Anna Hee Ustvedt

How Covid-19 has transformed the retail industry

Covid-19 has undoubtedly had enormous consequences for a lot of businesses - especially within the retail industry. To limit the spread of infection, physical stores worldwide were forced to stay closed in early 2020, and countless employees were sent home without the opportunity to perform their daily work tasks.

globale retail trends 2020


Although the restrictions have been eased a bit and many stores have reopened, there is no doubt that the number of customers in the physical stores has decreased, whereas the opposite is true in the e-Commerce universe. The requirement to wear a mask and, most importantly, the risk of becoming infected makes many people choose to shop online.

 

A customer-oriented industry

Retail is an enormously customer-oriented industry, where the customer's wishes and needs are often given higher priority than the businesses'. Today, consumers expect an omnichannel and personal experience when shopping. Therefore, many retailers have spent the last few years expanding their presence, tying their sales channels together, and using customer data to tailor personalized offers. For example, we see that more and more retailers are expanding their physical presence with a webshop or a profile on social media and are implementing loyalty clubs.

Covid-19 has forced retailers to turn up their readiness for change and adapt to consumers' wishes and needs at a pace never seen before in the industry. In no time, initiatives were made to minimize physical contact and ensure good hygiene. Physical retailers began establishing an online presence, several opened the possibility of Click & Collect, payment with cash was banned, and contactless payment was introduced. New sanitary rules came, and the decor was changed to ensure the distance between customers.

Although the Covid-19 crisis will hopefully subside soon, we can expect some of the changes made in the retail industry during 2020 will continue. According to KPMG, Covid-19 has accelerated some fundamental trends that also existed in the retail industry before. Deloitte also writes that Covid-19 has emphasized the importance of some trends that were already at stake. We have gathered an overview here.

 

Contactless payment and minimum interaction between customers and staff

Several retailers have set up plexiglass walls at the checkout and refused cash payment to reduce the risk of infection between the store's employees and customers. Overall, Covid-19 has increased the use of payment methods that require little or no touch. This can, for example, be in the form of payment via mobile or contactless credit cards. It was already an emerging trend, but it has received a massive boost in recent times because it reduces the risk of infection.

At the more high-tech end, several retailers have chosen to implement self-service solutions where the customer does not have an exchange with a sales employee at checkout at all. Self-service solutions are also a trend that has been underway in recent years but which has accelerated due to Covid-19. Before distance became an essential item on the agenda, the primary reason for implementing self-service solutions was to provide customers with a more comfortable and smooth shopping experience. The self-service solutions shorten, or at best, remove the queue so that the customer saves time. Most customers choose the self-service solution precisely because the line usually moves faster or does not exist.

Read more about why you should consider implementing self-service solutions in your business here.

Self-service solutions undoubtedly contribute to a better customer experience, especially now that we need to minimize social interaction. According to Business Wire, 87 percent prefer to shop where there are self-service solutions under Covid-19. With self-service solutions, retailers can show that they care about both their customers and their staff.

 

Omnichannel, omnichannel, omnichannel

An omnichannel mindset has been a burgeoning trend in retail in recent years. Today, many have a presence on several different online and offline channels, where their customers are offered a seamless shopping experience.

Covid-19 has not changed that – the opposite is the case. When the corona crisis broke out, physical retail stores worldwide were forced to stay closed for a while. This meant that consumption was primarily moved online. According to Nielsen's "The New Shopper Normal" survey:

  • Only 9 percent of consumers worldwide regularly shopped online before Covid-19.
  • When the restrictions went into effect, 27 percent of consumers shopped online for the first time.
  • In May 2020, 44 percent said they shopped online each week, with 23 percent doing so several times a week.

For online and omnichannel retailers, Covid-19 has had significantly less impact than for retailers who have only had a physical presence and have not yet entered the omnichannel universe.

Most physical stores have reopened now, but many have discovered the convenience of shopping online. Our new reality with a global health crisis means we need to minimize physical contact and wear a mask when we are around more people. It also means that many people have lost their jobs and are in a financially vulnerable situation where every penny count.

The fact that Covid-19 has moved the consumption online does not mean that physical retail has lost its purpose. Many people prefer to use both online and offline channels when shopping. For example, this can be in terms of Click & Collect, where the customer does not expose himself to the risk of infection by standing in line at the checkout but can easily pick up his goods immediately. According to Adobe Analytics, the number of Click & Collect orders in the United States in April 2020 increased by 208 percent compared to April 2019.

Consumers who, due to Covid-19, are in a financially vulnerable situation, use online and offline channels to research where to find the best prices and offers before leaving the house to visit the physical store or buy it online.

To run omnichannel successfully, your sales channels must work together. Your customers must be presented with the same prices, discounts, and inventory, regardless of which of your channels they meet you through. Omnichannel is a trend accelerated by Covid-19 and will undoubtedly be a trend we will also encounter in 2021. Even though the coronavirus hopefully comes more under control and the restrictions are eased.

Do you want to know more about what omnichannel is and entails? Read here and get in-depth answers to questions like: What is omnichannel? And how I create a successful omnichannel strategy?

 

People over profit

Although benefits such as free shipping and reasonable offers are undoubtedly valuable means of creating a strong customer base, good values ​​have never been more important to consumers than now. A study by Forrester shows that the proportion of consumers who consider a company's values ​​before buying is increasing. In 2017, it was about 52 percent of consumers, and by the time the report was released in early 2020, it had risen to more than 55 percent. According to 5wpr's "Consumer Culture Report", 71 percent of Millennials are willing to pay more for a product if they know a lot goes to charity.

Covid-19 has not changed this trend but instead emphasized the importance of it. The companies that during the pandemic have prioritized profit over their employees have experienced criticism from consumers. An example is the Danish retail giant Bestseller, which laid off 750 employees in the spring and postponed the rent payment to 200 store landlords.

The need for unity and a sense of solidarity grows when a crisis hits us. At the same time, a crisis with significant economic consequences as Covid-19 can create mistrust of businesses among consumers. That was the case during the global financial crisis in 2007. According to Walther and Skytte, authors of the book: Medbruger: Forstå hvordan et velformuleret purpose kan gøre skeptiske forbrugere til tillidsfulde medbrugere, trust in a company can be restored if the company manages to communicate that they are responsible and helpful. Therefore, "people over profit" is a message that right now is extra essential to communicate.

 

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