The C-Series: How Coronavirus will change the way we shop

Mar 20, 2020

In The C-Series, GDR will explore the impact Covid-19 will have on consumer behaviour; how we live, work, play and, in this first instalment, how we shop.

It’s our job as business futurists to help you understand the way the world is changing, and ensure you’re ahead of the curve in understanding the impacts on consumer behaviour. However, this kind of once-in-a-generation pandemic cannot have been in anyone’s scenario planning. Our hearts go out to everyone who is vulnerable, or in need.

As a developing global situation, it’s too early to speak with any certainty about what the short- and long-term implications will be. However, if we consider how the global recession and increasing public consciousness about issues like sustainability and health have reshaped life during the last decade, it’s safe to expect that the legacy of Coronavirus will have a similarly game-changing impact.

Clearly physical retail outside of food and pharmacy is going to be put largely on hold for the next few weeks or months in many countries. Its viability in the immediate aftermath of the pandemic is likely to depend, at least for smaller businesses, on government assistance, tax policies, economic stimulus measures and use-it-or-lose-it community mobilisation.

Over a series of articles we’ll explore how the crisis will change fundamental elements of how we live, work, and spend our time and money.

This first article explores how Coronavirus will change the way we shop. Many of the themes and drivers that we touch on, such as the maturation of ecommerce and the decline and changing nature of physical retail, long pre-date the current crisis. Yet the global pandemic has exacerbated certain problems, challenged both consumers and businesses to make unexpected choices, and brought new solutions to the fore, thus accelerating the development and acceptance of change.

 

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How Coronavirus will change the way we shop

Hygiene transparency

During the last week companies across myriad sectors have started releasing in-depth details about the lengths they’re going to to maintain optimum hygiene levels for their staff and customers. In China this level of insight led to stringent measures in dark kitchens, whereby chefs and delivery drivers were constantly having their temperatures taken, and the drivers where asked to present their latest results to customers upon delivery of their food.

Will this level of process and information become the new norm going forward, in the same way we now expect in-depth information about provenance, ingredients, nutrition, and manufacturing processes?

Another important element of this is trust. Brands are going to have to work hard to prove to customers that their offer is safe and meets the expected hygiene standards.

Even if it does not become mandated across the board, releasing this level of information about hygiene is likely to become a new differentiator, and a signal of freshness, goodness and a brand’s altruism.

 

New store formats and high street configurations

We’ve been talking for years about how legacy retail is no longer fit for purpose in the modern era. As more buying happens online, both individual stores and the malls or high streets they sit within have far too much expensive retail space. Without wishing to be too fatalistic, it is clear that the pandemic is going to be the tipping point for many already struggling shops, retail formats, high streets and malls. Once the dust settles we’re going to have to answer some fairly fundamental questions about the role of physical retail in our lives, and our communities.

During the crisis, supermarkets, pharmacies and their staff have been on the front line, keeping us stocked up with the products we need most, while also providing much needed compassion, help and fraternity. Yet, in stark contrast to this, in many countries, for example the UK, the taxes and businesses rates payable by physical retailers make their very existence increasingly unsustainable.

We can expect to see more exciting new retail formats that merge online and offline and use data to provide truly local product and service offers in more compact spaces. But, much more important will be how governments and local communities respond to rebuild and reimagine their retail centres.

Will governments, many of whom are proactively putting in place measures to support businesses during these troubling times, rethink the outdated systems that stifle physical retail and create new community-focused models where retail can flourish alongside other services and spaces? At a time when many retailers and consumers are spending more time than usual considering how their actions and behaviours can help their fellow citizens, it’s also interesting to consider whether we may now see more co-operative-based, community-run retail formats.

