The ‘Great Lockdown’ has forced consumers to adopt new shopping habits and re-evaluate their needs. Before the current pandemic, the non-food retail sector was already in trouble. There were many high street failures, particularly in apparel chains and departmental stores. Will consumers return to real live shopping when all restrictions are lifted?
The way we shop now
Before February 2020, only 7% of food purchases were made online. Since early March this percentage has risen dramatically to more than 30% due to the stay-at-home rules and additional food retailers offering online facilities. Online grocery shopping in the UK is the fastest growing purchase channel, both in terms of value and growth, according to retail analysts IGD.
McKinsey and Company’s current research into consumer behaviour in the UK tells us that there is a growing reluctance to physically visit and spend in non-food stores. They report that “consumers continue to report decreased spending intent across all categories other than groceries and in-home entertainment. While consumers are facing decreased income and other financial impacts, they continue to cut back on spending.” People are questioning their discretionary purchases – do I really need more clothes and other material goods?
Statista reports that in their recent survey of retailers’ opinions on what would happen if the pandemic persists through the rest of 2020, 75% of the respondents said that it would have a negative influence on their overall sales. It is likely to be worse for non-food purchases, especially textiles, clothing and footwear.
Some apparel and luxury goods companies won’t come through the current crisis. They will have to position themselves to attract a different type of purchaser to survive. Those that do survive will do so because they have an e-commerce capability as well as providing the traditional sales channels.
The battle for foot traffic
We may be entering an era of fewer shops, less discretionary spend and a penchant for buying locally. In March 2020, there were 1859 store closures, fairly evenly split between independent operators and the chain stores. These were already in trouble before the pandemic. The Centre for Retail research (CRR) estimates that there will be more than 20,000 store closures this year, up from about 16,000 in 2019.
Stores that are reopening may have to offer financial or loyalty incentives or heavy discounts to attract their customers back. Shopping as entertainment or for pleasure may be a thing of the past. Retail operators need to give customers the one thing they can’t get online – human interaction. They also need to ensure the health and safely of both customers and staff as shoppers will continue to be concerned about the risks involved in face-to-face interaction.
According to McKinsey, customers in the UK anticipate that they will shop slightly less in grocery stores, quite a bit less in non-grocery stores and will go to malls a lot less. This behaviour is less pronounced in other countries, especially in US and Germany.
The global trend
GlobalWebIndex’s recent research has revealed that nearly half of global consumers do not expect to resume shopping in brick-and-mortar shops for ‘some time’ or ‘a long time’ once lockdowns ease. “Although the impact will likely vary across different regions, it is thought that non-grocery offline sales will see a 20% decline in growth overall.
Statista reports that in their recent survey of retailers’ opinions on what would happen if the pandemic persists through the rest of 2020, 75% of the respondents said that it would have a negative influence on their overall sales. It is likely to be worse for non-food purchases, especially textiles, clothing and footwear.
Mobile devices are the most popular device for online shopping. The major credit card companies such as Visa and Mastercard are delighted with the expansion of e-commerce and are actively trying to make their processes simpler, convenient and more secure. Visa calls the trend “couch commerce” where you make purchases from your mobile in the comfort of your living room.
The general consensus is that the retail store still has a place in the economy. However, there is an urgent need for innovation and improved personal service if retail operators are to tempt customers back into their stores.
As experts in retail and e-commerce logistics and e-fulfilment centre operations The Supply Chain Consulting Group is well-placed to help you develop the best strategy for your e-commerce logistics operations. The best starting point is to call the experts at The Supply Chain Consulting Group. We have implemented our own continuity plan and are working remotely. Call us for an initial no-obligation discussion on 01926 430883 or email us at info@sccgltd.com
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