After the immediate impact of COVID-19 on life in general and retailers in particular lockdowns are easing, and we are entering a new normal. While the crisis has positively benefited many ecommerce retailers, such as those in sectors such as grocery, now is the time for every brand to understand the long-term impact on their business and what they should be focusing on moving forward.
To start, retailers need to look at the consumer perspective. How have their habits changed and what are they now looking for online? To provide this insight we surveyed 5,000 consumers in five countries (the UK, US, France, Germany and Italy) to learn more about the fast-changing ecommerce landscape. The findings group into five key trends which all impact retail strategy.
The lockdown essentially forced consumers to become digital-first, meaning that many people switched to online for the first time. And this pattern is continuing, with many shoppers still wary of leaving their homes while the risk of the virus remains. Our research found that 32% of UK consumers said they’d been doing more online, with the most popular activities being streaming entertainment (51% said they were doing this more), followed by reading the news online (46% more) and buying products to improve their home and garden (30% more). Mirroring this, analyst eMarketer expects 7.4 million new US digital buyers in 2020 thanks to the pandemic.
This is an enormous opportunity for ecommerce retailers to tap into a bigger market. However, the experience that these new digital consumers expect will be radically different compared to long-term digital natives. Retailers will therefore need to be able to provide a personalised experience to each group and the segments within them if they are to increase their sales. At the moment they are not delivering this successfully – 73% of consumers expect to receive a personalised online experience, yet 59% are disappointed with what brands currently provide. Retailers that can bridge this gap will therefore be in pole position to benefit in the expanded ecommerce market.
As well as bringing more people online, the lockdown has changed the behaviour of existing UK digital consumers. Not only are they are doing more of activities such as buying groceries, but they are branching out to buy and consume other services. 31% said they were spending more time taking online classes and 17% were doing medical consultations digitally.
While this has clearly been forced on many people by the conditions of lockdown, it provides the chance for brands to turn this experimental use into a long-term habit. They can become the provider of choice in these new areas if they successfully meet the needs of their suddenly increased user bases.
The move to digital has been a long-term process, but the pandemic has accelerated it significantly. What is important is that the majority of British consumers won’t go back to offline channels as they see the benefits that digital provides in terms of greater choice, safety and money and time savings. In fact over a quarter (27%) said that they’d use digital channels more in the future. Just 15% will return to ‘offline first’ behaviour.
This sudden and wide-reaching digital switch opens up new opportunities (and challenges) for ecommerce companies. They need to plan for how they operate in a bigger market, while retailers with a mix of offline and online have to understand how to manage how the two channels interact successfully – for example through concepts such as Click and Collect and other initiatives that bring the virtual and physical worlds together.
The increase in digital sales is a growth opportunity for retailers, particularly those that are online only. However, they face greater competition as more players enter the market, against a backdrop of an economic downturn. The most agile brands have already demonstrated the ability to pivot their businesses to meet changing consumer needs, focusing on areas that are in high demand and this will continue to be vital in an unstable world.
Success will come to those that best meet consumer needs and expectations, not just about products or services, but around the experience that they offer. In our research nearly three-quarters (73%) of British consumers said that the experience they receive now from brands will impact their future buying habits. 50% will spend less or switch from brands that have not delivered on their current needs while 23% will buy more from brands that have delivered a good, personalized experience. The message is clear – focusing on the digital experience, at both a general and individual level, is key to winning consumer trust and loyalty.
5. Compliance and data protection are key
While consumers want the benefits of digital channels they also want their personal information to be kept private and protected. This cuts across both long-term digital users and those that have newly moved online – while they are happy that their data is used to personalise the experience they receive they want brands to handle information in a compliant, secure manner. This is particularly true as the range of online services spread – for example telemedicine involves deeply personal information that has to be tightly protected.
In an unstable world predicting the future is not easy – however, by understanding and acting on these key trends, retailers can put in place the right strategy to benefit from the opportunities of a digital-first world, while overcoming the challenges that it brings.