The extreme shifts in shopping behaviour in recent months have been shocking to witness. The news of the pandemic sparked an immediate rush to grocery stores and we saw the world supply of toilet paper quickly disappear as panic buying went into full force. Shortly after, people started to settle into a new reality that revolved around their living room. The “stay at home” customer has become a critical audience for brands.
Online spending habits also rapidly evolved. We saw purchase increases of 216% for sportswear and sporting goods, 190% for housewares and DIY supplies, and 84% for gaming. In parallel, we saw decreases of more than 97% for ticketing/events, 73% for travel – and the list goes on.
We also saw the resurrection of previously shunned processed foods from old favourites such as Kraft, Heinz and Kellogg at a rapid rate. Imagine me telling you a year ago that Warburtons crumpets would have a 55% bump in sales in the space of a few months? Not possible, you would have said – but this is the era of the “stay at home” customer.
This customer was also consuming content online at a breakneck pace. TikTok had the highest download numbers ever – 315 million –for any app in a quarter, Instagram saw a 70% increase in live viewing in the early days of the pandemic and Netflix added 16 million subscribers globally (double its projection). Customers were (and still are) clamouring for content and digital experiences, and brands were struggling to keep pace.
Reimagining retail for a new era
The heritage retail model was already on a shaky foundation that began to completely crumble as a result of an inability to adapt to new shopping behaviours, crushing debt obligations owed to private equity buyers and an over-reliance on physical storefronts. First came Debenhams, then Neiman Marcus and JCPenny in the US, and more are sure to follow.
From the direct-to-consumer revolution and new retail robots to delivery models and overspent retail presence, Covid-19 accelerated what started as a slow burn into a full-blown bonfire. Now that retailers are facing a new world, they must reimagine their business model to survive.
This is an opportunity to triple down on digital transformation. From the top of the funnel through to purchase and delivery, we’ve seen incredible shopping innovation. For instance, western brands such as Ikea and BoConcept are experimenting with artificial intelligence, augmented reality and immersive experiences.
Ikea, which was already a leader in AR, recently acquired AI start-up Geomagical Labs, a company that is using computer-visioning technology to allow users to scan a room with their phone, remove all existing furniture and virtually repopulate the space with Ikea products. Many retailers are also creating new services such as home delivery and "buy now, pick up in store" (known as BOPIS).
But the biggest success has been live-streaming ecommerce in China, which is expected to double and reach $129bn in 2020. Live-stream ecommerce, which is a bit like TV shopping for the 21st century, has the potential to completely transform the online shopping experience, largely driven by a colossal influencer ecosystem. To date, we have seen influencers such as Viya not only driving record commerce, but also record engagement. The audience for her nightly online show, where she sells everything from cosmetics to cars, reached 34 million people last month – larger than that of the Game of Thrones finale or the Oscars.
Retailers need to shift their physical stores from shelf spaces and stockrooms built for volume to deliver a more curated and impactful experience for their customers, from the store design to the way customers interact with sales reps, and from contactless pick-up options to setting up live-streaming influencer studios and frictionless payment experiences. Cashless retail is a new reality, as it is more hygienic and also provides greater opportunities in the realm of data capture and retargeting.
As high streets and shopping centres started to reopen, retailers saw a surge in demand, with research group Springboard reporting that footfall was higher. But shopper numbers are nowhere near pre-lockdown levels.
We’ve reached a retail reckoning and now is the time for retailers to innovate with courage, experiment with new models and build deeper relationships with customers. Even though showrooms are no longer only in stores, the creative opportunity is larger than ever. Brands that embrace technology fully to reimagine the end-to-end retail experience will be able to position their business models for the future.
Steven Moy is chief executive of Barbarian
Picture: Getty Images