How will retailers manage changing shopper behaviour across channels?
The COVID-19 crisis has radically changed the way in which people shop and what channels they use. Many of these behaviours will stay with us or continue to evolve, and it’s unlikely that we will see a return to the way we have done things before.
We have seen the move to online shopping accelerate during the crisis and reach levels unseen pre-COVID. As consumers were forced into lockdown or to self-isolate in their homes, online has benefitted from the changing shopper behaviour. Those who did decide to go in-store were faced with a very different experience, which included social distancing, hygiene measures and mask use, and in some places lengthy queues outside the store. Online grocery shopping offers the benefits of convenience, time saving and health and safety in these unusual times.
Share certainly shifted more to e-commerce in the early stages of the crisis but has remained at an elevated level. In Italy, e-commerce spending was low compared to other markets at just 1% share, but is predicted to reach 4% by the end of 2021, maintaining 95% growth year on year. It’s interesting that the crisis is also introducing older shoppers to online. According to IRI’s Shopper Survey in Germany, 7% of baby boomers ordered food online during the crisis and 5% intend to continue. Retailers will need to adapt online for this group of shoppers in order to meet their needs.
Supermarkets will also need to expand online delivery services if they are to meet this growing demand, including investment in click and collect, a much more cost-effective option than home delivery. We have already seen many of the big supermarkets turning to third party delivery services as a way of expanding their delivery capacity as a time when it’s most needed, including Waitrose partnering with Deliveroo, and Asda with Uber Eats to offer delivery in just 30 minutes.
Proximity is also a deciding factor in shopping missions today. Location has always been important in store choice for shoppers, but during the pandemic, particularly in the lockdown phase, it was critical, even a lifeline for some. The convenience channel and local stores have seen a huge increase in footfall as a result. With many people working from home or unable to work, they are less likely to go further afield for groceries, so this trend is set to continue.
But convenience is not always benefitting from changes in shopper behaviour. With fewer people travelling to work or restricted in terms of travel, those convenience stores in travel hubs are struggling, while on-the-go food and drink sales are down in these stores. Convenience retailers will need to give customers what they need when the need it; providing all the benefits of local shopping, with a range of products at the right price.
With a recession on the horizon, the economic downturn could prove to be the main driver behind the discounter bounce-back. According to an IRI Italy Shopper Survey, nearly a third of Italian consumers plan to visit this format more frequently. Already well established and positioning themselves as supermarkets with a limited range, the discounters will continue to grow, leveraging the need for consumers to trade down. Supermarkets will need to differentiate themselves and provide a range of products and prices adapted to various profiles of shoppers that have a big discrepancy of budget available.
We have seen Tesco recently launch a new price strategy against the discounters in the face of a COVID-driven recession, in an effort to prevent a second growth phase after the success of the discounters in the wake of the 2008/9 banking crash. First with its price-matching campaign against Aldi pre-lockdown, and now with its Great Prices Every Day – with plans for everyday low pricing for own label and brands – the retailer has set out its stall.
While COVID-19 has changed the way we live and shop, this shopper behaviour is still evolving, while others are here to stay. Convenience and speed have taken over from brand and retailer preference, while getting a much-prized online delivery slot is the new normal.
Let’s not forget that there is also the possibility of a resurgence of the virus. We are already seeing spikes in some countries and regions, leading to new restrictions and delays in lifting earlier restrictions. In the ‘next normal’ we as an industry have to be ready to move ‘back in time’ sometimes as restrictions are imposed once again.
Patrick van der Zee, Senior Vice President International Retail, IRI
