Reshaping Retail: Post COVID-19 Trends
The retail landscape has been hugely affected by COVID-19. When the pandemic hit early this year, physical shops across the globe were forced to close. Even though situations slowly returned to a kind of normality, it’s safe to say that retail might never be the same again.
Here are some of the trends that we think will develop:
Increasing adoption of e-commerce
The bricks and mortar retailers have been competing fiercely against emerging e-commerce giants globally, even before the pandemic hit. Nowadays, more people are becoming more comfortable ordering online and waiting for the package to be delivered to their door. During the pandemic, three Chinese e-commerce giants — Alibaba, JD.com, and Pinduoduo — now rank among the top 10 retailers worldwide.
Even after the end of the stay-at-home order, the majority of consumers still expect that they will shop online more. Consumers expect a seamless experience when making online purchases. Retailers have to make sure that their sites are user-friendly, easy to navigate, and mobile-responsive.
Having an omnichannel approach is the most common strategy adopted by retailers. The “buy online pick up in-store” option is becoming increasingly popular due to its flexibility, low cost, and convenience. This strategy is also beneficial for retailers to minimize the environmental impact with less traffic congestion from delivery vehicles and less packaging.
In China, a broad logistics network and back-end technology that help to cut delivery time and costs are why online retail giants are successful. Consumers can now expect their goods – such as fresh groceries – to be delivered within the hour. Meanwhile, in certain parts of Europe where the infrastructure or the service levels are not as high and where delivery takes longer, the adoption of online shopping is not as high as in China, as it does not meet the consumer’s growing expectation level.
Social media platforms – such as Facebook and Instagram – are also becoming the final touchpoint to online purchases. For consumers who considered buying certain products, seeing that Instagram ad might finally encourage them to make the final purchase. Social platforms encourage purchase through validation and reviews from other people. In the future, expect that more retailers to use social media platforms as sales channels and to build an online community.
Another trend that has taken off this year is live-streaming online shopping. This trend is visible in China and some other Asian countries. Livestreaming online shopping can involve the whole community – from sellers to professional internet personalities known as “key opinion leaders” or KOLs. Livestreaming online shopping has been successful in China – it has a reputation to sell thousands of yuan worth of goods in just a few minutes, through interactive streaming sessions on online platforms.
Next-level customer experience
Traditional stores have to transform their business – they do not merely sell products, but they will also need to provide an extraordinary customer experience in the stores. Generic service efforts – such as greeting consumers, handling complaints, and managing returns – will not be enough to create an edge and compete over online platforms. Consumers will expect further services, such as personal shoppers, technical experts, and even certified installers.
An efficient and hygienic retail operation
Nearly half of the retailers worldwide expect to hire fewer store associates after the pandemic. Nevertheless, a seamless store operation is still highly expected by consumers. One way to facilitate this is by adopting various digital technologies, such as self-service and contactless payments. Self-checkouts are becoming popular nowadays, as it facilitates contact-free shopping, while also helping reduce the risk of crowding and queues.
Also, in the short-term, consumers have shown higher confidence in retailers that demonstrate hygiene, physical barriers, and care for employees.
The fight for brand loyalty
Brand switching during the pandemic is increasing as consumers are changing their shopping behaviours in response to multiple factors – economic pressure, store closings, product availability, and changing priorities. The beneficiaries of this shift include big and trusted brands, which are seeing a 50% growth during the crisis, and also private labels that have outpaced the retail market.
It has been a challenging environment for brands to maintain consumers’ loyalty. Consequently, retailers are forced to protect their share by capturing a portion of consumers who are increasingly paying attention to how businesses interact with their external stakeholders, local communities, and the wider society. Firms with a strong sense of purpose – brand inclusivity programs, fair hiring practices, sustainability, and other CSR initiatives – are gaining traction among generation Z, millennials, and baby boomers.
Post-crisis, companies should continue to commit to sustainability and it is even more crucial to make it more financially viable for both companies and consumers.
At ADK Insights, we continue to monitor trends emerging in the retail sector and translate their impact on consumer behaviours, providing insights to help businesses future-proof their innovation. To find out more about our dialogue with consumers worldwide and how we help our clients navigate these challenging times, please contact Dam.