How 2020 has dramatically changed consumer behaviour and why brands should care.
2020 is approaching its end and we can say, without a doubt, that this has been a year of great uncertainty. We have experienced unprecedented transformations within society, which ultimately lead to a complete change in consumers behaviour.
In addition to the Covid-19 pandemic, which has largely contributed to this unanticipated shift in consumers behaviour, there were several key technological and political factors which impacted consumers behaviour.
With many different forces at play, today's retailers and brands are working more than ever to understand the changing mindset and rapidly evolving consumer purchase behaviour. This understanding is both crucial to success and key to fuelling top-line growth in the future.
But what had exactly changed?
1. New Online Shopper
When the Covid-19 pandemic forced stores to close, many consumers had no choice but to turn to online channels. For many of them, it was the first time in their lives. This was not just a temporary phenomenon that occurred during the lockdown, rather it turned out to become a durable change in the consumers behaviour. Surveys found that 82% of consumers will continue to shop online even after stores will re-open (or have already re-opened, depending on the country in which they live). The shift that consumers made to e-commerce is here to stay, even after the pandemic is long gone.
Retailers must prepare for this new era by changing strategies to provide a more unified and multi-channel experience. They ought to take a digital approach to meet the increasing online consumer base. This will not only enable them to compete in the future, but also be prepared to convert shoppers with little or no cost of acquisition.
A recently released report by McKinsey shows that, by the end of the year, consumers plan to continue shopping online:
2. Reduce of Overall Spending
In the last year, economies around the world have experienced slow growth, weak expansion, political and economic instability and a slowdown in almost every area of business. Of course, the pandemic made things worse by completely paralyzing some economies, closing businesses and increasing unemployment.
This has consequently led consumers to reduce their overall spending and prioritised certain categories over others. In the global recession, 40% of consumers agreed to cut spending on clothing, footwear and accessories. Evidently, many persons were forced to stay at home as a direct result of the pandemic. This has led to an unexpected growth in the categories of food, electronics, and entertainment.
3. Worldwide Shopping, increased competition and higher standards
With the ecommerce growing exponentially in this time, many people are choosing to buy their products outside of their own country. Whether by price, quality, or availability, the purchases have broken any barrier of location that previously existed.
This has proven to be an advantage for companies which can reach their customers all over the world, as consumers are more incline to these types of purchases. On the other hand, it has also increased the competition as the consumers are faced with endless options. Hence, it becomes increasingly important for companies to clearly differentiate their value proposition, making it attractive and compelling to their target audience. “Quality and customization,” today more than ever, can be considered as a new mantra.
Value will be the primary reason for consumers to navigate towards new brands as well as new channels to shop. Furthermore, convenience and availability are most often cited as the main factors driving consumers' decisions about where to buy – thus posing new challenges on logistics and effectiveness of digital operations and digital channels.
How business should act towards these changes?
It is of great important to keep in mind that the popularity of online shopping will continue to gain momentum and new segments of online consumers will emerge. Therefore, to capitalize on demand, retailers must invest in technologies that enable faster delivery, higher exposition and visibility, and a great customer experience.
As more consumers turn to e-commerce, in-store shopping will evolve to be a matter of education and meaningful engagement between buyer and brand. This will potentially evolve towards appointment shopping, online consulting and the growth of data-based technology to support customers on the path to purchase, from the store to the line.
To conclude, the wave of transformation the retail industry is going through is undeniable. The changes brought by COVID-19 19 are probably here to stay, a new era of online shopping will unfold. The future of retail is based on data, digital technology, consumer experience and core values, and brands need to be prepared to embrace the change.
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