs everything from product development to pricing and even store design, ensuring the overall experience genuinely resonates with shoppers.
Real-life example
Figure 1. Crocs YoY revenue growth between 2017-2022
Source: Statista2
Crocs has experienced a nearly 200% increase in sales since 2019, outperforming other brands that Crocs saw a nearly 200% sales increase since 2019 by actively adapting to consumer needs.3 They leaned heavily into digital marketing, celebrity endorsements, and market research to pivot toward a more fashion-forward market, successfully maintaining relevance far beyond the quarantine-fueled peak.
2- Increase product launch success
Launching a new product is inherently risky. Thorough market research minimizes that risk by uncovering consumer desires, identifying emerging trends, and finding unmet needs before the product is developed.
Case study
A survey by the Toy Association found that over 40% of adult parents buy toys for themselves.4 Retailers like Walmart recognized this trend, dubbed the “kidult” market, and responded by directly marketing toys and games to adults, successfully tapping into a profitable nostalgic segment.
3- Stay informed about and ahead of competitors & retail industry trends
Keeping pace with the industry and knowing what rivals offer is non-negotiable. Retailers must be aware of their competitors’ strategies to find areas where they can build a distinct advantage, whether through unique product features, a superior customer experience, or better communication.
Real-life example
Home Depot recognized the consumer demand for convenient, seamless shopping.5 They invested in advanced technology, developing a robust mobile app that offers in-store navigation, real-time deals using location services, price comparisons, and augmented reality tools for visualizing products in a space.
4- Improve marketing messaging and customer relationships
Research provides insight into customer behaviors, preferences, and motivations. This information is invaluable for creating targeted marketing campaigns that truly resonate, which enhances the overall customer experience and builds lasting loyalty. Understanding needs allows retailers to personalize marketing and align products with consumer expectations, driving both loyalty and sales.
Example
McDonald’s responded to customer feedback regarding the lack of healthier menu options.6 As a direct result, they introduced healthier items like apple slices and launched ad campaigns that focused on the real meat content in their nuggets and patties, publicly demonstrating a commitment to addressing customer concerns.
5- Validate product idea(s)
Market research is the ultimate check: Is there genuine demand for this product? Does it meet customer needs? Analyzing market trends and preferences drastically reduces the risk of launching a product that the market simply won’t adopt.
Real-life example
Quibi, a mobile-focused streaming service, shut down after just six months due to its failure to attract a significant audience, despite raising $1.8 billion and being positioned as the next big service company in modern entertainment.7
The company’s leaders later acknowledged that the idea behind Quibi wasn’t strong enough to justify a stand-alone streaming service. This highlights how even well-funded ventures can falter without adequate market research to validate the product’s fit and demand in the market.
Primary vs. secondary research
Retail research uses both primary (new, direct data) and secondary (existing, indirect data) methods to gain a complete view of both micro (customer-level) and macro (industry-level) factors.
Primary research: gathering direct data
Primary research is essential for obtaining fresh, direct feedback from customers. This firsthand information is crucial for grasping customer behavior nuances and shaping product and marketing strategies accordingly.
- Customer surveys: Questionnaires administered online, in-store, or via email to collect quantitative data on satisfaction, preferences, and areas for improvement.
- In-depth customer interviews: One-on-one sessions that uncover detailed, nuanced insights into attitudes, experiences, and behaviors that surveys can’t capture.
- Focus groups: Bringing together a small, diverse group to discuss products, services, or marketing campaigns. This method provides rich qualitative data through interactive discussion.
Secondary research: analyzing existing data
By analyzing existing data from sources like trade journals, government reports, and consumer studies, retailers can identify current trends, challenges, and potential opportunities for growth within the industry.
- Sentiment analysis: Using natural language processing (NLP) to categorize online opinions (social media, reviews) as positive, negative, or neutral. This reveals how customers feel about a brand, product, or campaign.
- Social media monitoring: Actively observing and analyzing conversations and trends on social platforms to gauge public sentiment about a brand, competitors, and the industry in real-time.
- Sales records: Reviewing and analyzing existing sales data to see which products are performing well. This provides concrete evidence of customer purchasing patterns, informing inventory and pricing decisions.
