- 83% of commerce B2C and B2B decision makers reported a double-digit growth in digital revenue in 2020. In 2019, this was just 9%.
- Online orders for delivery saw ten years of growth in just 8 weeks.
- Online e-grocery skyrocketed, soaring 230% compared to pre pandemic levels. Market analysts Nielsen forecast that by 2024, 70% of us will do our grocery shopping online.
- The use of smartphones to complete purchases has doubled since 2018 and more than 50% of us say we use our digital devices to shop more than we did 6 months previously.
Work, entertainment, socialising… human behaviour has changed in all areas of life – The pandemic abruptly brought huge implications and substantial challenges for the retail industry as national lockdowns dramatically changed shopping activity and consumer expectation. Retailers were forced to undergo major operational shifts at speed to meet demand, remain competitive and ensure their survival.
Although online shopping was far from new, the government restrictions gave consumers little choice but to evolve faster than forecasts first predicted. According to McKinsey & Company, online orders for delivery saw ten years of growth in just 8 weeks. This cultural shift amplified growing online consumer habits and saw the creation of new behaviours.
Following their annual study of the latest consumer trends and global consumer shifts, Bloomreach states that 93% of all buyers say that Covid-19 changed their shopping behaviours – primarily buying online as much as possible. More than half B2C shoppers purchased items that they had never ordered online prior and online baskets increased in size as purchase frequency.
Prior to the pandemic, 88% of UK consumers did at least half of the shopping in person* but the consumer shift to digital channels is likely to remain. Customers who may have previously been reluctant to shop online soon became accustomed to the convenience, speed and often free home deliveries.
As the pandemic begins to abate and store shutters reopen, has the retail industry changed for good? What are the key trends and new shopping behaviours that look set to stay?
The disappearance of brand loyalty.
One of the biggest emerging trends is previous customer brand loyalty has plummeted as the impact of the pandemic reshaped the customer decision journey.
Supply chains became strained, items were out of stock, panic buying reduced supplies of essentials, and economic pressures forced consumers to tighten their belts. Whether a new method, a different brand, product or website, three quarters of buyers tried a new shopping behaviour during the pandemic… and as McKinsey & Company report, they plan to continue seeking out new brands in the future.
Greater support for the local economy.
Feeling a greater sense of community than they did before Covid-19, more people are shopping locally. Shoppers are choosing to support the local economy and independent businesses who have been hit hard by the crisis. Innovative business owners found creative new ways to serve customers, such as free cargo bike delivery of goods or a drive-through service. Whilst initially it helped businesses weather the storm, these commonplace delivery methods add value for customers. As such, they look set to stay.
People have rediscovered their local areas and are choosing to stay close to home. A recent survey by ecommerce platform, Shopify, reported that 68% of the 1,000 UK consumers surveyed believed that shopping locally was very important – 21% intend to continue doing so post-pandemic as previous barriers to buying local have been removed, such as price or choice.
Focusing upon a healthier lifestyle.
Grocery retailers have reported basket recomposition as consumers have made a significant shift towards healthier lifestyle choices. 30% of shoppers say that they are focusing on nutrition, eating healthily and purchasing more sustainable products in 2021.
The e-grocery sub-sector saw record growth. Demand surged for grocery delivery slots as shoppers sought safer alternatives and avoided a stressful supermarket experience. Online e-grocery skyrocketed, soaring 230% compared to pre pandemic levels. Market analysts Nielsen forecast that by 2024, 70% of us will do our grocery shopping online. A quarter of European’s have now tried a meal subscription service as consumers choose fresh produce and seek to reduce their food waste.
Globally £9.8 billion has been invested in the super-fast food delivery market+. Aiming to make issues, such as fighting for a delivery slot and poor substitutions a thing of the past, a host of start-up’s have launched promising delivery in 10-15 minutes, either for free or a nominal fee.
Food delivery services, such as Zapp and Gorilla’s operate using a dark store model; several supermarkets have also adopted this model to help them meet demand.
