What a year it’s been.
One minute, we were living normal lives. The next, we saw whole countries locked down, borders closed, high streets deserted and government-nationalised payrolls. And the end is not yet in sight. So, as we move forward, let’s look at what the ‘new normal’ for ‘shopping’ looks like – starting with COVID-19.
With so much change around us, it’s important to remember that COVID-19 isn’t a change agent, but a change accelerant. Most of what’s happening around us is the acceleration of existing trends e.g. ecommerce growth, WFH, remote medicine, income inequality etc.
To envisage what the ‘new normal’ for ’shopping’ might look like we need to understand how ecommerce is being accelerated by COVID-19 and what brands should be doing to capitalise on the new landscape moving forward.
Accelerated ecommerce growth
Online shopping has grown significantly since the outbreak of COVID-19. Many people are now making purchases online that they would ordinarily have made on the high street; buying groceries online for the first time or increasing their usage of Amazon for example. And it looks like these new habits will be maintained by many as we move forward.
SMP’s COVID-19 tracker study of more than 2000 adults, carried out three times across the past five months, reveals just how much UK shopping habits have been transformed by COVID-19. The big winner is Amazon. The number of people who say they now purchase on Amazon more often has jumped from 19% in April to 29% in August. In addition, one in five shoppers (20%) now believe they will maintain that habit when the pandemic is over, up from the 12% who thought that way five months ago. Almost as many (18%) say that when things return to normal, they will continue to buy items online that they would have previously bought on the high street.
These changes in shopping behaviour aren’t limited to younger shoppers, who had higher rates of online shopping pre-COVID-19. A quarter (25%) of over-55s say they now shop more on Amazon and 18% think they’ll continue to do so when things get back to normal. Even more over-55s (28%) say they now buy items online that previously they’d have purchased on the high street and 22% plan to continue that habit post-pandemic. Less than a quarter of over 55s now believe their new shopping habits won’t be maintained post-coronavirus (down from 37% in April). In fact, over 55s are now the most likely age group to say they will continue to shop online for products previously bought on the high street.
This growth in retail ecommerce has made some of the recent ecommerce grocery partnerships even more important for the likes of M&S, with its Ocado partnership, and Morrisons with its ‘Morrisons on Amazon’ store.
Looking at a category level, Google’s UK Smart Shopper Research found a significant shift to online shopping across most consumer goods categories. For example, the online share of consumer electronics purchases has grown from 55% (2019) to 73% (2020). These large shifts were also seen in Home & Garden (48% to 67%) and Fashion (41% to 86%).
Management consultancy McKinsey recently released research that found similar effects in the US market. They looked at the growth in the percentage of customers expecting to purchase from various categories online post COVID-19 compared to pre-COVID-19: Groceries +59%, Alcohol +40%, Personal Care Products +46%, Fitness & Wellness +29% and Consumer Electronics +18%.
McKinsey also looked at the growth in customers expecting to do most or all of their shopping online post COVID-19 compared to pre-COVID-19: Groceries +148%, Alcohol +96%, Personal Care Products +123%, Fitness & Wellness +97% and Consumer Electronics +52%.
Marketplace food delivery platforms like the Just Eat group have also seen significant growth, with Just Eat reporting a 44% surge in revenue during the first half of 2020. The group predicted strong order growth throughout the rest of the year, despite the post-lockdown reopening of restaurants in markets such as the UK.
After an initial down-turn, Deliveroo has also grown this year and are taking a significant investment from Amazon, who are keen to ensure they have a stake in a growth channel. Other retailers have developed partnerships with the food delivery platforms, including Asda with Uber Eats and Co-Op with Deliveroo. Meanwhile retail business’ reliant almost entirely on physical stores are reducing staff numbers and closing stores. Pret-a-Manger is a perfect example, recently cutting 2,800 roles from its shops and closing 30 stores after restructuring its UK business.
While the high street and physical retail is struggling, consumers don’t appear to be sentimental about the changes. Our COVID-19 tracker study found, apart from Debenhams (33%), no retail brand currently in receivership had more than 10% of respondents saying they would miss them. Interestingly over 55s (58%), a group with traditionally strong high street usage, were the most likely to say they won’t miss any of the retail brands currently in administration.
Looking ahead, Google has considered how the pandemic may affect holiday shopping. In 2019, 57% of UK holiday shopper-reported purchases were made online. This year, Google expect that number to grow, as over 70% of U.K. shoppers who plan to shop this season reported they will shop online more for the holidays than they did in previous years.
What should brands be doing to capitalise on the acceleration of ecommerce?
Shifts in shopping behaviour, that may have taken five years to happen, have been accelerated by COVID-19 and have been compressed into less than 12mths. It’s never been more important for brands to understand how the acceleration of ecommerce is creating new touchpoints and behaviours across customer purchase journeys.
We recommend brands take stock and ask themselves five key questions when reviewing their ecommerce capabilities:
Customer insight: Have you mapped your customers’ purchase journey(s) this year?
Review retail and marketplace ecommerce purchase channels: For example, Amazon, eBay, Bol, Just Eat and UberEATS through to Ocado and Tesco. Does your brand have the right presence, in the right channels and are you investing enough to win where growth is happening?
Ecommerce media review: Are you using ecommerce media to efficiently acquire and convert customers through search, retailer media and paid social?
Audit your ecommerce content: Are your product pages, A+ content and brand stores assisting search and converting customers?
Data & Analytics: Do you have access to the data analysis, tools and reporting needed to uncover insights that drive growth?
By answering these questions and taking the necessary action brands will be well placed to grow and make the most of the opportunities the ‘new normal’ for ecommerce will offer.