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Woocommerce Category Post Widget
2020 has brought with it a host of unforeseen changes in the day-to-day life of a typical American shopper and a massive shift in behavior, priorities, and sentiments concerning his/her consumption patterns. So far this has meant that long-established, strong, and seemingly evergreen knowledge of consumer behavior trends has been turned on its head to make way for the new normal. And as social restrictions begin to ease up, the burden of preparing for this shift in mindset is on retailers, to compete for the appeal of the masses and fit into their newly formed needs and demands.
The following post summarizes some of the major transitions and newly formed expectations in consumers, to help you best prepare for the transformed retail arena:
With the start of the pandemic came a massive and sudden switch in priorities, behavior, and sentiment on the consumer’s part- the impact of which was instant, and tangible, thus creating a distinct effect on different sectors of the retail market. The most immediate of these changes was in the food and grocery industry, which peaked in demand and saw significant changes both in the USA and the rest of the world.
Quarantine buying in the USA – Grocery leading the eCommerce boom
- Analysts estimate that total US retail sales, including auto and fuel, will drop by 10.5% in 2020 to $4.894 trillion — a level not seen since 2016.
- This drop is also steeper than the 8.2% drop last seen in 2009 amid the recession.
- Offline sales will decline by 7.9% in 2020 and will not reach 2019’s levels until 2024.
- In the US, grocery sales growth in 2020 will be more than double of what it was in 2019, driven by food price inflation and the increased demand for eating at home.
- In 2020, grocery, apparel, and electronics will see the largest share of their sales migrating online.
- The online grocery will grow by 46% in 2020.
- In the US, Target, Walmart, and Amazon grew their eCommerce grocery sales in April by 350%, 200%, and 60%, respectively.
- By 2024, 8% of global grocery sales will occur online, and more than one-quarter of retail sales as well as one-third of non-grocery retail sales will be online.
- The online share of grocery will more than double over the next five years.
Rest of the world: Evolving trends in online shopping
- In Germany, retail sales grew by 3.8% in May 2020 compared to a year earlier.
- The retail sales contraction during the COVID-19 lockdown declined by only 6.5% and 2.8% in April and March, respectively.
- In the UK, one-fifth of households bought groceries online in June 2020
- Pure online grocery retailer Ocado saw sales rise by 40% in Q2 2020.
- In China, driven by price and convenience, 2020’s online grocery sales will be double those of 2019.9
- Carrefour, one of the largest grocery retailers globally, saw its eCommerce sales tripling in Brazil from March to April 2020.
- By 2022, retail sales in the Asia Pacific region will be more than double the retail sales of North America.
Shopper Behavior During a Pandemic
Alongside the more immediate shift in buying behavior came a shift in mindset for many consumers in America. More than just stocked products on shelves, people are concerned about whom they are buying from and for many, their entire attitude towards buying may be drastically different.
- The vast majority of US consumers lack trust in all major institutions (except for healthcare providers) – only 21% said they trust brands, and 20% fully trust retailers. Each of these response rates has dropped since April.
- A majority of Americans are more concerned about access to basic necessities than their jobs or finances, and 75% have changed the products they buy.
- Consumers in the Hibernate and Spend (mostly aged 18-44) are those most concerned about the pandemic’s impact but are also optimistic about the future.
- But only 40% of them say they are shopping less frequently.
- While 42% say the products they buy have changed significantly, 46% say brands are now more important to them.
- The majority of US consumers (78%) think there will be another outbreak within one year, and 53% of them think it’ll be within the next one to six months.
- In April, consumers were more likely to report it would take days or weeks for the way they shop (51%) and the way they dine out (48%) to return to normal, but consumers now feel that recovery will take place further out.
- Now, just 47% expect shopping to return to normal in the coming days or weeks, and 35% say the same about going to restaurants, bars, and pubs.
- The consumers who are mainly over 45 have seen the most impact on their employment. Almost a quarter have had their jobs suspended, either temporarily or permanently.
