Retail
in the time of coronavirus
In this four part guide we look at how consumer behavior has changed, how stores need to adapt to those changes, the role technology can play, and how payments will play a part in helping businesses move forward.
Chapter 1
Waiting, Wanting, Changing
Maybe you've heard this tale before? Two people who've had a rough day, wait by a tree for something or someone. They wait. They sit around. They discuss trivialities. They talk more about this potential arrival. But the person they’re waiting for never arrives. It's the plot of Samuel Beckett’s Waiting for Godot, but it also sounds a lot like our lives for the last 6 months. Waiting for answers, waiting for stability, waiting for that package to finally arrive
From a business perspective, parts of the experience of the coronavirus have felt exactly like that, helplessly waiting for decisions from governments and international bodies on when we can start again or make some effort at progression.
For retailers, Godot has arrived, or more accurately he has donned a hazmat suit and a handheld UV light and is taking his first cautious steps into the open. All over the world, retailers are tentatively opening their doors or frantically preparing their stores to welcome shoppers again.
The prerogative of retailers is to seek a resumption of business as usual, but what we once recognized as usual may now be resigned to history. As with most aspects of society, COVID-19 has forced our hand and encouraged an inspiring phase of evolution among retailers.
Behavioral shifts
People are living differently, working differently, and buying differently. There’s arguably been no swifter shift in consumer behavior in history. We’ve identified four stages of behavior that shoppers have undergone in this short period. The question we’ll only be able to answer months from now is will these changes to shopping habits be permanent, or are they temporary results of an unforeseen situation?
Panic buying
The most shocking change in consumer behavior was the mass levels of panic buying. Caused by high levels of anxiety, worry, and in the most part because everyone else was doing it, voracious consumers left the aisles of grocery stores and pharmacies empty. US retail sales rose by 17.7%, while UK grocery sales increased by 22%. In China, JD.com reported that its online grocery sales grew 215% year over year during a 10-day period between late January and early February. While these trends are leveling out, a lasting impact will likely be seen in the value people are beginning to place on essential items such as basic foodstuffs, hygiene products, and pharmaceuticals.
E-tail therapy
As the reality of lockdown began to settle in the public consciousness, shoppers shifted to ecommerce in their droves. Processed volume via Adyen for online retail increased between the end of March and middle of April. Excluding purchases of necessities, shoppers shifted to online shopping to ease the boredom of isolation. In Britain, March sales of electricals and DIY products were up 42% and 14% respectively. Many retailers were quick to move their businesses online or explore other methods of selling to loyal customers remotely.
GrandVision, the leading optical retailer, noticed the shift immediately:
“The outbreak of the crisis required a strong change to allow us to adapt to a sudden new normality where, from one day to the next, the daily offline turnover was zero but the online turnover had even increased fivefold.”
Alberto Dal Santo ∙ Head of E-Commerce, GrandVision Italia
Pent up demand
For those shoppers unwilling to make the leap online, their demand for goods has been building aggressively for the last three months. Data coming from Asia suggests that there are millions of wealthy shoppers sitting in the long grass preparing to pounce and purchase. Hermès’ Guangzhou store raked in $2.7m on its reopening day, believed to be the highest-ever tally for a single boutique. The starvation of shopping was such that shoppers appear to be overcompensating by spending more than usual. This is in part due to the decrease in spending by the wealthy on luxury experiences, their excess funds are now going towards possessions. For many retailers, these are healthy indicators that their target audience will still be equipped with the funds required to start shopping again as soon as doors open.
Vigilance
For the vast majority of shoppers, vigilance will be the predominant behavioral trait now and for the foreseeable future. Where until recently, the aim of most retailers was to deliver an experience that excited, now it will be to deliver one that is safe. The relaxing scents of lavender and vanilla, often used by retailers to make customers feel at ease, will be replaced by a new comforting scent: antibacterial spray.
It may seem counterintuitive, but one of the best ways to capitalize on the closure or limited opening of your retail store will be to have an engaging online experience. With all your items listed with detailed information and hi-resolution images, shoppers can do their research at home, taking screenshots if necessary so they know exactly what they’re looking for. This will reduce time in store, make them feel more at ease, and reduce unnecessary interactions with staff.
Environmental conditions are causing panic, boredom, and decreases in casual spending for some and increases for others. The primary learning for retailers is that they need to remain flexible and cater to whatever emotional state their shoppers may be in. In Chapter 2 we’ll look at how stores can adapt to these.
