The last year has seen seismic shifts in terms of consumer behaviours and spending patterns. Online is now a material part of the UK’s shopping psyche and that’s not going to change. The pandemic has caused historical online shoppers to double down on an already important channel but more importantly, it has driven digital holdouts to try it and, in many cases, convert.
That said, digital will never replace physical shopping entirely. Fact. Video does not kill the radio star in this instance. People love to shop, they love the experience of going to the shop - browsing, touching, trying, showing their friends/family… They also love a day out: doing some shopping, grabbing a bite to eat, catching a movie, or having a drink over a game of bowling or similar. The whole experience is what matters to people and digital can’t replicate that. In contrast, Digital thrives on convenience - comfort, shopping in your pyjamas, and of course, being socially distanced.
But as we emerge from lockdown 3.0, we fully expect to see a flurry of shopping activity as stores reopen and people venture out from their homes post winter hibernation, in an attempt to get back to ‘normal’. Research suggests that 32% or people will start shopping in stores “Immediately or Very Quickly” once lockdown eases. Digital shopping, which is now running at a staggering 36% of retail will dip significantly but only temporarily, before rising again to “new normal” levels of growth. However, this won’t be constant for all categories, some will drop back closer (but still much higher) to pre-covid levels, but some, like Grocery, will have been irrevocably altered.
A few examples of expected change by category:
Grocery has changed forever, and whilst people will venture back into stores, a large portion of the population (15.4% according to Kantar) are now used to doing their weekly shop online, having seen the benefits of doing so. Supermarkets have been forced to massively scale their delivery and click & collect capacity (2-3x capacity according to Sainsburys & Tesco) to meet demand during lockdown, and with scale comes efficiency - they will be keen to continue to capture market share away from their competitors with better experiences, broader ranges and most competitive pricing for digital shopping. Physical store visits will now be for top-up shops, fresh produce and to pick up forgotten items, so convenience stores and local specialist (artisan) shops will see a resurgence.
Audio, Video & Music – parts of the population that had never considered streaming music and TV have now been forced to try it and discovered the benefits, ingesting their favourite shows and music in a new way. There will always be a small group who want the physical asset but a category which was already massively disrupted by Netflix and Amazon is facing a fresh onslaught from Disney and TimeWarner. Much the same is true of the bookshop, with many store closures, and those that remain being geared to collectors, fans and those who enjoy the book shop experience.
Fashion/Apparel – eCommerce was growing pre-covid and accelerated further during lockdown, but there will always need to be a blend of physical and digital. Clothing is too emotional a purchase, and the physical experience of touching the fabric or trying something on to feel the fit is too much of the process. Digital sales will regress from the current high (especially with stores like Primark reopening) but the magnitude of the correction may be short-lived as there will likely be a sudden rush to refresh the summer wardrobe for post-lockdown parties that may not last beyond the initial surge. The high-street has been changed forever by the pandemic, with the demise/acquisition of many brands, a number of which were acquired by pure players and are now ‘online only’.
Jewellery & Luxury – have weathered the storm surprisingly well over the last year, which is perhaps a reflection of how the pandemic has affected people differently from different socio-economic backgrounds. Luxury stores are best equipped to respond to future demands of shoppers, who will be looking for unique, experiential shopping experiences when making high consideration purchases. Many luxury and jewellery brands have also been quick to bring innovations to market like virtual store assistance, video shopping, and virtual try-on experiences which will only serve to support continued digital growth.
While consumers will indeed venture back into shops and overall, ecommerce will dip back below its current level, consumer behaviours will still have permanently shifted. Consumer missions will have become even more polarised than before. Consumers will be more conscious of their shopping journey, the channel to complete that journey and the expectations of such. Convenience shopping will have shifted heavily online, so physical shopping needs to double down on what only physical can bring – discovery of new brands, experiencing your product, the immediacy of shopping or the convenience of pickup and return. Stores will need to reconfigure themselves to ensure that each of these very different missions can be performed in the space, whilst being aware of heightened health and safety concerns. Stores will also have to play an increased role in driving awareness of their brand and fulfilling digital orders with their instore inventory to create the profitability many brands so desperately need.
In addition to defining a new purpose and experience, stores will have to equip themselves with very different capabilities to play this role:
High streets will have suffered significantly from all the brands that have collapsed or been sold to online pureplays. Even more so than individual retailers, retail parks and shopping malls will need to double down on making themselves fully fledged destinations, with a better blend of engagement, experience and entertainment. Shopping locations can no longer be just a collection of stores, as consumers will demand a more balanced mix of retail, food, entertainment and services; to become places consumers to want to spend their time (and money) in, and thus provide their retailers with a constant source of traffic and awareness.
Guy Elliott, senior vice president, retail, Publicis Sapient