Report: How We Shop – Measuring the Rapid Digital Shift

The 'How We Shop' Report examines how consumers' shopping and payment preferences are evolving as they turn to digital channels and what it means for retailers to cater to those experiences.

Meeting this digital-first consumer base’s needs and preferences requires merchants to deliver shopping and payment experiences that are quick and easy to use and that also allow shoppers to pay remotely from the safety of their own homes or pay without needing to touch point-of-sale (POS) terminals or use cash and cards in stores. Fifty-seven percent of consumers now say that the availability of such digital payment options would impact their choices of where to shop.

PYMNTS, in collaboration with PayPal, surveyed 2,163 U.S. consumers to learn how their shopping and payment preferences are evolving and to investigate what it means for retailers to cater to those experiences. The How We Shop Report lays out the findings of our extensive research.

Inside the September report

  • 57% of consumers now say that the availability of digital payment options would impact their choices of where to shop.
  • 40% of consumers are shopping online more and shopping in stores less.
  • 48% of consumers who prefer POS credit would not buy from merchants that did not offer it.

Part I: The rise of the digital-first consumer

Life may never look the same as it did before March 2020. This massive shift away from shopping and eating in stores and restaurants began when local and state governments first issued stay-at-home orders in March. Consumers suddenly had no choice but to go online to shop and pay for products from their favorite retailers. What was initially a necessity has now become a matter of personal preference.

Consumers prefer clicks to bricks

The share of consumers who plan to return to brick-and-mortar stores is continuing to drop as the share of those who plan to shop using digital-first channels continues to climb. Our latest research shows that 40 percent of surveyed shoppers report doing fewer activities in stores and more activities online — this is up from the 12 percent that reported doing so on March 6.

Consumers' propensity to shop for retail goods online has been the biggest shift. The share of consumers shopping less for retail goods in stores and more online increased 28 percentage points since March, and the share ordering from restaurants online instead of at physical locations increased 14 percentage points during the same time frame.

There was a slight drop in ordering food and buying retail goods online between May and June, when many state and local economies began lifting their stay-at-home orders. The share of consumers ordering from restaurants online decreased from 24 percent to 19 percent in this time frame, and the share buying retail goods online decreased from 42 percent to 40 percent.*

Consumers' appetite for online grocery shopping has continually increased, in contrast. The share of consumers buying groceries online increased 14 percentage points since early March and shifted from 15 percent to 18 percent between May 23 and June 22.

Once online, maybe always (or mostly) online

Half of the retail shoppers who once planned to return to their prepandemic in-store shopping routines now say they will keep their digital shopping habits, even after the pandemic is over.

The degree to which consumers intend to continue shopping online changes depending on the types of products and services they purchase, however. Eighteen percent of consumers surveyed in April said they had shifted to shopping for retail products online but planned to shop in stores after the pandemic — only 9 percent of consumers surveyed in June said the same. This means that half of the consumers who originally said they would go back to shopping in stores after the pandemic is over now say they do not want to go back to shopping in stores at all.

The only activity that consumers seem to be more eager to do in person now than they did in March is eating at restaurants. Five percent of consumers say they plan to revert back to eating in restaurants after the pandemic is over, up from the 3 percent who said the same on April 27.

Touchless payments drive merchant preference

Fifty-seven percent of all consumers say merchants’ digital payment offerings impact their willingness to shop in their stores. They are particularly interested in using contactless payment options, as 26 percent and 23 percent of consumers say merchants must accept contactless cards and offer curbside pickup, respectively, for them to feel comfortable shopping in a store.

This underscores a widespread desire to avoid more traditional in-store payment options which require consumers to make physical contact with paper bills and POS terminals. Six in 10 consumers say merchants that do not offer digital payment options in stores will not get their business.

Having digital payment options is even more important to bridge millennials1 , millennials and members of Generation Z than to the average consumer – and far more important than it is to either Generation X consumers or baby boomers and seniors.

The payment options merchants accept impact consumers’ willingness to shop in store for 69 percent of bridge millennials, 70 percent of millennials and 71 percent of Gen Z consumers. Just 55 percent of Gen X consumers and 46 percent of baby boomers and seniors say the same. This shows that millennials and bridge millennials are not only the most accustomed and comfortable with the eCommerce shopping experience, but are also professionally established enough to have disposable income to spend on eCommerce purchases.

Payment choices can drive merchant loyalty, especially with QR codes and methods that allow consumers to buy now and pay later

More than one-third of consumers who prefer to pay using QR codes say they are unlikely to buy from merchants that do not offer these options. Approximately 34 percent say they would not buy from merchants at all if QR code-enabled payments were unavailable.