- 78% of them are shopping less frequently, and 64% are only buying essentials.
- Today, 65% of US shoppers are visiting physical stores less often.
- Compared with consumers globally, more Americans come under the optimistic Hibernate and Spend segment, 10% vs. 18%, respectively, and fewer are characterized as Cut Deep (hardest hit by the pandemic and spending the least amount), 27% vs. 23%, respectively.
- 65% of US and 69% of European online adults who are Progressive Pioneers — the most assertive in Forrester’s Empowered Customer Segmentation — say they prefer to purchase from companies that align with their personal values.
- 21% of US online adults always research a company’s position on corporate social responsibility before making a purchase.
- Over 60% of online adults in Canada, the US, and Europe want the companies they buy from to be transparent about their business practices.
- They respond strongly to purposeful brands, with 62% saying they are more likely to purchase from companies they feel are doing good for society.
- And 29% would pay a premium for brands that contribute to the community and 42% for locally produced goods.
The New 2020 Shopping Experience & Expectations
Many factors in the retail landscape may incentivize consumers to spend or switch loyalties to brands- but outside of the black and white world of pricing alone, these factors may be a bit more challenging to understand. The following are some examples of the more personal and obscure reasons why consumers think and behave the way they do:
- 80% of European online adults say that price is the most important consideration when buying a product, but
- 40% of US online adults prioritize convenience and opt for products that reduce effort while enhancing speed and ease.
- The most popular corporate value among US and Canadian online adults is a commitment to information confidentiality and data privacy.
- Of the possible influences on purchasing behavior, authenticity, honest, clear labeling, and transparent origin or product source are among the most important.
- Today, 65% of Americans visit physical stores less often, 61% say they’re shopping less frequently overall, and 33% say they will shop at online retailers more over the next month.
- An Intelligence Node survey found that 53% of shoppers return to a website that offers fast, free, and easy shipping policies.
- Loyalty programs are soaring. A study by Accenture found that 77% of consumers participate in a retail loyalty program.
- Customers today find financial rewards (61%) and programs highly tailored to their needs (58%) an enticing incentive to buy.
- 57% percent of consumers want to engage with their loyalty programs via mobile devices, but 49% don’t know whether there is an app associated with their loyalty program.
- Lack of trust can be a deal-breaker. 43% switched providers because they lost trust in the company; 38% said their loyalty to brands is more driven by trust (e.g., personal data security) today.
- Loyalty marketers that implemented an influencer marketing program in 2016 received $11.69 in earned media value for every $1.00 of spend, on average, which is a 4.4% YoY increase.
What Does the Future of Retail Look Like?
- When it comes to their trust in the future, 64% of consumers in the US say that they’ll prioritize brands they’ve purchased from before in the next one to two years.
- Compared with global consumers, more Americans are in the Back with a Bang segment (14% vs. 9%, respectively), and fewer are in the Stay Frugal segment (20% vs. 22%).
- This trend suggests that American consumers may be more ready to spend money once they feel the pandemic has passed.
- 45% believe that how they shop will have changed permanently, and 38% say the same about what they will buy.
- However, 93% of American consumers also say shopping in stores that reopen will be important to them once the pandemic is over.
- Another 87% say that eating and drinking in restaurants and bars will be important after COVID-19.
The global pandemic has altered consumer behavior trends, accelerated the shift to eCommerce and completely transformed the retail landscape as we know it today. According to IBM’s U.S. Retail Index, COVID-19 has accelerated the shift away from brick-and-mortar stores to digital shopping by roughly five years. To add to this data, the above online shopping statistics clearly confirm this shift to digital and reiterate the importance of pivoting retail businesses to offer unified, digital, and omni-channel experiences to cater to the newly evolved consumer and thrive in this developing eCommerce space.
The retail arena is changing! Equip yourself with real-time consumer behavior trends to thrive in the ever-evolving e-commerce landscape. Book a Demo.