Whilst using a delivery service instead of popping out for milk seems a little frivolous, in fact, travelling in a 2-ton car to collect a bag of groceries is incredibly inefficient. With more than half of UK car journey’s remaining under 2 miles, it is estimated that street-porters and ebikes have the potential to remove 85 polluting delivery vehicles from the roads per day**. Robotic delivery using automated droids will also soon become a familiar sight in our smart cities with successful trails being completed across the world to provide green deliveries.
Increasingly ethical consumerism.
Whilst some consumer behavioural changes were almost instant, others began to emerge and have picked up pace, which has helped brands adapt their offering to attract new customers and increase lifetime value of existing customers.
Eco-active consumers are increasing across Europe, in particular. Increasingly aware of their impact on the environment and the need to reduce their carbon footprint, the provision of sustainable delivery options has become a service that is actively sought by buyers. In their 2021 report, Accenture noted that almost half of buyers would choose eco-friendly delivery if it were an option; solutions such as street-portering from hyperlocal delivery centres also known as micro fulfilment centres, (MFC) commercial EV fleets and pick up, drop off points (PUDO) or parcel lockers. The latter also reduces touchpoints ensuring the safer shopping experience that consumers are seeking. The report found that by using urban hubs for 50% of online orders, city-centre traffic emissions could be reduced by as much as 25% by 2025.
For the retailers, sustainable last mile logistics solutions attract ethical consumers, demonstrates CSR and reduces spend significantly. Final mile logistics account for the majority of delivery cost. By using hyperlocal delivery centres located in redeveloped under-utilised real estate, companies make multiple shipments in one go, providing parcel lockers or PUDO locations for buyers, a meeting point for foot and bike couriers, storage and micro mobility charging points. This also eliminates rising costs for missed home deliveries.
Changing customer experience expectations.
According to the World Economic Forum, the use of smartphones to complete purchases has doubled since 2018 and more than 50% of us say we use our digital devices to shop more than we did 6 months previously. The use of smart voice assistants has also increased by 42%.
Yet, no matter how good the technology, the online experience cannot replace seeing new trends, touching or trying a product or the social element of shopping with friends. The McKinsey & Company research shows that more than two thirds of us are reluctant to return to stores as health, safety and hygiene remains a key consideration affecting our shopping behaviour. Our cultural norms and consumer expectations have dramatically changed.
Whether in-store or online, retailers must focus on the entire brand experience providing a seamless customer experience. Customers expect the omnichannel multi-channel approach as the lines become increasingly blurred.
Experts predict that the way we use our high street outlets will change. Shopify predicts that the proportion of customers ordering in-store for home delivery will increase by more than half. Stores have also become free of charge online collection points in their own right. There is a high demand for hybrid fulfilment such as call/click and collect along with a substantial increase in customer research as they seek the best prices and make their buying decisions from a variety of sources, such as reviews.
Customer expectation must meet business reality.
More than three quarters of retail decision makers agree that ecommerce is and will be their most important sales channel in the next 1-3 years with many reallocating large budgets to improve the digital customer experience. (CX)
However, investing in digital tech and channels is not enough alone. It is vital that businesses look to regain brand loyalty by providing sustainable and healthy choices and promoting their green ethos. CSR is not only great for new business but is highly cost effective – reducing variable costs of shipping, returns and customer service.
Sustainable deliveries meet the demands from the growing numbers of ethically aware consumers. Environmentally friendly fulfilment using dark stores, hyperlocal delivery centres, smart lockers and cargo bikes, can solve the challenges and shipping cost of last mile deliveries – reduce delivery time, reduce emissions, congestion and reduce their urban logistics costs.
Whilst the huge growth of the ecommerce sector is likely to slow post-pandemic, individuals report that they do not intend to return to their old habits. Despite the change being forced upon consumers, operations that manage their business using the ominchannel model have greatly improved levels of customer satisfaction, provided sustainable choices and offered new and faster-delivery methods – why would shoppers go ‘back to normal’?
Convenience, speed and sustainability have become three of the biggest drivers for commerce, marking a huge cultural shift in our shopping behaviours. Covid-19 has been a major turning point for all forms of retail with research indicating that this dramatic shift to digital channels will become permanent.
Shopify, **Accenture, +UK Tech News.