By Jack M. Germain
Aug 4, 2020 4:00 AM PT
In the new COVID-19 reality, consumers have extra time on their hands to find other ways to shop as traditional storefronts become less accessible and convenient.
Several recently-published reports and surveys tracking changes in consumer buying habits reveal a growing competition between old versus new shopping habits. This industry-wide tracking of changes in consumer shopping presents in-store retailers and online merchants alike with vital information about how to adapt their marketing efforts to appeal successfully to a new buyers’ marketplace.
Some consumers are trying to buy into morphing brick and mortar (B&M) shopping experiences. But legions of shop-from-home consumers are leaving in-store purchases behind in favor of online shopping that delivers products to their doors. The alternatives of order-by-phone or buy online with curbside pickup later is less attractive.
Included in their new shopping quests, consumers are using their expanded time at home to get a head start on their holiday shopping with a focus on online outlets. The additional free time to browse, coupled with the unpredictability of physical stores closing again, is pushing shoppers to purchase holiday gifts online earlier than usual this year.
With the potential of a second wave of hiding from COVID-19 in new lockdowns, consumers do not want to risk delayed deliveries due to supply chain issues. Instead, they are using their laptops and mobile phones to check off holiday gift lists and household supplies provisioning.
The E-Commerce Times discussed the implications of these new consumer buying trends with marketing experts. The results show that e-commerce is overwhelmingly becoming the first choice for many consumers. But some consumers are beginning to show renewed interest in returning to their previous shopping norms.
How to get old customers back and attract new ones is a work in progress for both retail and e-tail merchants. The expert advice gleaned from these reports and surveys could keep their doors — both physical and digital — open for business.
During the last quarter, online apparel sales increased by 34 percent and electronic sales jumped by 58 percent. That shows a significant shift from brick-and-mortar sales to e-commerce due to coronavirus restrictions.
Manufacturers and retailers are already working overtime on their e-commerce setup. The goal is to compensate for lost sales in the past few months.
But now they also need to start preparing for an earlier than usual holiday shopping season. This will more than likely be ruled by online sales, according to recent reports.
Data from the retail technology company Intelligence Node reveals some surprising trends are becoming the new normal. That data shows a continuing rise in online shopping:
- At the start of the pandemic, only 31 percent of consumers shopped online; now 82 percent of consumers say they will continue to shop online, even once stores are fully re-opened.
- Sixty percent of consumers surveyed said they rely more on online shopping now than they did before the pandemic.
Intelligence Node’s data shows new trends in the works for holiday spending:
- Almost one-third (28 percent) of consumers reported that they are saving up for Amazon’s yet-to-be rescheduled Prime Day compared to other holiday shopping events;
- Fifty-seven percent said they have yet to start budgeting for holiday shopping.
Data analysis points to growing worries among consumers about their near-term spending ability. Consumers are eager to shop but are more cautious about how they spend money:
- Nearly one-third of consumers said they plan to spend less on school supplies this year.
- Forty-seven percent said they will spend the same amount of money on school supplies this school year, compared to last year.
- Forty-four percent said they are considering buying more private label items in order to save money.
Impact on B&M Retailers and Manufacturers
Retailers who are struggling to get set up selling online will find it very difficult to survive in the post-pandemic world, according to Sanjeev Sularia, CEO and co-founder of Intelligence Node. The increase in e-commerce sales during the pandemic will continue, even as stores reopen, since many consumers have become accustomed to making purchases online.
“A recent survey we conducted in the U.S. revealed that a whopping 82 percent of consumers will continue shopping online, even once stores fully reopen. More than ever before, it is imperative for retailers to set up their online operations and adopt a digital-first approach if they haven’t done so already, he told the E-Commerce Times.
Speeding up that process means retailers must change their current singular view of consumers. The retail world has been giving increased importance to a single view of the customer until now.
“However, what is now important for retailers’ strategy is to have a single view of inventory. With order online and pick up in-store options gaining importance during the pandemic, it is pivotal for retailers to have a strong omnichannel strategy with a single view of inventory in order to capitalize on changing consumer shopping trends and prepare for the earlier shopping season,” explained Sularia.
Intelligence Node data analysis points to a less-than-ideal holiday shopping season. Consumers will be comparing prices in-store as well as online, more than ever.
According to the survey, 26 percent of consumers said they plan to cut back on gift buying during major holiday shopping events. Another 41 percent said they are very likely to take advantage of summer sales this year.
“This makes competitive pricing at the right assortment levels very important. Since a lot of this shopping will happen online, a strong SEO and SERP (Search Engine Results Pages) strategy should be central to any retailer’s overall strategy for the shopping season to ensure that the product is highly visible and popular among shoppers,” noted Sularia.
