A year of coronavirus health concerns and ensuing government lockdowns have led to more online shopping — and greater use of local businesses. But evidence suggests these shifts in consumer behaviour will outlast the pandemic, meaning retailers will have to adapt, to ensure goods can be delivered quickly and cheaply.
The shift to online shopping
Online shopping surged after restrictions were first imposed to control the spread of Covid-19. “In the first eight weeks of Covid, when everything was shut down [in the US], ecommerce accelerated as much as it had in the 10 years before that,” says Tamara Charm, co-author of McKinsey’s US consumer sentiment research.
When US restrictions were then relaxed, after the first wave of coronavirus cases subsided, the proportion of sales made online fell back — but remained at a much higher level than was seen before the pandemic. A similar trend was observed in other countries.
“There’s been a fundamental shift,” says Rory O’Connor, chief executive of Scurri, which supplies retailers with software to manage deliveries. “Habits which were already changing have been accelerated by the pandemic. Covid has just been the catalyst.”
Buying goods over the internet was a new experience for some: 22m Americans bought their groceries online for the first time in 2020, according to NielsenIQ.
And it appears these new internet shoppers are here to stay. A McKinsey survey, carried out in September 2020, found that across several large economies — including India, Spain and the US — a much larger share of consumers were intending to make more purchases online after the pandemic, than did before it began.
Staying local
Another change brought on by the pandemic has been a rise in support for local businesses. “This time last year, [when lockdowns were first imposed] there was a lot of community rallying,” says Scott McKenzie, global head of intelligence for NielsenIQ, a provider of consumer data. “We all found communities that we gravitated to . . . and that included local suppliers and local shops.”
More than 45 per cent of Britons reported that buying from local and independent brands had become more important since the start of the pandemic, according to a survey by research firm Quadrangle last July. A separate survey by King’s College London and Ipsos found that three in every 10 people in the UK plan to shop locally more often when restrictions are lifted.
But with many still intending to avoid shopping in person — opting for deliveries and click-and-collect instead — these local stores will need to find a cost-effective way to deliver items to a supportive customer base.
McKenzie expects that smaller stores, with no delivery capabilities of their own, will want to pair up with nearby businesses offering complementary products for their customers. He says that, with more attention being paid to delivery costs, couriers are competing to offer lower prices.
Instacart was one company to benefit from this rise in demand for local produce — connecting online customers to shoppers in their area who could pick up items from nearby grocers and then deliver them. Demand for such services beyond grocery is also expected to rise.
A taste for fast deliveries
Takeaway food delivery services have also developed further, to cater for customers wanting instant gratification. “And there are more and more companies partnering with these delivery mechanism companies who can help pull the resources and the technology needed to get products from one place to the other,” says Charm.
These services also show how behaviour adopted during lockdown can persist afterwards. In the US, customer visits to DoorDash and UberEats more than doubled in the five weeks after Covid-19 was declared a national emergency, according to data from SimilarWeb, a web analytics company.
But even as restrictions were eased in the aftermath of the first wave of coronavirus cases, traffic to the sites kept on rising — and did so throughout the year. By November, almost 60m visits were made to DoorDash that month, up from an average of 19m in the months before the pandemic.
O’Connor argues that food delivery services have changed consumers’ perceptions of the potential timescale for deliveries — of anything. “People start to think: if I can get my food that quickly, why can I not get stock from my local store in the same timeframe?” he says.
Yet, for the majority of people, online shopping still only supplements purchases made “in the flesh” — rather than fully replacing it. Just 6 per cent of US households considered themselves exclusive online shoppers in September 2020, according to NielsenIQ.
“I don’t think there will be a point in my future where everyone will be buying everything online,” McKenzie says. “But there’s going to be some losers if [businesses] don’t pay attention to the consumer switch to digital.”
Source: Economy - ft.com