Our survey shows that 40 percent of consumers who prefer digital wallets would not buy from merchants that did not accept them. Thirty-seven percent of consumers who prefer paying with contactless debit and credit cards say they would not complete purchases if they were unable to use those cards to pay for them.

POS credit options are another payment option for which many consumers have an affinity, albeit for different reasons. They enable consumers to make purchases without having to pay for them until later, which is especially appealing to consumers who are short on cash or who are trying to delay payments. Our research suggests that 48 percent of consumers who prefer POS credit would not buy from merchants that did not offer it.

Part II: Why the digital shift?

It is increasingly less likely that consumers will revert back to their prepandemic lifestyles as the pandemic continues, and the digital shift will become stronger and more permanent. Why the digital shift?

Consumers are closely watching their (digital) wallets

Many consumers’ concerns about the COVID-19 pandemic are compounded by the fact that they lack the financial resources they may need to keep paying their bills in case of emergency. Seventeen percent of consumers have no money in savings whatsoever, whereas another 30 percent have less than $2,500 stashed away in case of emergency.

Consumers are feeling the need to curb their spending in the hopes of keeping solvent until a year from now, when they believe the pandemic will end. Unemployed consumers are at even greater risk of running out of funds, with 24 percent of all unemployed consumers saying they have no money stored away for emergencies and 54 percent in total saying they have less than $2,500 in savings.

Part III: Who gets the consumer’s business?

Accepting digital payment options that consumers want is unequivocally important to maximizing merchant conversion rates and boosting businesses' bottom lines.

Consumers seek shopping experiences that create certainty

Digital-first consumers crave certainty in their shopping experiences. This means knowing that the products they want to buy will be in stock before they leave their homes to buy them, at the lowest possible price.

Brand-name store chains are struggling to meet these expectations. Fifty percent of brick-and-mortar grocery shoppers say that merchants running out of stock is a challenge they have encountered when trying to shop in stores, and 37 percent are frustrated by limited quantities of available items.

Consumers also say that higher prices and long delivery times sour their experiences shopping at big stores, as do their concerns over being exposed to COVID-19 while shopping in-store. Twenty-eight percent of consumers say they are frustrated with paying higher prices for the same goods and 14 percent are frustrated with long delivery times they endure when ordering from these big stores online. Twenty-seven percent also report concerns about contracting COVID-19 while shopping.

Consumers see buying directly from brands as a way to create a more certain shopping experience

Consumers' desire for certainty in their shopping experiences is driving an interest in shopping directly with brands in lieu of shopping in-store at larger merchants. Our research shows that 37 percent of all consumers are now interested in direct-to-consumer (D2C) retail shopping and that the primary reason they cite for this interest is brand loyalty.

Forty percent of consumers who are interested in D2C retail options say they are interested because they have shopped with them before and trust those brands. Thirty-three percent of interested consumers say D2C retailers have better deals on their websites, and 28 percent are interested because it is cheaper. Thirty-three percent of consumers interested in D2C retail say it is easier to see all the brand’s offerings on one website.

Consumers with more to spend have more interest in shopping with brands directly

Consumers earning more than $100,000 in annual income are more likely than consumers in all other income brackets to be interested in D2C options, with 44 percent saying they would be “very” or “extremely” interested in such purchasing options. This compares to 37 percent of consumers earning between $50,000 and $100,000 in annual income and 31 percent of consumers earning less than $50,000 in annual income who express similar levels of interest

Interest is highest among millennials and bridge millennials and lowest among baby boomers and seniors. Our survey shows that 48 percent of millennials and 50 percent of bridge millennials would be “very” or “extremely” interested in making purchases directly from their favorite brands, compared to 29 percent of baby boomers and seniors. This makes sense, as part of the reason consumers are drawn to the D2C shopping experience hinges on the digital capabilities many D2C merchants offer — capabilities that tend to be most valued among digital-native generations.


U .S. consumers have migrated from brick-and-mortar stores to digital shopping channels, and many have no intention of going back. Merchants looking to succeed in this digital-first environment will need to provide services and payment features that can help facilitate the digital shopping experiences their current and potential customers demand.

This means not only adopting touchless payment options such as contactless card readers, QR codes and digital wallets that can help them securely shop but also providing money-saving features such as rewards programs that can help them enjoy digital shopping experiences without having to spend beyond their means.

How We Shop Report (PDF)

How We Shop Report (PDF)

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