Strategies for staying ahead of shopping trends and being prepared for a possible return to in-store shopping could be critical for retailers. Private label brands can give retailers a big boost in the post-pandemic world and help ensure that they are prepared for a possible return to pre-pandemic shopping routines.
“I predict that greater investment behind private label, especially in lifestyle categories, will continue in the long-run. Private label is a high ticket and high-margin component in an ideal category mix for most large retailers,” he said.
From an inventory view of private label brands and retailers, inventory cycles that are already in-store / procured will work as a great asset post store openings, he added.
Online Shopping Surge Continues
COVID-19 clearly started a trend away from in-store shopping by spurring a spike in e-commerce, according to an Adobe report on RetailDive. A related Adobe Digital Economy Index report further shows that buy online, pickup in-store (BOPIS) transactions jumped 208 percent year-over-year in April.
That report said the spike in BOPIS transactions is a sign that consumers want to continue to limit their potential exposure to the coronavirus by reducing their time in stores. Online grocery sales alone grew by 110 percent.
Grocery stores have stepped up their digital offerings as essential retailers became the focus of consumer spending. For example, the coronavirus pandemic sent grocery app downloads to new heights.
Digital apps pushed essential retailers to invest in contactless payments, delivery, online ordering for drive-thru pick-up, and mobile checkout options for consumers. Perhaps these strategies are paths B&M shops not yet having an online presence need to pursue.
Survey results AI-led merchandising and personalized experiences firm Qubit published on Aug. 3 bears out the rapid shift in shopper behavior and its potential impact on holiday shopping this year.
Store closures that are not dictated by demand but rather by the public health crisis, present an unusual scenario for brands. They are forcing unexpected and massive overhauls of their marketing and digital commerce strategies this year, according to Graham Cooke, CEO and founder of Qubit.
“The survey data also supports our view that a permanent shift in the balance of online and in-store shopping is occurring and is not likely to revert back entirely to pre-COVID-19 levels. Retailers are now forced to implement an expedited roadmap to their digital future or face extinction,” he said.
Qubit Survey Insights for Retailers
Some of the insights in the Qubit survey reveal consumer sentiment towards present-day shopping realities:
- One in two consumers currently does more than 75 percent of all shopping online; one in four consumers shops online for 90 percent of the family’s shopping needs.
- More than half of consumers are shopping more with grocery brands, followed by fashion, and beauty, and cosmetics.
- Loyalty is decreasing with almost 40 percent of consumers (36.6 percent) stating they now shop with more brands than they did a year ago; 46.2 percent of consumers say they are less loyal to the brands they love.
The survey also gauged consumer attitudes towards the upcoming holiday shopping season and whether respondents’ shopping behaviors and spending will change in the future compared to years past:
- Thirty-five percent of shoppers say they will shop online more than they did before the pandemic; meanwhile, just 10.6 percent of shoppers say they will do less shopping online than they did prior to the pandemic.
- Forty-four percent of respondents plan to shop more online during this year’s Black Friday, Cyber Monday and Christmas holidays as compared to last year’s holiday season.
- Less than 30 percent of consumers feel uncomfortable returning to stores, with 36.1 percent saying they plan to return in two months and 18.9 percent consumers planning to return in 2021.
“The key findings of the survey indicate a seismic shift in the way consumers will shop for the rest of 2020. Sales have always been dominated by in-store; however, the transformation that many expected to take 10 years has taken three months,” George Barker, head of marketing at Qubit, told the E-Commerce Times. “E-commerce has become the primary channel for consumers.”
Message for Brands
With more people than ever using the online channel as their primary shopping place and an expectation of relevant experiences, personalization needs to become pervasive. A lack of relevant offers, promotions and journeys will result in diminishing loyalty and a customer only too happy to shop with brands that have customer centricity at the heart of their strategy, according to Barker.
With such a push towards Internet shopping, B&M stores can still maintain sustainability beyond curbside pickups, he believes. Stores still definitely have a place and will continue to be important for multichannel retailers.
“But the experience consumers might have within that store might be completely different from what we currently see,” he predicted. “As we have seen with some e-commerce pureplay brands’ stores in key locations, the store of the future will be experience-led and underpinned by technology.”
Native advertisement platform company Cardlytics helps marketers track how overall spend is changing each week and take action to drive incremental sales. The company’s latest State of Spend report indicates in-store retail sales are now showing positive year-over-year growth.
Cardlytics urges marketers, especially those working for B&M stores, to focus on these pressing questions:
- When are customers starting to make in-store purchases?
- How quickly am I gaining or losing share against my industry?
- How is my e-commerce channel performing against my category?
- Are my newly acquired customers likely to churn once we get through the pandemic curve?
