June 21, 2021
COVID-19 was a catalyst for a universal shift towards online shopping as lockdown measures, and physical distancing were rolled out. Our US General Manager, Guy Edasis, explores how the pandemic has impacted consumer sentiment and behavior, and the need to provide a seamless shopping experience in-store and online in today’s new retail reality.
by Guy Edasis
There was no question 2020 was a critical year for retail in terms of consumer behavior. In less than one month, everything we knew about in-store experience changed. The place where people spend most of the time moved from shared public spaces to their private home. The commute became the distance from the bedroom to the living room with Zoom becoming our window to the world.
The ripple effect of COVID-19 was far reaching, as it impacted and shaped consumer behavior. Lockdown measures inevitably impacted, and limited, spending as retail, entertainment, and leisure were all suspended. Consequently, the percentage of savings per household went up dramatically, decreasing the monthly outgoings. While families and individuals that were hurt from the financial impact also changed their shopping habits. In 2021, overall spend is on a path to recovery with monthly credit-card spend showing signs of growth and continued increases. Recent findings have shown that in the United States, credit-card spending over the last six months was equal to the year prior versus the decline in revenue seen in the first six months of the pandemic.
Besides the economic impact of COVID-19, the most dominant factor that influenced consumer behavior last year was the need to feel safe and protected as our individual and collective health felt endangered. As a result, several categories of online shopping witnessed an unprecedented surge in sales. Shopping online for products such as OTC medicine, groceries, and non-food child products rose by between 15% to 30%. Consumers did not want to take unnecessary risks, and packaged products delivered directly to their door provided convenience, and most importantly, safety.
This shift is especially visible within Gen Y and Gen Z consumers and high-income families. Gen Y and Z consumers grew up with eCommerce already cemented as a popular shopping behaviour, so this transition was only natural. By contrast, baby boomers and average-income families are expected to decrease their usage of online shopping and return to physical shopping as lockdown restrictions ease.
"It is clear that retailers who invested in their online experience before the pandemic, or understood quickly its impact, enjoyed up to 50% growth during the pandemic."
So what does this mean to your brand or company? Well, in simple terms, the current collective shift towards online shopping means consumers can research brands and switch loyalties very quickly. The number of factors that influence consumers has risen as online shopping has provided convenience, flexibility, speed, and endless options to compare and contrast everything from price to shipping options. Research from McKinsey & Company found that “36% of consumers are trying new brands, and 25 percent are using a new private-label brand”. In 2020 alone, the level of brand switching doubled compared to 2019, especially prevalent among Gen Z and millennial consumers than with boomers. It is clear that retailers who invested in their online experience before the pandemic, or understood quickly its impact, enjoyed up to 50% growth during the pandemic. That dynamic is now a make or break for many within the retail industry.
Human interaction is irreplaceable as we are intrinsically social animals, and this means that we will continue visiting physical stores and attending in-person events. With the return to life post-pandemic, consumers now expect integrated experiences that harness the best of both worlds, and it's on us to provide this to them. We’re already halfway through 2021 and it’s clear today’s consumer expects a seamless, streamlined customer experience.
The change in consumer behavior can be felt and seen across all areas of life, from how we work to how we shop to how we spend our free time. Retailers that comprehend and respond to this new consumer behavior will be better placed to understand the new consumer journeys and exceed customer expectations. The customer journey, especially for younger consumers, needs to transition fluently between online channels and in-store experiences. Those that struggle to deliver this experience will feel the pain as consumers contribute to the economic rebound with increased spending. Equally, those that are at the forefront of change will reap the many benefits today, and for the years to come.
Boost revenue/sales by unifying the retail experience for your eCommerce and in-store customers
Cut operational costs by seeing the full picture of stock management - including availability and location of inventory in warehouses & on shelves
Improve customer service and brand loyalty by fulfilling orders with speed from the store closest to the customer’s address
Avoid inventory duplication and overdependence on warehouses by turning your network of stores into local fulfillment points to ship online orders
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