Competitive Pricing

The impact of Covid-19 on retail & ecommerce

Skuuudle insights report

The Covid-19 pandemic has had and continues to have, a significant impact on every aspect of our lives.

In the UK lockdowns, shops that weren’t deemed to sell essential products were forced to close their doors for months at a time. Even when stores have been allowed to open, new safety measures, declining sales, lack of stock, staff management, and consumer experiences have And, as we remain in the third lockdown, businesses have to think creatively and evolve to survive.

New trends and behaviours have emerged faster than ever before, with changes that would previously have taken years, now being implemented in a matter of days.

Not only this, but consumers have had to adapt to new ways of purchasing goods and services quickly. And, although many are eagerly awaiting the return of our previous sense of normality and the shared experience of shopping and consuming, many others have developed new permanent behaviours.

To understand the impact of Covid-19 on retail and the potential long term effects, it’s essential to consider consumer and eCommerce data insights.

The move to eCommerce

The closure of non-essential retailers made a shift to online essential.

"Would you say you are going to be spending more or less money online compared to last year?"

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According to our eCommerce data insights, even before the third lockdown in the UK, 30% of consumers expect to spend more online this year compared to last, while 37% of respondents said they expect to spend less in retail stores. 65% of respondents aged 55 or over-stated that the pandemic had had a moderate or high impact on their desire to visit retail stores.

This customer sales data is reflected in sales figures. New data from IMRG reveals that online sales grew by 36% in 2020, representing the highest level of growth seen in 13 years. In contrast, overall retail figures fell by 0.13% - the lowest annual growth figures the sector has seen in 25 years.

According to data from IBM, the pandemic has accelerated consumer’s shift toward eCommerce by five years, with retail businesses using online commerce solutions more than ever before, including social media sales channels and websites. And, with almost half of consumers having now purchased an item online that they had only ever purchased in-store prior to the pandemic, some of these behavioural changes will inevitably outlive the crisis.

Not only this but, even as social distancing measures are relaxed, many customers may continue to social distance voluntarily, as well as being more conscious about shopping in physical locations.

With no indication of when the UK’s third lockdown will end and how long the global disruption will last, it is predicted that the move to eCommerce will continue. As a result, if they want to survive, retail stores must recognise the importance of having an online presence. As well as establishing digital sales channels, this also means ensuring they have the infrastructure in place to deliver to customers efficiently, respond to queries, handle returns, and promote their online store.

Shopping early

"What effect would you say the pandemic has had on your decision to start your Christmas shopping".

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In 2020, one-third of people started Christmas shopping earlier than they did in 2019. Why? For many, the perception of low stock levels, as well as scarcities experienced early on in the pandemic. In fact, 31% of consumers have experienced a lack of stock in a retail store, forcing them to buy online.

"When shopping at retail stores, which of the following scenarios have you experienced since the pandemic?"

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This fear of a lack of availability was very much driven by the scenes of empty supermarket shelves and long queues outside supermarkets that we saw in the early days of the pandemic. However, combined with the delays in postage over the holiday period, as the Royal Mail became overwhelmed with the increase in deliveries, it is likely that this decision to buy early will continue, for the short term at least.

Retailers must keep this in mind when planning for busy periods, such as Christmas and other seasonal events.

Issues in-store

For stores that have been able to open, there have been further challenges in keeping their staff and customers safe and ensuring they are adhering to all Covid regulations – many of which have actually deterred customers from visiting stores.

"When shopping at retail stores, which of the following scenarios have you experienced since the pandemic?"

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In our survey, over a quarter of all consumers stated that they had experienced ‘too many rules’, making shopping ‘complicated or unpleasant’. 23% said they had experienced ‘poor signage or lack of store guidance’, while almost 1/3 of retail shoppers experienced a verbal disagreement due to Covid restrictions, during this past Christmas period.

But will experiences like this cause a permanent move to online shopping after lockdowns are over?

When online shopping is no longer essential, any negative in-store experiences are likely to drive customers further towards online shopping.

The UK retail sector will inevitably emerge from the pandemic in a very different form. The customer experience will be changed for the foreseeable future, as the retail industry finds its place in the ‘new normal’.

Shopping was previously associated with escapism, entertainment, and product interaction. Now safety, social-distancing, and hygiene measures have instead become the focus. With face-masks, queues, one-way systems, and other safety measures in place, many customers may see shopping as being for essential purchases, rather than a leisurely trip out.

Opportunities for retail

The move towards online shopping provides a host of opportunities for eCommerce businesses. There is a chance to gain customers who weren't previously shopping online. Equally, brand loyalty's fragility allows smaller, independent brands to increase their existing online customers' market share.

"How much more likely would you say you are to shop with a company that you haven't used before, based on price".

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Our customer insights data reveals that, compared to 2019, consumers are 33% more likely to shop with a company they hadn't used before. 47% of those aged 18-24 stated they were much more likely to try a new brand, while 42% of 25-30-year-olds said the same. Consumers are more likely to switch than ever before.

However, if they are to embrace these opportunities, they must implement an effective strategy going forward, considering all available eCommerce data insights. They must use the tools available to them to stay flexible, keep up to date with the latest data, and remain focused on delivering positive customer experiences that will help them retain their new customers in the future.

Traditional retailers must adapt quickly to the current environment if they want to survive. That means migrating online and catching up with other, more experienced online sellers.

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