Cardlytics’ view into US$3 trillion of annual purchase data revealed that consumer spending behavior is shifting in response to the coronavirus. Marketers should watch consumer spending patterns closely to help drive sales, according to Nate Bucholz, vice president of e-commerce partnerships at Cardlytics.
“Despite the recent surge in COVID-19 cases that have forced many brick-and-mortar businesses to reclose their physical locations, in-store retailers are shockingly showing YoY growth. Spend at B&M retailers was up one-point-two percent the week of July 2 compared to the same time last year,” he told the E-Commerce Times.
This is a significant increase for B&Ms. In-store sales were down by 12.8 percent YoY in Q2. It indicates that consumers still value the physical shopping experience, he added.
Using the Spend Data to Drive the Next Sale
Understanding the spending data on a regular basis can be very useful for marketers and B&M stores. The fact that brick-and-mortar stores were able to see a one-point-two percent growth in YoY spend even through a pandemic is significant. It demonstrates the value that people find in the in-person shopping experience, Bucholz noted.
“While B&Ms have had a difficult run with the rise of e-commerce, they should continue to play up the value of shopping in-store to their customers. Offering shoppers financial incentives, facilitating contactless transactions and coupons, and ensuring them that your store is compliant with COVID-related safety procedures will help drive foot traffic, even during these complex circumstances,” he said.
Indicators that were previously relied on to target consumers — like geographics and demographics — are far less accurate predictors of what a consumer is likely to buy in the future than purchase data on what they bought in the past, Bucholz explained. Instead, spend data tells the story of not only how people are likely to spend their money; it identifies customers who typically have high basket value, repeat purchases, and spend with competing goods and services.
Another encouraging sign for B&M retailers is the gradual shift back to non-essential buying. By seeing where, when and how spend is taking place, particularly in discretionary categories, retailers will be better positioned to target only the consumers that are ready to spend.
Strategies to Stay Ahead of Shopping Trends
The future of the retail industry is uncertain. Consumers are acclimating to a new, more cautious way of life. Still, whether it is an online business, a physical store, or a retailer that offers both options, the main goal remains the same: drive loyalty, according to Bucholz.
“Even during a pandemic, spend with physical retailers is not only persisting, it is growing. That said, there is no denying that as a result of COVID-19, many consumers who once preferred the physical shopping experience will begin moving towards other channels that require less contact. This fact leaves many B&M retailers wondering if they can sustain solely on in-store sales,” he said.
Two strategies are essential to surviving these challenging retail times, he added. offering omnichannel services was always an important marketing strategy. Now it is essential.
“Retailers struggling with growing their online sales should, of course, remain focused on driving foot traffic, ensuring their shoppers are comfortable, and providing an exceptional experience,” Bucholz advised.
But, these same retailers must simultaneously place added focus on driving spend with online or mobile shoppers. By offering consumers cash-back deals that can be redeemed in-store or online, retailers can ensure that their shoppers are able to spend and save, wherever and however they like. This will hopefully incentivize a sale and drive loyalty down the road, he explained.
Pipsay Poll Shopping Highlights
Global opinion-gathering platform Piplsay on July 30 published the results of a shopping attitudes poll of 30,315 Americans. The main takeaways offer strong insights into how respondents are handling their expenses through the pandemic and how they see it affecting their holiday shopping.
Here is a quick summary of the results:
- Forty-three percent of Americans plan to restrict their holiday spending this year.
- Seventy-one percent of Americans have reduced their spending in anticipation of a recession or pay loss.
- Fifty-four percent of Americans expect their holiday shopping to be impacted by the pandemic.
Jason VandeBoom, CEO of ActiveCampaign has some keen insight into how the retail industry can adapt to capitalize on changing consumer shopping trends. ActiveCampaign specializes in email marketing, marketing automation, and CRM tools to create customer experiences.
“Over the last decade, we’ve seen consumers increasingly rely on peer reviews to make purchase decisions. This means five-star reviews are the most important tool you have at your disposal. Selling great products is a starting point to earning that five-star review, but it’s not enough,” he told the E-Commerce Times.
Buyers today make most of their purchase decisions based on the overall customer experience. But one of the biggest untapped opportunities for retailers is post-sale engagement, he offered.
“That is where it is possible to discuss prior purchases, recommend complementary products, offer personalized promotions, or even request customer reviews,” VandeBoom explained. “Many retailers overlook this part of the customer life cycle, but the way you treat customers once they buy is how they will remember you. So it is very important to maintain positive engagement post-sale.”
Managing the customer engagement process across multiple channels is essential. Buyers now expect a cohesive experience across the e-commerce website, chatbots, social media, SMS, and more, he added.
Retailers must find ways to connect customer engagement across multiple channels. This has introduced a lot of complexity to managing customer relationships.
“Businesses need to find ways to leverage automation to manage it all,” VandeBoom concluded.