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How has COVID-19 changed consumer behaviour?

Richard Tucker | 03. Jun 2020
10 minutes read

The COVID-19 pandemic is having a significant impact on every aspect of life, including how people shop. Retailers around the world are facing new challenges, the sudden boom in e-commerce, especially in grocery delivery, means they have to respond to a surge in orders to cope with the drastic growth. Consumers have demands, with delivery windows full, they remain more than ever driven by delivery options, visibility, communication and the final mile retailer strategy.

With online retail sales estimated to reach an eye-watering $6.5 trillion by 2023, the ecommerce sector was already booming. But since the outbreak, online shopping has been catapulted into complete overdrive. Even the largest retailers on the planet are struggling to keep up with the unprecedented consumer demand

So, what exactly are people buying?

As people come to terms with their new living situations, their buying behaviour has adapted to suit their needs. While panic buying may have slowed in some countries, consumers continue to stock up on supplies, or “pandemic pantry products”. Our changing behaviours have resulted in a number of product categories experiencing a surge in demand — and although a lot of them are practical, others are wonderfully weird.

For Retailers, there have never been tougher climates to trade in — physical stores have been closed, consumer confidence is low, and peoples are spending less on non-essential items. Retail has been thrown upside down – the things we were busy with don’t really matter as much anymore, and our priorities have changed.

A recent study by Alvarez & Marsal suggests that half of UK retailers could be wiped out if coronavirus continues.

There have been retailer casualties – and there will probably be more. But what we’ve seen rise from the ashes is an inspiring show of retail versatility and adaptability.

  • Laura Ashley, Debenhams, Brighthouse all in administration due to COVID-19.
  • Cath Kidston to close all 60 UK stores with loss of 900 jobs, they will continue to trade online.
  • Oasis and Warehouse Group brings in administrators, online continues 'for now'
  • 50 John Lewis shops were now shut, and more than 14,000 staff are furloughed.
  • Around the world, the likes of J.Crew, JC Penney and the Aldo Group.

change in consumer behaviour due to covid

Retailers must shift their eCommerce priorities, not only to act as an emergency buffer to what is happening, but to ultimately provide long-term value to consumers, for when the world eventually gets back to normal. Retailers have implemented some changes, at lightening speed, or have made decisions at a pace that would’ve previously been impossible.

Could the consumer shopping habits for good?

As consumers get used to living in lockdown, they have no choice but to turn to online delivery for their shopping. Working from home is changing the priorities of what we all value too. As more consumers are forced to shop online to stay safe, they will inevitably habituate searching and buying products online.

  • 45% believe that how they shop will have changed permanently, and 38% say the same about what they will buy.

Retailers should look ahead to the new shopping habits of post-coronavirus consumers. The suggestions are that consumers will buy more sustainably and may shy away from using touchscreens in stores and restaurants. It is also suggested that consumers will change the way they buy – and the way they use technology.

Many consumers will remember and value which retailers and consumer goods companies met their needs and formed a personal relationship during these times, influencing long-term loyalty.

Final Mile Logistics are crucial to modern eCommerce and Omnichannel Supply Chains

Online retailers and their carriers are delivering parcels almost 20% faster than usual as the ongoing coronavirus crisis continues to unfold. This rise in efficiency is being put down to a number of key factors including people being confined to their homes during the day and more able to receive parcels on the first try and many carriers removing the need for a signature on delivery, which again saves time.

More customers are also likely to be opting for carriers to leave their parcel in a safe location, which again increases first-attempt delivery success, while carriers are able to get from A to B much quicker as the roads are far less busy.

With more consumers using final mile delivery services, there is huge pressure on carriers to deliver consumers their orders. Retailers need to maximise their delivery promise to the consumer with a delivery management solution, defining the right carrier for the right product.

These delivery management systems protect the Retailer from having all deliveries with one carrier, drives cost through efficiency, integrates all carriers into one system to create a stronger customer service and consumer choice and visibility of final mile. One system that delivers a customer promise.

Consumers expectations on delivery - the ‘two hour’ or ‘four hour’ versus ‘tomorrow or the next day’ has also seen a drastic change. Retailers cannot keep to this promise, not only because of the growth in online orders, but also because of health and safety guidelines, social distancing and work from home that impact productivity within the warehouse, fullfilment and supply chain.

Retailers need some flexibility and creativity in the final mile, working with their carriers to present a range of delivery options will help carriers deal with the increasing demand on their services.Drivers signing for deliveries and contact-free delivery drop-offs have replaced many click&collect options to consumers, as an example.

It is key during this time that customers gain the visibility and communication they require. Many retailers have seen a large increase in customer contacts, leading to long wait times and un-happy customers. Retailers and carriers need to be clearly communicating with their customers and providing as much visibility within their supply chain and final mile as possible.

As we have already said, Retailers need to continue to build their brand trust and boost consumer confidence, many consumers will remember and value which retailers met their needs during these times, influencing long-term loyalty.

The only bonus at the moment is generally we are all at home! 

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Will technology deliver a greater consumer experience?

Ensure that your technology is scalable on demand, using modern architecture and cloud infrastructure to handle bursts of growth and the diverse needs of emerging omnichannel experiences.

This is not just limited to what is traditionally viewed as ‘customer facing systems’. Supply Chain systems that are playing a real time role in the overall customer experience (OMS, WMS, TMS, customer data platforms and even network modelling and planning systems).

Retailers need to be asking themselves if their existing end-to-end solutions supports the increases in traffic of the new normal. Agility and flexibility in all areas of the supply chains using digital interventions. Retailers will need to invest in the next generation of supply chain control towers, provide visibility, optimise delivery networks, inventory, cost-to-serve, and service levels across entire supply chains.

Retailers need their Supply Chain Technology  to increase efficiency and reduce emissions through collaboration and data driven logistics. As a result of the supply chain disruption the consumer demand is shifting to eCommerce online retail and marketplace channels purely out of necessity.

For many organisations, this ‘new normal’ will require market leading technology and continuous innovation, collaboration and visibility to deliver a customer promise.

These are difficult times for everyone working in the supply chain, you don’t need to wait for the next disaster to take action in planning to understand the risks on your end-to-end supply chain – today, tomorrow and long into the future.

Immediate action across the supply chain can help retailers meet consumer demand.

 

5 Retail Supply Chain actions to support the ‘new normal’

 

1. Suppliers

  • Establish Daily meetings with strategic suppliers
  • Reduce product variety
  • Reduce on-time, in-full requirements a well as payment terms for key suppliers
  • Mitigate risk for existing orders, in collaboration with suppliers

2. Merchandising

  • Revise buy plans and reallocate staff towards higher demanding categories
  • Override algorithms to redirect inventory to high-density areas
  • Dial down near-term buy plans
  • Anticipate future increases in sales and adjust buy plans accordingly

3. Distribution

  • Retrain employees and redeploy them to the distribution centres in high demand areas
  • Raise wages and make temporary hires
  • Maintain good work hygiene
  • Cross-train store and office staff to assist eCommerce Retail team

4. Supply Chain

  • Allocate more transport capacity to high-demand items
  • Have suppliers deliver directly to stores
  • Stage products at strategic hub stores to feed smaller stores
  • Offer transportation capacity using fleet to support movement of critical goods

5. Delivery & Final Mile

So, that leaves just one final question- Is your Supply Chain ready for the ‘new normal’?

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