Changes in consumer behavior and attitudes may be around for some time, what can retailers do to address them?
The reopening of the UK’s “non-essential” retail cohort in towns, cities, and shopping centers this month feels like a confident if carefully managed, step forward into a brave new world.
Hindered by the immense initial disruption and subsequent false dawns in 2020, this is a watershed moment for the retailers who have battened down the hatches for 12 months and counted down the days before they could welcome customers back in person.
How many will return is another question altogether. Mentally, physically and financially drained by multiple lockdowns, consumers will enter stores with a very different mindset, if indeed they opt to venture out at all.
Our recent research into shifting consumer priorities around the world has shown that optimism in the UK around the vaccine rollout exceeds the international average, with three-quarters of those polled feeling positive about the program. Internationally, shopping in person at grocery stores for beauty products, footwear, or clothing all rank lowest as activities that consumers will wait to resume until they have been vaccinated. In this respect, there’s an indication that retail (particularly in physical stores) will be one of the first industries to rebound.
Enforced shopping shifts online are permanent
But the pandemic has fundamentally changed our way of thinking and retail’s way of operating. More than half of the UK consumers we surveyed said that their buying habits have been permanently altered by the events of this past year, again outweighing the international average. Those indicating this immovable shift in their future behavior cite those same beauty, grocery, clothing, and footwear sub-sectors as the areas where they will never be the same again. But what does that really mean and how can retailers respond?
Perhaps unsurprisingly, this will largely manifest itself in the persistence of previously enforced online e-commerce activity. National lockdowns as a result of the pandemic accelerated the growth of e-commerce by five years in just a few months and this channel shift will stick.
The retailers that are tackling the ongoing disruption head-on taking the opportunity to rethink, make difficult decisions, and innovate at pace are maneuvering into stronger positions. Establishing a mindset of relentless agility and adaptability was so vital to retail survival (and any proportionate success) throughout 2020 and will continue to be so as the new world order unfolds.
Understanding the post-COVID consumer
Traditional demographic information overlaid with online data and additional retail activity metrics have formed the foundation of sales, marketing, inventory management, and many other retail business strategies for years.
However, COVID-19 has catalyzed and magnified another quadrant of characteristics that will drive consumer behavior this year and will heavily influence the ways in which recovery in retail can be harnessed.
While our research revealed that 41% of UK respondents could be categorized as “Least Disrupted” by the pandemic in terms of health and financial concerns, a further 20% provided responses to be categorized as “Health Concerned”, 7% “Budget Constrained” and 32% as the “Most Anxious” group of all.
Those permanent shifts in behavior mentioned earlier are more pronounced in the “Health Concerned” and “Most Anxious” groups. Significantly, this picture is consistent across all age groups, genders, income levels, and geographical locations making it increasingly harder to identify the motivating factors from traditional demographics.
UK consumers also say they are saving more than earlier in the pandemic and have a heightened level of environmental concern since the pandemic started which has impacted their buying decisions. All of which presents a greater onus on retailers to respond to the dichotomy of articulating both value and values to an increasingly considered and concerned customer base.
Respond to consumer anxiety and act on sustainability
Our findings underscore the fact that consumer anxieties are driving shifts in buying behaviors. It is imperative that, for retailers to thrive in the current environment, they need to double down on nurturing a customer-focused culture and investment in advanced analytics to add further nuanced dimensions to customer understanding. Keeping as close to the consumer as possible through the aggregation and analysis of this intelligence must underpin all major business decisions and drive the roadmap for rapid innovation across all shopping channels.
The message is also clear that there is continued demand for sustainability and transparency in product and supply chains. Retailers must look across their entire value chain with this in mind. Crucially, the issues of sustainability must be tackled authentically with transparency and a thorough understanding of their audience and core value proposition. Consumers are increasingly alert to—and critical of—hollow ethical claims.
Customer relationships were enforced distant ones in 2020, and the UK’s roadmap for reopening across retail from this point onwards presents a not-to-be-missed opportunity to become more closely reacquainted.
How consumers behaved before the monumental disruption of COVID-19 has changed at such a pace and in such far-reaching ways that will persist for the long term as recovery moves forward. How they think, how they feel, and how they prioritize their shopping activity is a world away from 2019.
The challenge for retailers now is to demonstrate that they’re listening and have done all they can to reconnect with consumers as an “essential” part of their lives for the future.
Download our full global research study "Changing Consumer Priorities".
Footnote: AlixPartners Consumer Priorities research is based on a survey of more than 7,000 consumers, aged 18 and over, based across nine countries—China, France, Germany, Japan, Italy, Saudi Arabia, Switzerland, the UK, and the US—with 1,015 consumers having been surveyed in the UK. The research was conducted between 11-30 January 2021.