In retail market research, primary and secondary research serve distinct yet complementary purposes. This distinction ensures a holistic approach to the market research process to understand both the micro (customer-specific) and macro (industry-wide) aspects of the retail market.
Market research methods for the retail industry
1- Customer surveys
These are questionnaires designed to collect feedback from customers about their experiences, preferences, and opinions. Surveys can be conducted online, in-store, or via email and are useful for collecting quantitative data. They help retailers understand customer satisfaction, product preferences, and areas for improvement.
2- Sentiment analysis
Sentiment analysis often uses natural language processing (NLP) and machine learning to categorize opinions as positive, negative, or neutral. This method is particularly useful in understanding how customers feel about a brand or product and can be instrumental in identifying areas for improvement, gauging customer satisfaction, and monitoring the impact of marketing campaigns or new product launches.
Check out our research on retail sentiment analysis for more information.
3- In-depth customer interviews
This method involves conducting one-on-one interviews to gain detailed insights into customer attitudes, experiences, and behaviors. These interviews can uncover deeper insights than surveys, as they allow for more nuanced discussions and exploration of topics.
4- Social media monitoring
By observing and analyzing conversations and trends on social media platforms, retailers can gauge public sentiment about their brand, competitors, and the industry at large. This method provides real-time feedback and insight into emerging trends and customer preferences.
5- Focus groups
Focus groups involve gathering a small, diverse group of people to discuss and provide feedback on products, services, or marketing campaigns. This method allows for interactive discussions and can provide rich qualitative data about consumer attitudes and behaviors.
6- Sales records
Reviewing and analyzing sales data helps retailers understand which products are selling well and which are not. This method provides concrete evidence of consumer purchasing patterns and preferences, helping retailers make informed decisions about inventory, pricing, and promotions.
Retail market trends
Retail market trends are currently shaped by several factors that companies should keep in mind when they conduct market research Here are a few:
Use of AI and technology
Artificial intelligence (AI) is revolutionizing inventory management, customer service (through chatbots), and personalized shopping experiences (through natural language processing, or NLP). In 2024, 6 in 10 retail buyers reported that AI-enabled tools significantly improved demand forecasting and inventory management.8
Retailers are also experimenting with augmented reality (AR/VR) to enhance product visualization online. Notably, retailers that offered generative AI tools like chatbots during the Black Friday weekend saw a 15% better conversion rate, highlighting the growing value of AI in boosting retail performance.9
Omnichannel retailing practices
The line between online and offline shopping is blurring in the digitalized age. For instance, 70% of millennials and Gen Z customers rely on social channels for shopping.10 Besides, 500+ million people engage with Nike through the apps.g.11
Retailers are integrating their online and physical stores to provide a cohesive customer experience. This trend includes features like buy-online-pick-up-in-store (BOPIS) and the use of digital tools in physical stores.
Sustainable products & ethical practices
Increasingly, consumers are gravitating towards brands that demonstrate environmental responsibility and ethical business practices. This shift is leading retailers to adopt more sustainable practices, from sourcing to packaging, and transparently communicate their efforts to consumers.
Personalized products & services
With access to more customer data, retailers are tailoring shopping experiences to individual preferences. This trend involves using data analytics to offer personalized product recommendations, targeted marketing, and customized shopping experiences.
If interested, here is our data-driven list of survey participant recruitment services and survey tools.
Reference Links
Cem's work has been cited by leading global publications including Business Insider, Forbes, Washington Post, global firms like Deloitte, HPE and NGOs like World Economic Forum and supranational organizations like European Commission. You can see more reputable companies and resources that referenced AIMultiple.
Throughout his career, Cem served as a tech consultant, tech buyer and tech entrepreneur. He advised enterprises on their technology decisions at McKinsey & Company and Altman Solon for more than a decade. He also published a McKinsey report on digitalization.
He led technology strategy and procurement of a telco while reporting to the CEO. He has also led commercial growth of deep tech company Hypatos that reached a 7 digit annual recurring revenue and a 9 digit valuation from 0 within 2 years. Cem's work in Hypatos was covered by leading technology publications like TechCrunch and Business Insider.
Cem regularly speaks at international technology conferences. He graduated from Bogazici University as a computer engineer and holds an MBA from Columbia Business School.
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