smp London
Peter Martin
+44 (0)20 3923 2129
peter.martin@wearesmp.com
smp Dublin
Jason Kidd
+44 (0)20 3923 4776
jason.kidd@wearesmp.com
smp San Francisco
Glen Mellinger
+44 (0)20 3923 4750
glen.mellinger@wearesmp.com

A Pandemic Of New Opportunities – For Those Up To The Challenge

The hustle and bustle of excited shoppers marching the high streets, and long lines of people waiting for the biggest bargains are all but a distant memory due to COVID-19. Boxing Day footfall fell by a shocking 57% in 2020. The coverage of overnight queues that are normally a staple of end-of-year news reports were gone, replaced by footage of deserted high streets and warnings of yet another lockdown.

The good news is that online sales are in some cases compensating for the shortfall in physical retail with traditional retailers shifting their focus to online and brands choosing to go direct to consumers. For example, L’Oréal’s ecommerce sales soared by 53% after it upscaled its digital offering as COVID-19 floored the make-up counters. 

So, whilst we all know that digital retail came of age last year, does that really mean ecommerce will become the norm, whether or not shops remain closed for equal swathes of 2022?

For instance, if were to look at the first day of trading in China, after the first lockdown in April, Hermès raked in $2.7 million at its flagship store in Guangzhou – its highest daily total ever. This phenomenon was called ‘revenge spending’, but on paper it looks like hysteria.  

The UK retail market may appear to be different, but we saw this type of behaviour during the peak of the pandemic. At the beginning of the first lockdown, shoppers succumbed to panic buying, leaving supermarket shelves bare and, later in the year, people flocked to IKEA – many still queueing at 10pm – to make last-minute purchases before closing for Tier 4 restrictions.

But, even if shoppers return to their favourite stores, their buying habits have changed forever. We can expect an initial surge on the high street, as shoppers will want to get out again as soon as possible, just because they can. This ties into the psychology of wanting what you can’t (or haven’t been able to) have. The greater question is whether we’ll adopt the new habits formed during lockdown once we’ve got over the luxury of being allowed back into non-essential stores?

The shift to a digital-first market is inevitable with the downfall of so many familiar high street brands and hard data implies shopping habits are changing for good. Between April and September last year we conducted a series of tracker studies to gauge how UK shoppers’ habits were evolving over the course of the pandemic. We discovered that the number of Brits that said the way they shop would change permanently went up from 60% during the April lockdown, to 81% in September. Now with a further lockdown underway, we can expect this figure to rise.

This pattern of consumer behaviour is similar across demographics. When asked if people would continue to buy things online that they had previously bought on the high street, over a quarter (28%) of over-55s agreed.

Although retail is on a digital-first trajectory, ecommerce doesn’t really have to compete with or entirely replace traditional bricks-and-mortar. The logical step for larger retailers would be to make the most of omnichannel strategies to set themselves apart from competitors.

Household name brands are expected to reduce their presence on the high street, honing down on flagship stores in urban centres. They will focus more on becoming experiential hubs, capitalising on tech-led shopping experiences, specifically designed to make shopping seamless across all channels. Through doing this, we’ll see online convenience move offline, particularly through initiatives like Amazon’s cashless stores, and offline interactivity shift to online, with AR and XR assistance.

It’s thought that these stores will be repositioned as brand showrooms for consumers to interact with physical goods, but they won’t hold stock on the premises. Instead, we’ll see these redesigned shopping experiences combine the best of both worlds: we’ll be able to make real-world choices and enjoy the convenience of having our goods delivered straight to our homes, on the same day or overnight.   

The larger, more established retail brands will quickly discover that they will no longer remain the kings of convenience and reap all the benefits of having existing ecommerce in place. Soon, there will be even greater choice for consumers, as emerging brands utilise social platforms with a low cost-of-entry to find and develop audiences quickly. The shortened – often one-click – purchase journey is the key benefit of using social commerce for brands and customers alike.

Through the use of multiple digital touchpoints, we’re shifting into an ecommerce landscape in which every moment is shoppable. So, you’re always connected, whether you’re ordering through a smart speaker from your sofa, or making a snap buy on the commute through Instagram Shopping on a smartphone. We’ve found that engaging content is fast becoming the pulse of the purchase funnel. With brands like TikTok and Walmart experimenting and even trialling a shoppable livestream, where viewers could make easy, in-app transactions of items endorsed by influencers.

It’s evident that new and competitor brands, particularly those who’ve never had to rely on physical retail, will also be able to take advantage of online marketplace opportunities and use platforms like Amazon and eBay as a way to scale their online presence.

While we lost a great many legacy brands in 2020, this doesn’t mean the retail landscape has contracted. As ecommerce becomes the main channel for buying goods, it opens up new opportunities for those established retailers that rose to the challenge to reinvent themselves for the digital age.

A new generation of digital native retail brands is already emerging, poised and ready to take advantage of this new landscape. So, if successful brands want to retain their privileged positions, they will need to build on the lessons they’ve learnt around agility and data optimisation.

 

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