Coronavirus and Markets: Retail
Covid-19 pandemic has changed consumer purchasing behaviours
What impact has the pandemic had on consumers and consumer shopping?
The pandemic triggered by the Coronavirus is having an enormous impact on consumption trends, and on identifying new purchasing behaviour. Data on consumption from a study by Bain & Company* forecasts a contraction in consumption, ranging from a -20% to a -25% drop in 2020.
On the other hand, the restrictions and shop closings due to the lockdown, not to mention rising concerns about leaving home, have incentivised online shopping. According to a study conducted by Netcomm**, an association of the leading online retail companies, 75% of online shoppers during this period were first-time online shoppers.
We are facing an out-and-out revolution. Precisely for this reason, retailers need to rethink models for selling goods and services in a way that takes into account new consumer needs, and uses new digital tools to respond to the fast-changing market.
How are consumers changing, and how are their purchasing decisions evolving?
Consumer shopping has changed remarkably over the past few years, a dynamic only heightened with the spread of Coronavirus.
A recent study by the IBM Institute for Business Value, “Meet the 2020 consumers driving change, January 2020”, found that shopping is quickly becoming an unplanned activity, one that can take place anywhere and at any time, one that occurs during “micro-moments”, swayed by the person’s mood at that particular time. In the past, shopping meant deciding where to go and what to buy. With the development of e-commerce and smartphones, there is much less planning, and this has ushered in radical changes to consumer shopping experiences.
With e-commerce consumers can buy products from home at any time of day. This fact has taken on new meaning as consumers are under lockdown, with any number of shops temporarily closed.
These new habits are a reflection of the new consumer: demanding, informed, and focused on sustainability on the one hand, but also focused on price, convenience and savings.
Zero-km product purchases had come to symbolize solidarity and proximity to the local community; now, the economic crisis triggered by the pandemic has forced consumers to focus on savings and staying within their own budget.
Unfortunately, the economic impact resulting from the pandemic has led to increased focus on price. Consumers have, indeed, become more focused on finding bargains and saving money.
Factors that determine purchasing choices
Consumers, essentially, can be broken down into four groups.
- Consumers focused on product value (41%) select brands based on price to make sure that what they are purchasing truly matches the amount paid.
- Consumers who are purpose-driven (40%) choose products and brands that match their lifestyle, and are willing to pay more if the brand is sustainable and environmentally friendly.
- Brand-driven consumers (13%) rely on the better-known brands, and are willing to pay more for a name-brand product.
- The fourth category is product-driven consumers (6%) who are not loyal to specific items or brands; instead, they decide what to buy on a case-by-case basis.
Regardless of their category, consumers are increasingly aware of how their choices might impact the environment; for this reason, nearly 6 out of every 10 consumers say they are willing to change their shopping habits to reduce their environmental impact. Moreover, 8 out of every 10 consumers agree that, for them, sustainability is a crucial issue; nearly 70% of these would be willing to pay up to 35% more in choosing sustainable and environmentally friendly brands.
How should companies tackle these changes?
As uncovered by the IBM research, the changes in consumer attitudes and the factors that influence purchasing decisions are more crucial than ever for companies and their production choices and methods of selling. Companies must be sure to place this new consumer, a person who is increasingly demanding, informed, and powerful in terms of a brand’s success or failure front and centre with their strategies. Each sales choice must be directed toward meeting a consumer’s “micro-needs”. In fact, over 70% of consumers agree that they are looking for specific characteristics in products: they are interested in having more details on a product’s characteristics.
Despite the fact that consumers are increasingly interested in making online purchases, brick-and-mortar shops are playing an increasingly important role for those seeking both convenience and instant gratification, not to mention the option to be able to inspect one’s preferred brands and products first-hand. More than 82% of consumers agree that the simple act of entering a shop (even if only for a quick, online-order pick-up) tends to make them buy additional products.
Intesa’s approach to customer experience
Intesa (IBM Group) continues to provide its customers, despite the current critical period, with the support they need, working with retail companies to respond to the new demands prompted by the lockdown.
The key projects relate to the digital transformation of company processes. By using digital platforms, digital transaction management systems and electronic signature solutions, retailers can transform a number of paper-based and inefficient internal processes which were, prior to the crisis, handled in person.
The installation of thermal screening systems for stores, offices and facilities is another very timely topic during this period, and responds to a number of different needs: from body-temperature scanning, to people counting, to access management, monitoring, and restriction, and to monitoring room temperature in order to improve customer experience.
Additionally, we support companies who provide services allowing for e-commerce B2B platforms, warehouses management, shipment tracking, and optimising supplier relations through collaborative portals.
* Source: https://www.bain.com/it
** Source: https://www.consorzionetcomm.it