Since the spread of Covid-19, it seems an understatement to say that retail will never be the same again. But whilst we are undoubtedly seeing big changes in how consumers shop, the new retail landscape isn’t as simple as a wholesale shift online.
Instead, what’s emerging are several overlapping changes, taking in not only what products consumers are buying, but how, when and why they are buying them.
Needless to say, the most obvious change has been what consumers are buying more of. In particular, home wear, home office equipment and even more comfortable clothing have all seen sales increases – hardly surprising when consumers have been spending more time at home rather than in the workplace. (Indeed, one of JML’s bestselling products is the multifunctional cushion and tablet holding ‘Pill O Pad’).
But it would be wrong to think that prolonged home working has led to consumers shopping exclusively online. In fact, at JML we’ve seen telephone sales surge – perhaps reflecting that consumers deprived of their normal social interactions will seek out other opportunities.
Similarly, whilst footfall in city centre retail destinations obviously dropped with the introduction of lockdowns and home working, since then we have seen neighbourhood retailers, local high streets and more suburban locations start to attract customers back.
Indeed, our partner stores Asda and Tesco attest to this. These supermarkets, who largely have a suburban presence, saw a 20% rise in demand for our products in August on the same month last year, underlining just how important a bricks and mortar retail presence remains.
And neither do physical stores have to exist solely in competition to internet retailing. Many retailers we speak to are instead reviewing how their stores can become fulfilment centres for online shopping – something especially relevant for grocery retailers.
But whilst it remains obvious that footfall would drop with lockdowns, then rise again as restrictions were eased and pent up demand released, we predict that we are going to see another sales surge in the coming weeks for quite a different reason.
Specifically, we predict that we will see gifting over-index this Christmas. There are two motivating factors for this – first, I think all of us will feel that after almost a year of often not being able to see loved ones (and especially if we can’t visit them over the festive season itself), we will want to at least send them presents.
Second, for many people who have been able to continue working remotely – but who are no longer spending money on commuting or eating out – a period of “enforced saving” has given them more disposal income. Optimism from this must be tempered with the challenge presented by the uneven economic situation and further lockdowns; potentially leading to large scale job losses. This, combined with the furlough scheme winding down would obviously reduce purchasing power.
This is perhaps the most important question. It is certainly the one that retailers need to have an answer for if they are to respond to the changed consumer landscape – why are shoppers buying what they buy?
For example, whilst we saw demand for “quick win” home comforts and tech products such as our comfort focused Egg Sitter Support Cushion (searches up 444%) and our Chillmax TV offer (where consumers get a free addition with purchase of two products in the range, with searches up 5582%) surge in the early days of the pandemic, there has now been a shift to the items which acknowledge that home working is here to stay – such as fitness equipment to replace gym memberships, and more home office equipment to support remote working as a permanent reality.
The data speaks for itself, with – for example – search variants increasing 289% for our Flex Core 8 exercise machine, whilst they increased by 2131% for ‘home office’ products.
So what can internet retailers do to better position themselves in the face of all this change? I would argue that our experience – where we have seen our August 2020 call centre volumes up 121% on the same period last year and internet-driven direct to consumer sales up an unprecedented 118% over the preceding quarter – indicates that investing in technology is key.
Yes of course, upgraded remote working technologies, such those we implemented for our own employees, is a must. But so is investing in tech that helps you better understand your customers – such as the companywide ERP system and advanced CRM facilities which we upgraded. Tech has been accused as the reason for the ‘death of the high street’ but it can also help strengthen it in an evolved form. Knowing more about our customers means regardless of online or offline, we’ll have a better understanding of how we can best accommodate their demands.
Ultimately with some analysts expecting around a quarter of the UK population to permanently shift to online shopping, this is a moment of great opportunity for internet retailing to build further. Whilst there’s still life in the old dog which is physical retail, if we can avoid too much human tragedy and operational show stoppers, this will be an incredibly exciting time for most internet retailers.
Ken Daly is chief executive of JML
Ken Daly, CEO of JML