The year 2020 has been a rollercoaster ride for retailers, with the COVID-19 pandemic disrupting global businesses and pushing economies into recession, tit-for-tat tariffs, growing counterfeit market and the accelerated adoption of eCommerce shopping.
The onset of the pandemic resulted in the enforcement of home quarantines and lockdowns across countries, coaxing people to order online, creating many new first-time shoppers, and facilitating the quick upward trend in retail eCommerce. In the months following COVID, brick and mortar sales saw a decline while eCommerce was at an all-time high. With these trends likely to continue post-COVID, retailers have a big challenge in front of them to pivot their businesses to become future proof.
In our webinar featuring Forrester, retail experts Sucharita Kodali, VP, Principal Analyst, Forrester, and Sanjeev Sularia, Co-founder & CEO, Intelligence Node, elaborated on these new eCommerce trends, supported by the latest Forrester research. They further dove into ways and processes retailers and brands must adapt, to fortify their digital armour and sell successfully to the 2020 online shopper. Here are the key excerpts from the webinar:
The Status of Retail in 2020 – Forrester’s Retail Forecast (Adjusted for COVID)
- This pandemic has the highest synchronization this century of global economies in recession with the highest share of economies to experience contractions in per capita GDP since 1870—more than 90%. This number is higher than the proportion of about 85% of countries in recession at the height of the Great Depression of 1930-32.
- Global retail sales will decline by an average of 3.9% in 2020, a loss of $1.2 trillion compared to pre-COVID-19 forecasts.
- In 2020, all regions will see retail sales decline and strong eCommerce growth.
- Not every sector has been crushed by the pandemic, however. Only four types of channels have seen growth to date in 2020: pureplay eCommerce, grocery, home improvement and general merchandise.
- The grocery industry has been one of four verticals within retail that has gained disproportionate share and has experienced record levels of revenue and profit in the last several months.
Other retail challenges and opportunities
- With the growing demand for eCommerce and studies showing an upward eCommerce adoption trend even post pandemic, eCommerce marketplaces will see an accelerated growth in the coming years.
- Data will play an important role in growing market share and retaining and acquiring consumers. To stay competitive and thrive in the age of Walmart and Amazon, brands will invest in better understanding data to craft hyper-personalized customer experiences.
- Loyalty programs are gaining popularity and will once again come to the forefront.
- Stakeholder capitalism seems to matter more to consumers with commitment to information confidentiality and data privacy being the most important parameters for consumers when it comes to corporate social responsibility.
- Brands must focus on excellent digital experiences and continue to tweak digital touchpoints to support conversion. Amplify the CSR messages if that is relevant to your brand.
- Brands and retailers should embrace a comprehensive operations and supply chain focused data strategy and work towards putting principles of eControl in place now.
The Evolving 2020 Online Consumer
After gauging today’s online consumer through a series of surveys across 9 months and 6000 respondents, Intelligence Node published detailed insights surrounding the changing behavior of today’s online shopper. Some of these insights are:
- 82% of shoppers will continue shopping online even when stores reopen.
- 94% of shoppers compare prices when shopping online.
- There’s a heavy demand for counterfeits, with 70% shoppers opting for counterfeits due to price considerations.
- In the global recession we are witnessing, 1 in every 3 customers are cutting spending on Fashion, Electronics & Home Decor.
- 1 out of 2 shoppers choose websites with fast, easy, and affordable delivery while 1 out of every 3 shoppers buy from the website with the lowest price.
- Splurging on grocery will continue with only 20% shoppers planning to cut back spending.
Executing a winning strategy and the way forward
- Digital touchpoints influence the buying decisions of a majority of customers in some way or the other, making a digital first approach a must have.
- As the consumer demographic is getting younger with Gen Z and Millennials ruling the eCommerce demographic, retailers need to engage in omni-channel, unified marketing, selling, and promotions strategies.
- Majority of the consumers (94%) compare prices on multiple websites at least some time or the other before making a buying decision – Competitive intelligence will be a must to thrive in the ever-expanding eCommerce arena.
- Retailers, especially departmental stores will have to continue investing in better logistics, curb-side pickup options, and exploring third party services for dropshipping and fast delivery options.
For Brands & Manufacturers
- Consumers are always going to be drawn to counterfeit products offering lower price points; putting the onus on brands and manufacturers to equip themselves with technologies to identify violators and closely monitor Minimum Advertised Prices (MAP)
- Brands and manufacturers will also need to have e-governance policies in place to identify and act upon counterfeiters and seller violations.
- Customers are losing faith in certain luxury brands like Louis Vuitton and certain online marketplaces like eBay due to multiple instances of counterfeit selling.
- Brands need to educate consumers about the counterfeit industry and the ills of purchasing such products.
- Direct to consumer (DTC) route might gain momentum due to diminishing trust in marketplaces like Amazon and eBay with brands like PepsiCo, Heinz and Nestle already spearheading this trend.