Now that the non-essential high street shops have finally been opened, will we be making a beeline for the tills loaded down with purchases?
The truth is we might enjoy a good browse but the signs are that the shift from physical retail to eCommerce is now happening at a faster pace than forecasters had previously predicted. Six out of ten consumers now say that they will continue to buy as much online in the future as they did during the pandemic.
A new Kantar study, commissioned by Detail Online, covering Europe’s three largest e-commerce markets (France, Germany and UK) showed that the share of consumers that do more than half of their total purchases online increased from 25 and 80% since the outbreak of Covid-19. The US Chamber of Commerce predicts that the shift to online buying that occurred as part of the lockdown will most likely continue.
The biggest categories are for clothing and home electronics, where 50 to 60% state they plan to continue purchasing online in 2020 - and it's not only Millennials that are the driving force behind these statistics. Older age groups state they expect to maintain their new online shopping habit after the epidemic.
Research from Legal & General and the Centre for Economics and Business Research suggests that during the lockdown UK adults increased spending on four key "at home" sectors: groceries, fitness, home and garden and technology. This "isolation economy" has become a new feature of consumers' daily lives.
Sports and Fashion are the categories where the bounce-back is expected after lockdown ends - just so long as there are not too many supply-chain disruptions. This is good news for online retailers and there's huge potential for brand owners to increase their online sales despite the difficult start to the year. One important thing to take note of from a McKinsey Institute report is the prediction that consumers may make more ethical fashion choices from now on.
What should online retailers do to appeal to those consumers hungry to get back to some normality? “2020 is not lost," says Detail Online founder, Joakim Gavelin. "Right now, there’s a huge potential for brand owners to increase online sales in 2020. To be a winner in this you need to have as good control of your products online as you would at a physical retailer.”
Nigel Wilson, chief executive at Legal & General says “As the hub of the isolation economy, the home is becoming a more flexible space, doubling up as a place for schooling, work, fitness and entertaining". He believes that some of these changes are here to stay - so, the online retailer needs to cater to these needs. For example, 69% of people plan to continue cooking more meals at home in the longer term so, instead of queuing at the local supermarket, they will be looking to buy ingredients/meal kits and alcohol online - plus, all the necessary utensils, kitchen paraphernalia and entertaining homeware required for the task.
This shouldn't be all bad news for smaller local retailers as 60% of people say they are planning to buy more products in their local shops to assist in the recovery of the local economy. 58% of respondents also said they would be willing to pay more for products made in Britain, rather than imported from overseas.
Whilst spending on events and theatres has been curtailed consumers are spending more on in-home entertainment (along with online gaming!) and this trend may well continue. Because of the fact that non-essential services have been curtailed or shutdown, the average consumer (those whose income has not been severely chomped) has managed to save a heap of money. What will they be spending their money on come the release from lockdown?
Unfortunately, the answer currently involves a bit of guesswork as it's nigh on impossible to 100% accurately predict what will happen in the months to come: will the changes that occurred during the shutdown be temporary? Will consumers want different products? Will those items even be available if supply chains disappear or shift from global to regional?
Some consumers will clearly revert to their "old ways" but there is a very good chance that the new spending habits are here to stay as consumers experience the epiphany that their previous “need” was really a “want”. If restaurants have lost some of their appeal, for example, then they might need to shift some of their services to catering or providing family-size takeaway meals to compensate for lost "dine-in" revenue. Whilst international travel will probably be in the doldrums for some months to come, travel companies may need to focus their marketing for the time being on UK holidays.
What can retailers do to capitalise on consumer spending shifts?
In a period of uncertainty, any trends and predictions will continue to evolve. Business owners (particularly the smaller ones) need to take steps to capitalise on consumer spending shifts by implementing the following:
- Track trends and change products if necessary
- Consider online distribution channels for products
- Watch for new markets that may become available as consumer spending trends shift
- Make profitable pricing decisions by using BlackCurve
Is the shift in consumer spending here to stay? The answer is most likely (for the foreseeable future anyway). Consumers have had access 24/7 to cheaper products and an ability to participate in everything virtually. They've excitedly enjoyed the arrival of those online purchases for which they didn't even have to leave home. The signs are there that consumers aren't going back to the way things were any time soon.