The retail landscape was already going through a seismic change pre-pandemic with changing consumer behaviours; and the prolonged periods of social distancing and economic uncertainty have impacted the way consumers behave, from how they shop through how they work to how they approach entertainment. These changes have significant implications for retailers and as the changing behaviours continue to evolve, businesses have the opportunity to reshape the next phase of their growth, centered around consumer values and drivers.
Initial figures from Springboard show that in the first week after stores re-opened, footfall figures across high streets, retail parks and shopping centres were up +330 percent versus the same week a year ago. This is no doubt a result of a combination of pent-up demand, the general population suffering from ‘lockdown fatigue’, as well as the Easter school break. Couple this with the lack of viable entertainment alternatives with the vast majority of hospitality and entertainment industry still remaining shut, that customers headed to their town centres for a spot of shopping. With the hospitality industry re-opening on the 17th May, footfall on our high streets and shopping centres will no doubt continue to increase, which is further good news for retailers. Whilst the current footfall numbers YoY are strong, it is worth bearing in mind that overall demand is still significantly below pre-pandemic levels and it would be unrealistic for retailers to expect the current momentum to continue in the long term.
The digital evolution of brick and mortar
E-commerce will play a pivotal role on the road to recovery for retailers. Those with an established multi-channel platform have been the least impacted through the last year, despite physical stores remaining closed for several months. Retailers have to adopt a ‘digital first’ strategy if they want to future proof their business. This does not mean that bricks and mortar stores no longer have a future – rather, retailers need to adapt a model where their physical stores are supporting their digital business rather than the other way round. Physical stores have to become a lot more than a medium to just sell products – they need to be the support acts for the online platforms. Retailers such as John Lewis are expecting more than 60 percent of their annual turnover to be generated online by 2025. B&Q is looking at reducing its floor space dedicated to selling products and converting part of the stores dedicated to fulfilling online orders. These are just some examples of how the retail landscape will continue to evolve post-pandemic.
Whilst e-commerce and the convenience that it offers will be key in the future success of retailers, research carried out by 4C Associates through a survey of over 250 respondents shows that convenience is significantly less important for consumers compared to product quality and price, with only 13 percent of respondents stating it as a point of difference. This highlights that whilst e-commerce capabilities are critical for retailers’ success, focus needs to remain on offering value, as price and product quality remain the key influence on buying decisions for over 40 percent of respondents. A prime example of this is John Lewis recently launching their new range of ‘Anyday Value’ which encompasses 2,400 items across multiple categories at prices they claim are 20-40 percent cheaper than existing own label products.
What future consumer spend looks like
Alongside prioritising price and value, 4C Associates’ research also showed that the pandemic has shaped what products consumers are likely to focus their future spending on. Outdoor living spend in the UK is predicted to be the highest after lockdown, with over half of respondents planning to invest more in their external surroundings, followed by home décor and entertainment. This reflects the overall attitude with focus on spending more time at home to reduce health risks even after the lockdown restrictions are lifted. Similarly, nearly two thirds (58 percent) of consumers plan to socialise more with family and friends at home, instead of going to pubs and restaurants and host more gatherings and BBQs at home to make up for the time missed last year.
Consumer habits have been interrupted during the pandemic, and many changes in behaviours and attitudes are here to stay. Priorities are also shifting for the type of purchases consumers are looking to make, with plans to increase investment into experiences over material purchases. For many, the closures of gyms meant that they adapted their sport routines to a more home-based set up, with new equipment purchases or taking to outdoor exercise. Sales of home fitness products and ‘athleisure wear’ have skyrocketed in the past year and the research shows that this trend is likely to remain, with half of sport enthusiasts replacing their gym workouts with home and outdoor exercise and more employers likely to encourage a more hybrid model of office/home working, meaning people will spend more time at home.
The retail outlook is positive, as 79 percent of consumers plan to return to their local high street to support small businesses, bringing a new wave of optimism as retailers look to recover from the long-term crisis. The successful vaccine rollout indicates that the end of the pandemic is in sight, and it will have a positive impact on restoring consumer demand to pre-pandemic levels due to increased consumer confidence and accumulated savings. However, these behavioural changes are not linear, and retailers will play a key role in shaping consumer experiences.
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