The impact of the 2020 lockdown on the whole of the retail industry has been unprecedented
The impact of the 2020 lockdown on the whole of the retail industry has been unprecedented, leaving many businesses who had never even considered digital and eCommerce (or actively resisted it) under huge pressure to try and fill the void left by the closure of their high-street stores. The closure of highstreets, and restrictions on leaving the home left traditional bricks-and-mortar retailers feeling the pinch as they lost their footprint and all-important access to their customers.
This impact was not reserved for smaller, independent retailers; giants also felt the impact, ultimately even harder. Whilst most fellow “non-essential” retailers ploughed efforts into starting or supporting their digital and eCommerce operations, UK high street staple Primark continued its stance of avoiding digital channels, leading to zero-income during the lockdown, with the firm reportedly suffering “a £650 million loss for every month stores were shuttered”.
Of course retailers like Primark have taken a deliberate stance on not taking on digital transformation, but it is very clear this has hurt them when the ‘worst case scenario’ has come to fruition. In an example like Primark’s, hindsight is certainly 20:20 and we are yet to see whether the pent-up demand (that it is assumed will be in place) will be released as they reopen all of their 153 UK stores in the coming days & weeks. However, for many other retailers, refusing to embrace digital commerce seems like a catastrophic decision despite the multitude of reasons a business may want to avoid going online - from distribution challenges & costs, to ethos and culture clashes.
There was a marked global resurgence of eCommerce online shopping during the 3 months of high street lockdown. eCommerce businesses saw an average 126% rise in online revenue for the same period last year in the United States, with other notable revenue spikes coming from the Nordics (Denmark, Norway, Sweden, Finland, Greenland & Iceland), experiencing 166% year-on-year increase, and the wider European region experiencing a 115% increase. The data indicates that eCommerce will enjoy continued success once lockdown is lifted, reinforcing the importance of embracing online channels.
A study by Kantar looked at France, Germany & the UK (Europe’s 3 largest eCommerce markets) and concluded that lockdown shopping habits are very likely to continue once social distancing diminishes and high streets start to get back to normal. Kantar predict that eCommerce will further outperform traditional retail in what remains of 2020, with the study revealing that 33% of households believe their volume of online purchases will increase. This is predicted to increase for eco-friendly shoppers to around 40% and around 45% for households with children – a marked behavioural shift which retailers who did not embrace digital really have to contend with.
As a result of this, many brands who embraced digital during the lockdown now have the challenge of enticing shoppers back into their physical stores as they reopen, with conflicting messaging. Many businesses may want to consider encouraging a hybrid-approach, encouraging Click and Collect behaviours to bring online customers back in-store (retailers will be experiencing a subtle dip in sales as impulse purchases and in-store up-sell opportunities are missed, for example). In fact, one study revealed that 42% of UK consumers said they would now rather turn to ‘Click and Collect’ services for groceries and pharmacy products.
Savvy brands will have ensured that there is an inherent value-add to visiting their physical stores beyond being able to browse at leisure – and there has been an ongoing battle for attention in physical retail which was raging long-before the coronavirus pandemic. Retailers have been trying to make shopping more experiential for some time to alleviate the cannibalisation of sales to their online divisions. Some high streets and shopping centres have even hired entertainers to make the social-distancing messaging a little less confrontational upon throwing open their doors.
The addition of in-store eateries and coffee shops, personal shoppers, peripheral entertainment and more all make shopping in physical stores an experience to enjoy rather than a chore to endure. The irony here is that these businesses will likely have to turn to digital marketing to promote this revived proposition and messaging.
According to a survey of over 2,000 UK consumers (produced by retail-technology start-up Qudini), one of the major challenges for retail businesses moving forwards post-covid is building (or re-building) trust in the retail experience and in their brand as a whole, citing that: “Retailers in the UK should be looking to build customer confidence before reopening their stores while navigating through the Covid-19 pandemic”.
Brands that are poised to win as restrictions lift are those who evolved to embrace the digital world, whilst paying very close attention to their customers throughout the lockdown. They are brands which have communicated consistently, looked to take control of the conversation, filled voids, and built authority & trust despite the uncertainty.