We have all seen the radical shift that the COVID-19 pandemic has had on consumer behavior. Most of us — as consumers ourselves — are living it. Our ability to go out into the world to buy and consume goods has been severely impacted due to concerns over social distancing.
With the exception of trips to essential retail locations (i.e., supermarket, pharmacy, etc.), the conduct of commerce in physical spaces has come to a screeching halt. That’s right — no more Saturday afternoons at the electronics wholesaler to check out big screen TVs; no more impromptu trips to the department store to grab a pair of new sneakers; and no more popping into an indie music shoppe to pick up a new vinyl record (yes, these retro relics are still seeing double-digit growth in sales).
So now, consumers are engaging in what is essentially the next best thing: virtual shopping experiences. With no option to visit physical retail locations available, consumers have increased their engagement with e-commerce and retail brands via websites, apps, mobile, and other channels. For the most part, the desire for goods hasn’t waned (though some categories have been hurt more than others) — it’s the means in which customers research, explore, and ultimately purchase those goods that has changed.
However, this embrace of e-commerce is not novel or niche. In fact, the shift to digital consumerism was inevitable — the COVID-19 pandemic simply accelerated it. This year we will see consumers of all ages and demographics become more digital in nature out of necessity. But post-coronavirus, it’s likely that their new shopping habits will stick and digital will remain an integral part of the consumer shopping experience, even when brick-and-mortar retail locations open up again.
The Shift to Digital is Accelerating — But It’s Not New
Before the coronavirus hit, digital commerce was already seeing rapid growth. According to McKinsey, “e-commerce has grown at an impressive clip of almost 18% a year” throughout the past decade. Now that “60% of Americans have a smartphone and 80% of these consumers are ‘smartphone shoppers,’” says McKinsey, the wisest brands have embraced this transition as an inevitable requirement for long-term sustainability, not just a fairweather pivot or trendy point of differentiation.
That said, prior to the pandemic, some legacy brands or tech-adverse retailers were primarily focused on driving sales and growth through brick-and-mortar locations. Experts were predicting that, in 2020, at least “80% of US retail sales will still happen within the four walls of a store.” Thus, many brands believed they could achieve the business outcomes they desired through in-store sales alone.
COVID-19 changed that.
“Broadly speaking, there’s a huge portion of retail that is completely shut down… Foot traffic is pretty much on pause for the moment,” says eMarketer principal analyst Andrew Lipsman on the Behind the Numbers podcast. “The retail market is going to be shrinking.”
With physical retail no longer an option, brands are forced to rely on e-commerce as the primary means of reaching their customers. This is causing a massive spike in online sales across the board, though certain product categories like food and grocery, household essentials, and self-care beauty products are seeing the biggest boost. The good news is, retailers who are putting the time and effort now into improving their online shopping experience will see long-term benefits.
“It’s fair to assume that [the pandemic] will probably be some sort of long-term accelerant [for e-commerce],” Lipsman says. “I would not be surprised to see that this steady trajectory does start to cause a bit more of an uptick… We’ll see what Q2 and Q3 numbers for e-commerce’s share will be, but it can be anything — it can be a really significant portion [of total retail] in the near future.”
It’s Not Just Millennials or Tech-Savvy Consumers
Leading up to 2020, many brands had been working on improving the e-commerce portion of their business. Broadly, this was to stay ahead of the curve, but also, it was a focused strategy to help capture more wallet share from Millennials.
There’s certainly logic in this — eMarketer had estimated that for 2020, “85.9% of Millennials in the US will be digital buyers this year.” No doubt e-commerce makes up a sizable chunk of Millennials’ purchasing. “Among 25- to 29-year-olds, 50% said at least half of their shopping occurs online, including 27% who said that’s where ‘all or almost all’ of their shopping takes place. The figures were similar for those ages 30 to 34.”
However, it’s worth noting that other major categories of buyers — Gen Xers and Baby Boomers — have also been projected to increase their digital shopping this year. Millennials weren’t the only ones dipping their feet in the e-commerce waters.
This insight is based on data captured prior to when the coronavirus hit. So if Gen Xers and Baby Boomers were trending toward increasing their online, mobile, and tablet-based shopping anyway, the trend toward e-commerce for these groups will no doubt be accelerated by the COVID-19 pandemic.
When it comes to shopping, it’s not just Millennials who are becoming more digital in nature — it’s everyone.
In a recent webinar from HospoLive, Managing Director for KAM Media Katy Moses suggests that, post-coronavirus, older consumers will have become much more comfortable with e-commerce, not to mention other digitally driven activities like online learning and virtual experiences. As such, digital marketing will become exceedingly important in terms of brand development, brand-customer relationships, and cultivating lasting customer loyalty.
A Digitally Led Strategy Helps You Now and Long After COVID-19 Passes
Of any potential trends forecasted for 2020, no one could’ve predicted the coronavirus and the economic recession it has caused. Although many businesses have suffered, notably bars and restaurants and traditional brick-and-mortar retailers, the most agile brands have innovated, pivoted, and placed great emphasis on developing their digital presence. The shift to a digital strategy may have been inevitable for many businesses, but COVID-19 rapidly accelerated it.
Through the pandemic, many pure play e-commerce and online retail brands have seen an uptick in online orders and online revenue. That said, for the large number of retailers who are accustomed to generating upwards of 80% – 90% of their revenue from in-store sales, any increases won through e-commerce haven’t been enough to cover the massive loss in offline revenue.
That’s why, once stores begin to re-open gradually, it will be vital for brands who have built up their digital presence to leverage it and drive customer engagement online and offline. A digitally led strategy will allow retailers to stay connected to their customers during the pandemic so that their relationship is strong — if not stronger — once in-store shopping becomes available again. These brands will then be able to use their newly strengthened digital marketing to get customers back into stores and recover to help mitigate losses.
Bear in mind, the kind of digital marketing that can accelerate business outcomes in this way requires the right technology. To drive revenue through e-commerce now and create meaningful omnichannel customer engagement into the future, having customer data, sales data, and product data centralized into a single platform will be critical. A platform with this capability will allow you to uncover new, insightful opportunities from your data.
You’ll also need technology that allows you to execute actionable marketing use cases and track your performance — and then measure the results. This will ensure you’re delivering the personalized communications your customers demand, as well as the business outcomes your brand needs to survive during the COVID-19 pandemic now and prosper long after. The right customer engagement platform should help you not only unify your data, but also, execute use cases and then evaluate the effectiveness of those marketing efforts.
No doubt brands will need a strong digital strategy now to survive the current economic climate, but they’ll also need it after the crisis has passed. Why? Because consumers of all ages and demographics, having been forced into e-commerce whether they were ready or not, will become exceedingly comfortable with — and in some cases prefer — e-commerce, and therefore will expect brands to be able to provide superior online shopping experiences and digital engagement.
In response to COVID-19, it’s critical for brands who have failed to fully embrace an online presence to ramp up their digital strategy now. Doing so will not only help these businesses navigate the current economic recession, but also better prepare them for a complete omnichannel engagement strategy once the immediate threat of the virus passes and life returns to something akin to “normal.” Remember: It will no longer be just millennials who are looking to engage with brands online and across all channels. It will be Gen Xers, Baby Boomers, and any other group with purchasing power.