 

The second rise of online

One of the most consistent features of retail in the last decade – as we’ve moved through the eras of multichannel, omnichannel and beyond – has been the tension between the decline of physical retail and the rise of online commerce. This struggle has been heightened by the current crisis. One of the clearest examples of this has been the growth of online grocery shopping as many shoppers have been reticent to visit physical stores. In the UK specifically the online grocery sector has been relatively stagnant in recent years, with many consumers, particularly older ones, put off by the extra cost of delivery and the inability to pick your own fresh produce. But these concerns have been superseded by the more pressing need to stock up while staying safe, producing unprecedented levels of demand that have made delivery slots like gold dust and forced Ocado to briefly shut its operations. In response to this situation Morrisons is bringing in 3,500 additional staff. Once normality returns, many “new” online shoppers may revert to their previous behaviours, but it is undoubtedly significant that the benefits of ecommerce are breaking through to new shopping segments.

 

Livestreaming and social commerce

Also interesting is the way that the more experiential and less functional elements of ecommerce have taken centre stage during the crisis. Livestreaming is already a $63bn industry in China, accounting for almost 9% of all e-commerce sales there, but it has taken on extra significance and visibility in the West as companies, including restaurants, beauty and fitness brands, and consumer electronics retailers, have been looking for more engaging and creative ways to interact with and sell to their customers in their own homes. A great success story comes from bicycle retailer Ribble, who recently partnered with Go InStore to allow online customers to video chat with their in-store product experts. They’ve extended their opening hours to reflect when people are buying online and they tell us they’re having to expand operations to keep up with demand.

There are great possibilities for growth and innovation in these areas of the experiential web generally and consumers being shut in for a period will only accelerate the number of brands and companies using digital alternatives to give their customers unique and fun experiences that were previously only the domain of physical retail.

 

Contactless and segregated retail

Driven by hygiene concerns, many online operations have started offering “no-contact” delivery for their at-home customers. At the same time, leading supermarkets around the world are starting each day with elderly-only hours to minimise the exposure of the most at-risk members of society. We’ve seen schemes like this trialled in isolation before, but never to this extent. As the pandemic has challenged our priorities, could this be a watershed moment that leads to this type of segregated approach becoming a regular feature of retail during flu season?

The move from cash – which some blame for the spread of germs – towards contactless payment, and the rise of fully automated stores also support this trend of no-contact retail. We can expect both of these pre-existing developments to gain more traction now.

Earlier this month Amazon announced it would be making its Just Walk Out automated retail technology available to third parties, while the format has been proliferating in Asia and Europe in recent years. The technology driving automated retail would theoretically make it much easier to enforce schemes like elderly-only hours, but there are still significant logistical and societal issues to iron out before automated retail becomes ubiquitous.

 

The changing nature of convenience

We anticipate that one likely effect of the pandemic is that it will force us to rethink convenience, both in terms of how we buy, and what we buy.

A real growth area for supermarkets in recent years has been convenience formats, servicing shoppers making short-term purchase decisions based on what they need now, or later today. After experiencing shortages of key items during the pandemic, will consumers revert back to more traditional shopping behaviours based around longer-term meal-planning, bulk buying and “the weekly shop”?

Another interesting thing to consider is how these shortages may affect consumer perceptions of what they actually need. Will convenience buying change from being about access to quick and easy cooking solutions, and become more about getting hold of the basic, staple products and ingredients that proved essential during the pandemic? Might we also revert to buying more raw ingredients, and doing more scratch cooking?

With this change in mindset, could we also see shoppers become more open to more sustainable, yet less convenient approaches to shopping? For example prioritising products that are seasonal and/or locally sourced, or gravitating towards no waste retailers like The Bare Market in Canada, which require more effort to shop.

 

Recession hardening part two

The recession in the last decade had a huge impact on shoppers’ perception of value and quality, leading to the rise of retailers like Aldi, Lidl and Dollar General, whose “good enough” offer is seen as “savvy” by its customers. The pandemic experience will likely reinforce this mentality in some shoppers, who will not only get used to living with less, but also with doing less. Will it usher in an era where people buy less and save more?

Something that Aldi does particularly well is to highlight its value offer with premium “hero” items, such as its award-winning Champagne. It’s likely we’ll see more shoppers buying into this mentality; taking a very conservative approach to the majority of their shopping, while still being prepared to splash out on specific, important items.

 

GDR want to support you, your business and your customers as you transition through these tricky times. We are available to chat, brainstorm or do a Q&A. Please use us to help you. Book up with rachel@gdruk.com

 

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